Why Tax Freedom Day is Silly

Posted on June 7, 2011

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It’s Tax Freedom Day! According to the Toronto Star, which should really know better than to write about this nonsense, Tax Freedom Day is

“the day when the average Canadian family has worked enough to pay its total tax bill to all levels of government for 2009. That’s assuming, of course, they had forked over every last red cent earned since the start of the year”

The Fraser institute is so excited about Tax Freedom Day that they wrote a song about it. Expect to see it played on a constant 24 hour loop on Sun News network:

I was so excited about tax freedom day that I could barely sleep last night. I woke up bright and early this morning, eagerly awaiting the imminent arrival of Ayn Rand Claus, who would ride a fancy train to my front door and bring me my first real paycheque of the year. When she failed to show up, I decided to attend the the tax freedom parade, which was put on without government funding and was actually just a morning traffic jam. After a long and festive day of working for myself, I returned home for a tax freedom feast, bought without government subsidies, and then sat down at my private computer to tell you why the whole idea of tax freedom day is absolute bullshit.

The way the Fraser Institute puts it, you’d think that Jack Layton was personally taking your first six months of paycheques to spend on massage parlours. This is, of course, not the case. When you get down to it, taxes are a fee for a service like any other. Roads, hospitals and police departments all cost a great deal of money, and so we as citizens are required to pay our fair share. Our taxes are a way of purchasing a share in Canadian society. This is pretty elementary stuff.

But the Fraser institute’s calculation is mathematically sound. It is true that the average Canadian pays a portion of their income that, if it was paid all at once, would take them until today to earn. What the Fraser Institute either fails to realize or chooses not to tell us, however, is that you can do this with any other personal expense. If you are a low-income Canadian, for example your rent freedom day is May 22 (source: Statistics Canada). Our commuter society means that in 2007, the average Canadian’s Car Payment and Gas Freedom Day was March 14 (source: Statistics Canada). That same person finished working for their grocer on Grocery Store Freedom Day: January 23 (Source: Shocked investor).

And yet, the Fraser Institute has yet to make a video where a stereotypical Albertan sings about how happy he is to no longer be working for his local gas station owner. That’s because, as any Libertarian will tell  you, none of the above people coerce you into giving them your money. When you make your car payments, says the libertarian, you’re freely choosing to enter into a transaction with the guy down at the Honda dealership. This libertarian cliche is based on a rather limited understanding of what actually constitutes coercion. Sure, a failure to pay one’s taxes will eventually result in arrest. But that is not the only transaction where refusal will carry consequences. Low income Canadians in particular, tend to have very little choice in which landlord they rent from or which grocery store they shop at or how they get to work. Libertarianism holds that these people are free to choose whether or not to pay for their various amenities, but libertarianism fails to mention that a failure to enter into these supposedly voluntary business arrangements can result in homelessness, unemployment or hunger. State regulation is neither the only form of legal economic compulsion nor even the strongest. Most people would rather be arrested than starve.

Tax Freedom Day is actually one of the more clever fallacies to come from the right. It takes the somewhat abstract concept of personal tax expenditures and makes it into the concrete feeling of having been stiffed on six months of hard work. Don’t fall for it. The days before tax freedom day are not spent working for the government.  They are spent working to contribute to parks, schools, police departments, festivals, libraries, the military, roads, and all the other wonderful things that we can enjoy communally. Taxes are a membership fee for a very well-appointed but nevertheless non-exclusive club. It’s immature to whine about having to pay for services you receive.

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Posted in: Canada, Economics