She quotes 1927 U.S. court ruling about taxes paying for a 'civilized society,' but completely misses the lessons of history
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Finance Minister Chrystia Freeland is now justifying tax increases by quoting from a U.S. Supreme Court decision almost a hundred years ago.
“Taxes are what we pay for civilized society,” wrote Oliver Wendell Holmes in a 1927 decision.
Federal U.S. tax in 1927 was in the low single digits, according to the Tax Foundation, an American organization that focuses on tax policy, as opposed to Canada today where the rate is anywhere from 15-33 per cent.
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Perhaps the increase is because we are having to pay more for that civilization. Another explanation is that governments, particularly this Liberal one, have forgotten what fiscal prudence entails.
At the weekend, Freeland was on CBC’s Rosemary Barton Live show quoting Wendell Holmes about the necessity of taxes to a “civilized society,” and defending the budget’s capital gains tax increase in the face of criticism that some people, such as doctors and businessmen, would find themselves penalized by the rise.
“I don’t think it’s right to describe tax fairness as a punishment,” said Freeland, who seemed to admit that the previous six Liberal budgets had failed to produce an equitable tax system.
“I think the tax system we had before the budget was not really fair. We had a tax system where a nurse or a carpenter was paying tax at a higher marginal rate than a multi-millionaire.”
It obviously never occurred to the Liberals that another way to achieve fairness is to cut the tax burden for nurses, carpenters and the like.
But if Freeland is going to lecture Canadians with a 1927 quote from Wendall Holmes, she might want to see if there are any other lessons she can learn as finance minister from the U.S. budget of the same year.
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In his 1927 Budget Message, President Calvin Coolidge began by remarking on the large number of tax reductions that had taken place over the previous six years.
Tax cuts. Imagine.
The Liberals have claimed to cut taxes for the middle-class but as the Fraser Institute has noted, it’s all smoke and mirrors. Eliminating a variety of tax credits, as the Liberals have done in recent years, offsets any gains in a lowering of personal income tax rates.
“Despite claims to the contrary, Ottawa has increased personal income taxes on the overwhelming majority of middle-class Canadian families,” the Fraser Institute noted in a report in 2022.
The U.S. 1927 budget went on, “Our housing problems are being cared far.”
A far cry from today where even Justin Trudeau and Freeland admit that the dream of affording a home is out of reach for too many people — even after, or because of, eight years of Liberal politics.
In 1927, Coolidge also enthused about the balanced budget. “To jeopardize our balanced budget,” said Coolidge, “is unthinkable.”
Before being elected the Liberals promised a balanced budget by 2019/20. It never happened, of course. Instead, it was one deficit after another, after another, with no end in sight.
For Coolidge, a balanced budget was a necessity.
“The assurance that federal expenditures will be kept within federal receipts has bulwarked public confidence, it has contributed measurably to the prosperous condition of the country, it has ministered to the justifiable pride of our people in their government and in its orderly and sane processes,” he said in his 1927 statement.
And what of the overall debt in 1927? “The debt has been reduced,” said Coolidge.
According to Freeland’s latest budget, Canadians are going to be weighed down by our increasing debt for a long time to come. By 2028/29 servicing that debt will cost $64.3 billion — more than the Liberals send to provinces for health care.
“We have provided for adequate national defence,” proclaimed Coolidge.
Canada has consistently failed in the defence department, refusing, for instance, to live up to our commitment to NATO to spend two per cent of GDP on defence. Even after increased defence spending announced in the latest budget, we are still shy of that target.
“The people are permanently richer because of the diminished demands made by the federal government,” said Coolidge.
Contrast this to what Freeland said earlier this month, “Today, too many young Canadians feel that the deck is stacked against them. They can get a good job, they can work hard, but far too often the reward of a secure, prosperous, comfortable, middle-class life is out of reach.”
When the finance minister tells you that after eight years of Liberal policy, the deck is stacked against young people and a middle-class life beyond them, you might want to believe her because she’s the one who put it out of reach.
And now Freeland is pontificating about increased taxes paying for our civilization — the one where young people can’t afford a home.
Instead of quoting historical figures Freeland would have done better to emulate historical budgets — ones where a balanced budget, tax reductions, defence and homes were a priority and not out of reach.
National Post
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