Taxes and Duties

Chapman: The more interesting ethical question is the relative role of the individual and the state to make decisions about our society. There is the neo-con/libertarian position that “It is my money and I am best at deciding what to do with it and therefore taxes should be eliminated except for the most minimal of government roles.” The opposite extreme of the socialist who says “From each according to their ability, to each according to their need” is equally disturbing to me. The socialist position is a disincentive to take risk and innovate and fails to reward talent and success.

The libertarian falsely believes that the self-made success story did it all by themselves without any support from the state. They conveniently ignore the fact that without a reliable currency, banking and legal system they would not and could not succeed. They ignore the advantage of a non-corrupt police service and that without state-run fire and emergency protection they could not amass the property and wealth without providing those services as private and expensive costs. They ignore the benefits of the public education system that provides them with a skilled and capable workforce. The list goes on but you get my point.

Milavsky: It’s so complicated now. If there is a loophole, it’s sometimes an error that the tax people made. Some tax lawyers look for loopholes and charge corporations good fees for their work. When I was studying commerce we had a little book about taxes. Now we have a great big book, a library. It’s hard for people to stay on top of it. Basically, I think they should lower taxes. If the taxes weren’t so large, you probably wouldn’t have to worry about finding loopholes.

I agree that everyone has to pay their fair share of taxes to fund programs and provide infrastructure that a democratically elected government has been tasked to do. The issue arises on what the definition of fair is; that is a debate in itself. The people who utilize loopholes are most likely paying large amounts of taxes and in their minds are paying more than their fair share of taxes…. An example would be a deduction that allows taxpayers with home businesses to deduct expenses relating solely to that business. It’s not a loophole if a taxpayer deducts that portion relating solely to the business. However, some advisers suggest arbitrary numbers and call this a loophole. I call this being dishonest. Just because the Canada Revenue Agency didn’t come back and audit your expenses doesn’t necessarily mean that they agree with them. So let’s not confuse loopholes with non-compliance.

Chapman: Getting through this recession/depression is going to take sacrifice and discipline…. We are going to have to start caring more, to become more responsible and more resourceful and most of all more adaptive. The debts and dollar devaluations behind the various stimulus plans of government all over the world are just increased and deferred taxes that future generations will have to pay. Neither libertarian nor socialist philosophies are able to reconcile the intergenerational unfairness of that new reality. The bottom line is we are all in this mess both alone and together. We will only get past this mess by staying together, by not being protectionist as nations or individuals. We have to start getting serious about the demanding process of finally paying the piper for past mistakes and misjudgments.

The Final Word
The challenge for business is to sort out how to be a good corporate leader and a good citizen. In a perfect world there would be no difference, and we would not be experiencing the shocking meltdowns we see around us. Winston Churchill said, “Democracy is the worst system devised by the wit of man, except for all the others.” When you consider the corruption that is par for the course in so many other countries, you could say the same about our tax system which works pretty well most of the time. Can we make it better, more equitable, more balanced? Yes we can. And if we’re going to avoid repeating the current fiscal mess, we must.

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