Tax This! Tax That!

A reader sent me an interesting article last week about a new report from the Fraser Institute that says, “Canadian families are spending more money on taxes than on food, clothing and shelter combined.” The Yahoo story says that almost 43% of the average family’s income went to pay federal, provincial and municipal taxes, while less than 37% went to the other three necessities.

Furthermore, it says that Canadians’ tax bills have gone up almost 1800% since 1961 – and that the balance between taxes and necessities has changed dramatically in the last half century. They claim that food, clothing and shelter accounted for 56.5% of the family budget back in 1961 and taxes took up just 33.5%.

The conservative think-tank, which often comes up with such alarming statistics, also says their numbers don’t include government deficits, which aren’t covered by taxes today but will have to be paid off somewhere down the road.

Scary stuff, for sure. And it makes it sound like life was pretty rosy back in the early 1960’s.

But, hold on for a second. Before you get your bags packed for a trip in the “wayback machine,” you might want to check out a counterpoint offered by the left-wing Broadbent Institute, run by former federal NDP leader Ed Broadbent. In rebutting the Fraser Institute’s claims about the exploding 1800% tax bill, Broadbent says, “While that’s a clear exaggeration that ignores inflation, what is astounding is that their numbers don’t even remotely hold up.”

Broadbent says the Organization for Economic Co-operation and Development indicates Canadian tax bills are a bit over 38% of GDP and that, rather than increasing, the percentage has actually dropped from a high of about 45% back in the late 1990’s.

As well as failing to take inflation into account, Broadbent also reminds us how different life was back in 1960 when there was no universal health care, no Canada Pension Plan and paltry Old Age Security benefits. Additionally, his report says access to post-secondary education was mostly limited to the rich and there was a massive wage gap between men and women.

Broadbent also questions why it’s considered a good thing that 56.5% of a family’s income went to basic necessities back in 1961, while it’s only 37% now. He makes a good point. When you add up the totals, 90% of income went to taxes and necessities in the old days, while only 80% is allocated now. That leaves a larger chunk of disposable income for the average household, on top of the fact that we have universal health care, a national pension system, more security for seniors, better access to education and a host of other social services already being factored into our tax dollars.

The Broadbent Institute concludes, “The fundamental point is that we are much richer as a society than we were back in 1961. Not only do we have more to spend on consumer goods today, we also choose to spend a bigger slice of the pie on social programs, education, and public services.”

Looking at the past through rose-coloured glasses or bending numbers to make things look better is nothing new. It happens all the time. When people talk about “the good old days,” they’re often just remembering the positive points about the past, while conveniently sweeping all those pesky negatives under the rug.

Life today certainly isn’t perfect. If you want to, it’s not too difficult to compile a massive list of all the bad things about the world we live in. But, if you honestly believe you’d be better off living back a half-century ago or in some other long-past era, maybe you should take the time to start an alternate list of how much better life is today. Once you do, chances are you’ll cancel your plans for that trip in the wayback machine. As Broadbent says, “The Fraser Institute can stay in 1961 if they want… but I’m happier to be living in 2013.”