Ted Talks: The Cost of a Complicated Tax System

In his latest column, Provencher MP Ted Falk promotes a program in which able volunteers help people with “a modest income and a simple tax situation” file their tax returns. Volunteer initiatives are a wonderful thing, but let’s look at why this one is even necessary.

Complicated Tax System

We all need to file our taxes each year to ensure that the government has taken the correct amount off of our paycheques over the past year. This is a good thing, because it means that the government is accountable and can’t take more than the current rates allow. It’s also our chance to claim all of our tax deductions. Deductions are there to encourage people to spend their own money on things that the government would otherwise have to provide, and most of us have quite a few deductible expenses – things like rent, charitable donations, and tuition costs. Adding up all of these deductibles means that most people with “a modest income” will get most of the taxes they paid over the past year back in a tax return. But adding up all of the deductibles according to the rules of the tax system is so complicated that most of us are willing to pay an expert to make sure it’s done right.

Ted also talks about the Conservative “Family Tax Credits and Benefits Plan.” This introduces more tax deductible expenses, and while that means that many of us are able to get more of our taxes back, it also makes filing taxes just a little bit more complicated. Conservative governments are well known for providing “tax relief”, but if you need to hire an expert to make sure you get that relief, is it really a fair system?

The Tax Industry and the Cost of Taxes

There are currently 190,000 members of the Chartered Professional Accountants of Canada, and many accountants deal mostly with tax returns (H&R Block boasts that they alone have over 10,000 accountants, and they only deal with tax returns). There are also many online and software options, some free and some not. My family paid $200 for an accountant to file our taxes this year. Every year I suggest filing for free using some software option, but I don’t feel confident enough in my knowledge of the tax  system to think that I could possibly do as good of a job as an accountant, and my wife agrees: she calls that $200 our annual marriage-saver. Taxes are stressful, and we’re able to pay for the peace of mind that comes with having a professional look after our taxes. But not everyone has $200 to spare, and the cost is actually much bigger than that.

Accountants are smart people, yet many of them spend most of their time helping us deal with an unnecessarily complicated system. Their time could be much better spent in ways that contribute to the economy, rather than helping the rest of us make sure the government isn’t taking too much of our money. Accounting is a very valuable service, but it doesn’t actually produce anything; it largely belongs in the same category as police, ambulance attendants, and disaster relief workers, the people we pay to help us escape from terrible things. The thing of it is, we invented taxes, and we have total control over how they work. They don’t need to be terrible things, and we don’t need to divert almost 200,000 Canadians away from more profitable work that would benefit our whole economy.

We also shouldn’t have to spend money to make sure we can keep our money. I’m pleased to see that the government notices that not everyone can afford an accountant, and that they support a volunteer program to help, but they’re also going to spend a million dollars ($1,000,000.00!) to support that program.

So, the government is spending tax money to help people pay less taxes because their own system is so complicated that people can’t handle it themselves and can’t afford to hire an expert do it for them. It doesn’t get much more convoluted or inefficient than that, but it doesn’t have to be this way.

Simplifying the Tax System

The Conservative approach to taxes is to simply cut the tax rate for corporations (a simple move), while giving individuals and families many small tax deductions full of conditions that make it hard even for Senators to understand.

The Green Party’s approach to taxes is to tax things that are bad: things that hurt our health and environment, things that cost us all money in the long run. We recognize that while most of us don’t understand the complicated income tax system, we all understand the cigarette tax: smokers raise healthcare costs, so we make cigarettes more expensive to recoup those costs. We want to review the entire tax system, phasing out the complicated income tax system and replacing it (over time) with taxes that target harmful things like pollution that drives healthcare costs, market speculation that destabilizes our economy, and other things. Taxes that are designed so that we can control the amount we pay based on the type of things, and the volume of things, that we consume.

So while I’m pleased that the government is trying to help people get their tax returns, and that they’re trying to make income tax less of a burden for families, I think they’re using hundreds of tiny bandaids to hold together a broken system, and it’s getting to a point where it’s hurting more than it helps. Let’s fix it instead.

Your candidate,

Jeff Wheeldon

Jeff Wheeldon

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2 thoughts on “Ted Talks: The Cost of a Complicated Tax System

  1. You make some very good points here, Jeff, about the complexity of the system.

    Something that was pointed out about Winnipeg’s recent civic election is that the more affluent areas of the city had over 80% voter turnout while turnout in some of Winnipeg’s most desperate neighborhoods ran below 20%. The observation has been made that many people in those low-turnout areas simply didn’t know they could vote, didn’t know where to vote, and didn’t know how to vote. Education, literacy, and even the paradox of not knowing that they even have the right to find out, keep people from the polls.

    Voting, at least in my experience, is a pretty simple thing. Far less complicated than our tax system.

    So what happens to people who suffer from literacy and education challenges? Who don’t even know they can get assistance for their taxes? Who don’t even know they are entitled to free help?

    There is much that the Conservatives do that seem to be very generous but they are often aimed, by design or by accident, at already affluent people.

    I don’t think that’s a good recipe for a sustainable and just society.

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    1. That’s a good point, but I think it’s fairly universal. Something I’ve discovered when trying to raise political awareness, host events, or circulate petitions is that it’s very difficult to even get people to listen for a few minutes, much less learn enough about a system to contribute to it or get the most of it. In that sense, I applaud this initiative for at least providing the help that people need; I hope the people who need it will use it, but I can’t fault them if they have trouble getting the word out.

      I’ve found that many people simply shut down when faced with the word “politics.” Highly intelligent and opinionated people who know me well often have nothing to say about political issues, and even those who have plenty to say about social issues will often refuse to sign a petition because they don’t feel qualified, or don’t want to involve themselves in politics. The most common responses I’ve seen from people when I approach them about political issues are insecurity, revulsion, and apathy. We tend to think that apathy is the biggest problem, but I’m not convinced that it is. People have genuine aversions to politics, even when it comes to simple methods of engagement. I think that this is a form of disenfranchisement, but I don’t have a solution for it. You can lead a horse to water, but you can’t make it drink, right? How do we offer people help engaging with the system if they don’t trust it, don’t want it, or don’t feel they have a right to it?

      Like

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