Smartened Up Taxes

Smartened Up Taxes

By John Taylor; 20 August, 2006

Dear Friends,

I have not written for a while and it is high time to start back again. To get me back in the swing of things here are some personal anecdotes. Dunnville is not without its share of bigots. A few days ago I was standing at the back of a line. The vendor, counting her change, exclaimed, "Hey, that guy just jewed me out of five bucks! Somebody stop him." The fellow in question was walking away as the person at the front of the line objected to her choice of words. "Hey, I am a Jew and I resent your use of that anti-Semitic expression. You should have said that somebody screwed me out of five bucks." Second in line pipe up, "Hey, I am a registered sex therapist and I resent the implication that the sex act has anything at all necessarily to do with violence or shortchanging. It is an honest natural expression of a legitimate aspect of human nature." Next in line was a fellow in dirty coveralls. He said, "Hey, I am a carpenter, and I object to your jumping to the conclusion that the expression "screw" has anything to do with sex. A screw is an extremely useful way to keep things together while allowing for future repair and improvements. If it weren't for screws our world would fall apart. We really, literally, would be screwed." I could not let all this pass without putting in my two cents worth. "You are obsessed with disputing over words while the real problem is staring us all in the face. We are all being cheated here. We would not be lined up here wasting time waiting for somebody to count out pennies if we had a smart card system allowing us to swipe a machine that would perform all our petty getting and trading, including counting change, automatically."

I have finished Jane Jacob's Dark Age Ahead and have included at the end of this essay a lengthy selection from her chapter on finance, "Dumbed Down Taxes," because I think it is all-fired important. Important too is this:

"Virtually all ideologues, of any variety, are fearful and insecure, which is why they are drawn to ideologies that promise prefabricated answers for all circumstances. Every society contains such people. But they can exert considerable power only when they control public purse strings which are not subject to the principles of subsidiarity and fiscal accountability. In the case of Canada, that flaw is actually written into the country's constitution, but in various forms and degrees it occurs just about everywhere." (Jane Jacobs, Dark Age Ahead, p. 115)

She explains in detail what subsidiarity is in our excerpt at the end of this essay, but for now we need only consider fiscal accountability ... in view of my little experience in the cashier's line. As it is, the banking system has united and agreed upon limited standards, enough at least to automate ATM's, which perform computerized transactions, but not nearly the number of those still using cash. We still take the time while shopping to manually count out our loonies and pennies, largely because yet another middleman intermediating at the micro level of the economy would be too expensive. Yet here is our chance, should we ever take the final step to eliminate cash, to make the sort of adjustment that Jane Jacobs seems to be talking about, without perhaps even needing to change the Canadian constitution. If municipal and other local governments got an automatic cut in every purchase taking place there, they would have an alternative to their present, clumsy, unfair property tax revenue stream. The local government provides the ATM cash machines in every store and, like any teller machine, takes a cut of the action, as do so-called "senior" levels of government, including the world government. In return, each government will be required in annual reports with open statistics to demonstrate that the taxes are being well spent on infrastructure. If the system is set up right -- as I have often said, the next Einstein will not be a physicist, he will be an accountant -- we would be well on the way to a "smartened-up" taxation system.

Consider, if you will, the Huqquq. Here is a tax that is so subsidiary and accountable that the onus is firmly placed upon the individual not only to pay it but also to assess it. It is a tax for the Age of Responsibility. At the same time, it is a fixed tax, a simple 19 percent of capital gain, and thus very simple. At the same time, as the House has ruled, it is in the spirit of the Huqquq to make regular payments, either yearly or more frequently, which means that a conscientious Baha'i will be constantly up on his or her financial condition.

I think this regular financial taking into account is in the spirit of the daily self-assessment that is at the heart of our devotional, calendrical routine. Gradually, we will have spreadsheets depicting our budget and financial condition, updated constantly, that we will habitually look over before we take ourselves into account for each day. Similarly, no doubt we will have some medical measures too, charting in detail our every bodily function during the day. If we abused our body, say by not drinking enough water or by bingeing on a donut, alarms and redlining will let us know, just the same as if we spent over budget during the day. After all, it is hypocritical for individuals to criticize government for poor spending when we ourselves do not do the correct amount of saving and giving required for our own financial, as well as literal, health.

My latest orphan book rescued from oblivion at our Dunnville library book sale is:

Linda McQuaig, "All You Can Eat; Greed, Lust and the New Capitalism," Penguin, Toronto, 2001

Her take on our present problems is that we have, as it were, meta-problems. The wealthy and powerful few are not just greedy, they are meta-greedy. She starts the book off by pointing to a typical court case in the 1300's where a fishmonger is caught profiteering in lampreys; he is pilloried and rolled through London on a wheel for trying to get an extra profit. Flash forward to now, a little town in Mexico decides not to grant a building permit to a corporation that wants to build a toxic dump there; their water supply was poisoned by the last tenant and the people are reluctant to be poisoned again. NAFTA intervenes and invokes a multi-million dollar fine on that town for daring to interfere with that company's legitimate profit motive. "Interestingly, the enemy today is no longer believed to be greed but rather any collective action aimed at curbing that greed, restraining it in the name of the broader collective interest." (p. 6) She sums up her book like this:

"This book is not about greed -- not about how bad it is or how guilty we should feel about giving in to it and indulging ourselves. Rather, this book is about the curious way our society has made greed and acquisitiveness its central organizing principle. I describe this as "curious" because there is nothing natural or inevitable about our approach. Indeed (historically the) ... attainment of material possessions was considered a less important mark of distinction and status than the display of other forms of human behavior -- like bravery, loyalty, devotion, service, honour and dedication to duty." (pp. 6-7)

This, of course, is a very perceptive insight into the soul of our capitalist kleptocracy. What is the Baha'i two cents worth on this? What is our point of distinction? I think we can all answer that easily enough: our distinction is spiritual distinction. Interestingly, the phrase "spiritual distinction" does not appear in the Writings of the Bab or Baha'u'llah, though it does in the Master's great work on development, SDC, which recommends this sort of what we now would call identity or self-image:

"It means to see one's self as only one of the servants of God, the All-Possessing, and except for aspiring to spiritual distinction, never attempting to be singled out from the others." (Abdu'l-Baha, Secret of Divine Civilization, 39)

I just read in a science magazine an interesting take on this. It seems that there was a study in 2002 of the word choice of poets who ended up killing themselves compared to non-suicidal poets. You guessed it, the suicides used words like "I" and "me" very frequently, and the non-suicides preferred "we." What am I supposed to think about that? Why is the "I" constantly being downgraded, what can I say, how am I to deal with this? What does it mean for me? O God, I think I am going to kill myself, or worse, not turn out to be a good Baha'i. Anyway, the Master's most famous and powerful statement on distinction He reserved for a meeting on June 15, 1912 at a private residence in New York. Here is the climactic, closing paragraph of that memorable speech, and here He defines, beyond all shadow of ambiguity, exactly what spiritual distinction entails.

"I desire distinction for you. The Baha'is must be distinguished from others of humanity. But this distinction must not depend upon wealth -- that they should become more affluent than other people. I do not desire for you financial distinction. It is not an ordinary distinction I desire; not scientific, commercial, industrial distinction. For you I desire spiritual distinction -- that is, you must become eminent and distinguished in morals. In the love of God you must become distinguished from all else. You must become distinguished for loving humanity, for unity and accord, for love and justice. In brief, you must become distinguished in all the virtues of the human world -- for faithfulness and sincerity, for justice and fidelity, for firmness and steadfastness, for philanthropic deeds and service to the human world, for love toward every human being, for unity and accord with all people, for removing prejudices and promoting international peace. Finally, you must become distinguished for heavenly illumination and for acquiring the bestowals of God. I desire this distinction for you. This must be the point of distinction among you." (Abdu'l-Baha, The Promulgation of Universal Peace, p. 189)

This kind of change in attitude is necessary if we are ever going to smarten up our financial system. As it is, it is expected that every government, like our greedy, suicidal egotist, will grab as much money as it possibly can, and surrender not a jot or tittle of its discretionary spending powers. National governments rip dollars away from local governments, and even the idea that the UN should have an independent revenue stream is kept well out of the arena of discussion. Even when international corporations grow to the point where they can bully national governments and play one upon the other, where they act like pirates with impunity, the very idea that they could maybe be put on the leash of a world government never comes up for discussion.

Dumbed-Down Taxes (Chapter Five, Jacobs, Jane, Dark Age Ahead, Random House, New York, 2004, pp. 103-105)

"Henri Pirenne tells us that the low point of the Dark Age that followed Western Rome's collapse occurred about the year 1000. After that, instead of sinking ever deeper into incompetent poverty, our ancestral culture slowly took a turn for the better. Pirenne also analyzes why and how culture's trajectory pivoted upward. The poor, backward European cities, many of them, at the time, hardly more than embryos of cities, with Venice leading the way and others following -- began trading with one another again and, indirectly through Venice, with the Middle East and Asia. The cities developed by importing, creating, and exporting innovations. By trading and mutually adopting innovations, they slowly drew abreast of advanced Asian cities and then surpassed them in economic and social capability and prosperity.

"Disadvantaged in almost every way though they were, the early medieval cities typically benefited from subsidiarity and fiscal accountability. Subsidiarity is the principle that government works best -- most responsibly and responsively -- when it is closest to the people it serves and the needs it addresses. Fiscal accountability is the principle that institutions collecting and disbursing taxes work most responsibly when they are transparent to those providing the money.

"The cities of the Roman Empire had lost these advantages in the desperate years before the collapse, when the imperial treasury extorted from them as much as it could and disbursed the money for schemes and needs according to its own, frequently crazed, priorities. The early medieval cities regained the two principles slowly, in various ways. Some, like London, received royal charters authorizing them to farm (that is, collect) their own taxes. Others, like Hamburg and cities of the Low Countries and northern France, gained subsidiarity and fiscal accountability through the efforts of merchants and citizens united by common interests and then, increasingly, by custom. Many others, like Venice itself, Florence, Bologna, and Genoa, achieved subsidiarity and fiscal accountability as by-products of their own sovereignty as city-states.

"Both principles are important, but the need for subsidiarity has become especially acute, for reasons I shall sketch out later. Yet both subsidiarity and fiscal accountability of public money have almost disappeared from the modern world, as if a cycle is returning to the Roman imperium, rather than to principles that renewed Western culture long after Rome's failure. Today, over almost all the world, major taxes, including those most remunerative and most economically informative, like income taxes based on ability to pay, or those directly reflecting economic expansion, like sales or value-added taxes, are collected either by sovereign governments or by their surrogates, provincial governments. This is true of federal governments like those of the United States, Canada, Mexico, and Germany, and of centralized sovereignties like those of England, France, Sweden, and Israel-to name a few of both types.

"The only exceptions are a few city-states like Hong Kong and Singapore and near-city-states like the Czech Republic (the city-state of Prague), Slovakia (the city-state of Bratislava), and Taiwan (the city-state of Taipei). Only very minor taxation, such as property taxes, responsive neither to ability to pay nor to economic expansion, is typically permitted to cities.

"Because city sources of public revenue are frequently inadequate to needs, so-called senior governments sporadically come to their aid with grants of public money and programs devised for using the grants. These resources are disbursed into many different localities, currently in many different situations, with unlike needs and dissimilar opportunities. Sovereign governments cannot possibly be in intimate touch with all this variation. Even with the best will in the world, the disbursers must act as if common denominators exist, and if these cannot be found, will allow idiosyncratic needs and opportunities to go unanswered.

"An example is a stillborn hotel tax in Toronto. The numbers of tourists visiting the city have declined since the late 1990s. The city has had virtually no money for marketing itself or its events as tourist destinations, so hotels in the city asked the City Council to tax hotel rooms modestly to raise such funds. When the city government boldly passed the requested tax, the provincial government annulled the act; only the province could enact such a tax, and only by making it a province-wide policy. Other hotels in the province, most notably in Windsor, a virtual suburb of Detroit across the river, vigorously resisted the tax, in the case of Windsor on the reasonable grounds that it wouldn't help that city's economy.

"The social and economic needs of urban residents and businesses are extremely varied and complex compared with those of simpler settlements. They require wide ranges of awareness and knowledge that are humanly beyond the comprehension of functionaries in distant institutions, who try to overcome that handicap by devising programs that disregard particulars on the assumption that one size can fit all, which is untrue. Even when sovereignties and provinces or states give special grants to this or that locality, the special grants almost always reflect the priorities of the disbursing institutions, not those of the recipient settlements.

"So dysfunctional have these ordinary arrangements become that in North America associations of mayors of municipalities, and associations of municipalities themselves, have taken to expressing their disappointments and dissatisfactions loudly, sometimes at screaming levels. The Organization for Economic Cooperation and Development (OECD), composed of thirty currently rich countries, published a report in 2002, Cities for Citizens: Improving Metropolitan Governance, the purport of which is that something is wrong which needs fixing.

"The disconnection between public treasuries and local domestic needs drawing upon them does not exist within taxpayers' pockets or bank accounts. The same taxpayers supply money for all layers of government. Rather, the disconnection is purely administrative and governmental. It is a political artifact with the strength of bureaucratic tradition. That being so, the dumbed-down result should theoretically be simple to mend; but, if experience in Canada is a guide, it can't be mended."