According to multiple reports, the Conservatives are proposing a review of the Canadian personal and small business tax system.

But, just juggling numbers and rates around — while it may help in the short run — doesn’t address the fundamental problems of political corruption, class envy and de-incentivization. All are entrenched business sector problems and to the brain-drain in Canada.

The progressive era spanning the years from the end of the 19^th century to the first two decades of the 20^th century, brought about significant changes in North America. Some of the more impactful changes were the increased regulation of the business sphere by governments and the introduction of federal income tax.

In Canada there were figures such as Liberal prime ministers Wilfrid Laurier, and W.L Mackenzie King. On the American side, we saw the rise of Republican Teddy Roosevelt at the turn of the 20th century and Democrat Woodrow Wilson. To better bring about the multifaceted changes the progressives wanted, all of them sought the help of experts and so came the birth of the burdensome unelected technocratic bureaucracy.

In the 1913, the USA brought in a federal progressive income tax.

This was actually inspired by Karl Marx (1818-1883,) who wrote in the Communist Manifesto, “A heavy or Progressive …income tax is necessary for the proper development of Communism”. Note: That is not to maintain Communism but to develop it. The goal here is to remove economic class distinction.

The supposed justification was that those who benefited the most should pay the most. This is a fundamentally flawed justification.

But income tax was introduced in Canada in 1917 — as a temporary measure to cover the cost of the Great War.

Of course, it became permanent and from this beginning the Canadian tax system slowly mutated into today's fully progressive tax system with higher earners paying higher rates. This was coupled with the extensive expansion of “social programs” that continues to this day.

As we have seen under Trudeau the use of the word “fair” is constantly invoked as if it were the eleventh commandment.

When politicians claim “fairness” you can be sure there is nothing fair coming forward. The use of this word is for its emotive power and in a calculated attempt to divide society into two camps, the larger group who believe they will either benefit or at the least, not be disadvantaged supporting the measure and the those who will pay the penalty unable to out vote the measure.

Often this division falls along economic lines with the “wealthy” demonized as if they were Rich Uncle Pennybags from Monopoly or Scrooge McDuck. To mix metaphors, if it looks like a duck and quacks like a duck, it must be Marx.

In what other sphere of human endeavour do we penalize the successful the way we do with the income tax system?

After sacrificing for years, a hockey player makes it into the professional league. The rules at the highest level do not require crippling one leg and tying an arm behind his back so that those playing at the neighborhood rink are treated fairly. Most people who are financially successful also have worked hard for years, followed the rules, and made sound decisions. Penalizing success is a sure way that Canadians will stop seeking it or will move somewhere else. Why would anyone want the land of the mediocre? When France brought in a wealth tax, the “wealthy” moved out of France.

The counter position enunciated by Max Weber (1864-1920) is the Protestant Work Ethic.

This ethic equates the vocation of priesthood with the nobility of the worker and his/her discipline, frugality and diligence at working.

Marx’s class warfare idea plays out psychologically as merely class envy. Weber’s idea psychologically elevates the person to a working-class hero. Weber’s ideas have helped make Canada and the USA great countries. The North American experience has also proved that Marx was fundamentally wrong. Weber’s idea makes noble the individual, Marx’s idea empowers the government and divides society.

Further problems are also noted stemming from the progressive tax system. Perhaps the most injurious to our form of government is the fact that it calls on taxpayers to decide between what is good for the country and what is “hopefully” good for their pocketbook.

This is fostered by pledging benefits to people living in Canada based on an income bracket at the expense of the “wealthy” to get votes. Constantly penalizing the wealthy (however they are defined) is systemic discrimination fostered by the Canadian government.

In Canada, we search out even the smallest discrimination and try to set things right unless you work hard and follow the rules. Then discrimination is ok.

The discrimination against the successful also encourages tax-evasion. Generally, a reasonable tax rate will be paid because most people understand taxes are a necessity and it’s more trouble to evade than to pay. In addition, the super-wealthy have ways to avoid paying taxes or lowering their tax rate substantially. It is the middle and upper-middle class whose pockets get clipped. These are the same people who create the small companies that employ most people in both countries.

There are other approaches for the government to raise money for the good of society. Further, a serious national conversation as to what the government ought to do as seen through the lens of what it can afford to do also needs to happen. If Official Opposition Leader Pierre Poilievre and the Conservatives are going to review the personal and small businesses tax systems, let them begin by understanding the damages brought on by the progressive income tax system.

Dr. A.W. Barber is the former Director of Asian Studies at the University of Calgary. He is internationally active and has wide-ranging interests.

CMS: Canada’s growing protest culture is a sign of a broken system

Related Stories