Economics 101

By Medicine Hat News Opinon on January 8, 2018.

I am always amused by people who demand more services from government, lower taxes for them and want to tax the rich and the corporations more and more. These people obviously have no concept of where money comes from.

The money comes from work, effort and risk along with due diligence. Some in the U.S. are complaining that the rich are getting a bigger tax cut than the poor and the corporations will have even more money in the future due to lower taxes. The reality is that more than 52 per cent of the income taxes in Canada are paid by 10 per cent of the people. They pay 33 per cent in taxes on income over $200,000. It also means that 90 per cent of us do not pay enough taxes to pay our fair share of the cost of the government resources available to us.

It only stands to reason that those who pay the most would save the most if there is a cut. The reality is that rates have recently gone up for the rich and were lowered slightly for others. The numbers are different for taxation at the provincial and municipal levels but the rich still pay more. There is a limit to how much you can tax the rich because they have the wherewithal to leave and take their money elsewhere and will do just that when the burden becomes too much. I do concede that some of the rich are paid far too much money for their work.

Most of these people worked hard for their wealth and many risked everything to gain it. Corporations are owned by people who risk their money to earn more. In the process, they create jobs and goods and provide opportunities for others to get rich or, at the very least, earn a living. Overtax these people and they too will leave for greener pastures.

There are those who are genuinely less fortunate and unable to provide a living for themselves due to their circumstances. A just society will help those people gain the means to achieve for themselves but a just society does not owe all of its inhabitants a living. The government provides supports for working families with family allowance, tax credits and tax deductions. The government provides education and health care that is largely paid for by that 10 per cent who pay the most taxes.

Imagine the teacher who decrees that the 10 per cent of those who get the highest marks on a test will be required to give one third of those marks to the folks with the lowest marks to help ensure that everyone passes the test. The results of the next test will show that the top 10 per cent will no longer put in the effort required to get the highest mark and those at the bottom will put in even less effort because can succeed to their satisfaction with no effort. As this system progresses, the result will ultimately be failure for all. This is communism and has failed wherever it was tried.

Virtually all governments dabble in this system to some degree with the goal of offering a hand up to those who are perceived to have less opportunity. They should test each plan to ensure it is an incentive program that will encourage people to work harder to do better and not a program that de-incentivizes effort and encourages people to settle for the lifestyle the government is willing to pay for.

Left-wing governments increase our dependence on them by increasing taxes and debt and providing services that would better be left to the private sector. These things would include child care, health care, education and infrastructure. Instead of waste and inefficiency, we would have entrepreneurship and healthy competition. The government’s job would be to regulate these activities, not run them. The people would have the control of their money and would do a much better job of spending to their benefit than the government.

Each morning, we should get out of bed and stare at a blank piece of paper. This paper contains a list of everything that we are owed in this life. It will enforce the view that we must work for everything we get and the more effort we put in the more we will achieve. We put government in place to create and increase opportunity, enforce our regulations and laws and offer a hand up to those who are failing due to circumstances, not lack of effort.

Paul McLennan moved to Alberta more than 20 years ago as a member of the RCMP. He remained in Alberta after retirement in 2002, taught driving part time and settled in Medicine Hat in 2011.

11
-10