It’s that time of year. I suspect that we choose January and February to do most financial activities because it’s the one time of year that there isn’t anything more interesting going on. Can you imagine trying to write a budget document or file your taxes in July, when you’d rather be at the lake? (We’re actually a bit behind, this process usually starts in October; we were busy with the election then.)
I have next to me a massive binder full of tables and charts, carefully written by department directors, each with a preamble explaining the purpose and general structure of the department, and followed by an explainer for any major changes to budgetary line items year over year. The binder explains what our staff expect they will need in the coming year in order to do their jobs effectively, and how we expect to pay for it. Over the coming month, Council will be working through this binder together in order to determine if any changes need to be made before the budget is implemented. It will be my first municipal budget, so I have a LOT to learn; I’ll try to bring you along for the ride, so expect a few more posts on the subject in the near future.
For now, I want to frame the subject with a few key points about taxes, why we hate them, and why they’re actually a great deal for all of us.
Why Taxes Are Great
Let’s start with the good news: taxes are the best deal around!
No single one of us can afford to pave our own street. (Well, there are a few who can, but most of us can only dream of it.) By pooling our resources, we have access to all sorts of amenities and services that we could never afford on our own, and many of them would be of little use to just one person:
- Imagine going to the Library, Arena, or baseball diamond on your own. Why would you? What good is a private soccer field or meeting room?
- Imagine having private highways that only you could use. Sounds nicer than rush hour traffic, but it would be incredibly wasteful: it would be unused most of the time.
Even if we could afford the things that taxes pay for as individuals, we wouldn’t use them as individuals. They are for us as a community, in their use as much as in generating the revenue to build them. Public goods are a shared investment that create spaces and opportunities for us to interact and build community — something that money cannot buy.
Not only do the things that taxes pay for enrich our community in the sense of bringing us together in their shared use, they also enrich our community economically by providing services that no single business could afford:
- Basic infrastructure like roads and pipes is a precondition for virtually all economic activity in our community. We can’t ship goods without roads, and our shops wouldn’t have many customers without sidewalks and crosswalks and parking and plumbing.
- Taxes pay for municipal Planning, which determines where people can live and businesses can do business, the physical shape of our community. Good planning is essential to a thriving community!
- The municipality has an Economic Development department, and also supports the Downtown Business Improvement Area, the Chamber of Commerce, and regional tourism initiatives.
A bunch of houses in the same area is not inherently a community. We have common needs and desires, and taxes is a relatively simple and highly cost effective way to meet those needs and desires in ways that benefit us all.
Why Taxes Are The Worst
If taxes are so great, why do we hate them so much? There are a few fairly simple reasons, that have nothing to do with taxes themselves and everything to do with how we think and communicate:
- We take the things that taxes provide for us for granted. Basic infrastructure is, well, basic. We use it so frequently that we forget that it’s there (unless for some reason it isn’t), so it’s hard to see it as valuable until there’s a problem with it, which tends to completely disrupt our lives and makes us even less happy about our basic infrastructure. So we’re naturally biased against the entire subject: we only think about it when it’s broken.
- We get no consumer satisfaction. Retail therapy is real: it feels good to spend money on stuff. When we pay taxes, we get none of that warm glow. Quite the opposite: because paying taxes is mandatory, it doesn’t feel like we’re buying something or even investing in something. It feels like something is being taken from us.
- We don’t see where it goes. We naturally want to make connections between our resources and what they fund. Charities understand this, which is why they ask you to sponsor a specific child or project rather than just make general donations. When taxes are collected, they go into a general pot and are used as needed. We have a budget, so the general pot isn’t exactly general, but few of us read the budget (or are able to fully understand it even when we read it!). Even if we are fully engaged in the budgeting process, there’s no direct line between my money and a particular expenditure, which is very unsatisfying.
- We don’t like where it goes. There are always expenditures that don’t apply to us individually. Many residents don’t have children in public school, but we all pay the education levy; and while we all benefit from having an educated society, it’s hard to feel a personal connection to a service we don’t use directly. Other services are inherently controversial: for example, policing tends to take up a significant portion of municipal budgets, and there has been a major movement demanding that police services funding be reallocated to instead fund mental health, anti-poverty, and cultural services and programs that would (arguably) better prevent crime and crisis.
Progressive Taxation
Whether we love taxes or hate them, we all get more out of taxes than we put into them. And thankfully, how much we put into them is determined relative to what we can afford (at least, that’s the goal). Income taxes (federal and provincial) are calculated as a portion of our income, and property taxes (municipal) are calculated according to the value of our home.
Because of this, taxation is one of the ways that we can keep capitalism’s tendency to funnel money upwards in check. Those who pay the least in taxes benefit most from public services, at least individually. No matter how little income we have on our own, and even if we could pay for it all on our own, we get the same service.
Let’s not kid ourselves though: as much as wealthy people and corporations could build the infrastructure they need to do business without public funds, they don’t — and the great value we get for our tax money because of the economies of scale also scales. While my personal share of property tax doesn’t come close to paying for the roads I drive on, giving me fantastic value for my tax money, the businesses that fund much more of our municipal revenues are getting a whole lot more use out of that infrastructure. So sure, industrial businesses pay a much higher tax rate; but they also have heavy vehicle traffic using those roads to make a lot more value than I get from my trip to the grocery store; and the grocery store pays a hefty tax bill for their large property, but every one of their customers uses municipal infrastructure just to get to the store. Wealthy individuals pay more than poorer individuals, but those wealthy individuals are probably invested in companies that return enormous wealth to them, wealth that wouldn’t be generated without municipal infrastructure somewhere. So even progressive taxation doesn’t correct inequality, but it gives us a buffer from the worst of it.
Embodying Our Ideals
The budget, and the taxes that pay for it, are where our ideas and ideals become concrete (sometimes literally). It’s possible for Council to pass a motion supporting a principle or ideal without anything coming of it; it’s possible for that motion to become the basis for a policy, which may or may not be enforced; but once there are budget line items attached to something, that means that it will be taking up space in the world. So while not all important policies have budget line items, as a general rule we can say that our budget expresses our true priorities. In that sense, the budget (including our tax rates) can tell us a lot about who we are as a community. What do we care about? How much are we willing to spend on our priorities? How much of our ideals are actually represented in our expenditures?
Some residents see Brighton as being a family-friendly community. Are we? Do we spend money on things that make us family-friendly, like parks and recreation? (We do! And we have a new Parks & Rec master plan under way to decide how best to move forward with strategic investments to support our Parks & Rec infrastructure.)
Others see Brighton as a retirement community, and certainly our population demographics lean toward seniors. But are we senior-friendly? We’re low on doctors (like almost everywhere else in Canada), we aren’t terribly accessible (think not just of wheelchair ramps, but also transit, sidewalk repair, and snow removal, among many others), and we have a lack of affordable housing that disproportionately affects seniors. Are these things reflected in our budget? (A little bit! And these things also affect more than just seniors; everyone needs doctors and transit, seniors just need them a little bit more.)
These are just examples, but the logic holds across any self-conception we have. Do our expressed values and priorities appear in our budget? How much are we willing to pay to address these issues? And when we find (as we always do) that we can’t afford to do all of the things necessary to fully embody our ideals for Brighton, are we willing to pay more in taxes in order to further enhance our community? How much more? And am I willing to pay a tax increase even if I don’t personally get more value from municipal services?
How much is it worth to live in a community that takes care of other people?
While I haven’t approved a municipal budget before, these are the things I think about when I think about my own taxes. I invite you to think about these questions, and be really honest with yourself about them. And if you’re willing, share your thoughts here in the comments! North Americans in general are very bad at talking about money, and I think we’d be better off if we had frank public discussions about it that went beyond just grumbling about taxation. So join in!