Income Inequality

This is undoubtedly an important political issue. It drives the voting pattern a large number of people. It is also a tricky issue because the economy is dependent upon the free enterprise system and its ability to reward top performance. It has built incredible wealth and has raised the living standards of the entire nation to what would have previously been unimaginable. But the system is susceptible to excesses, some of which are difficult to handle. Recessions, depressions and financial disasters such as that of 2008 are examples of potential excesses. Increasing income inequality even though general incomes and wealth has also increased is enough of an irritant to enough people that it demands a democratic consideration. How does Creative Humanism look at the issue of income inequality?

First, the free enterprise system is the right system. It maximizes the freedom of humanity. Individuals have the ability to find their own way, build the life they want and feel the direct causal consequences (be they rewards or pain) of the decisions. It is a human based economy and it fits with the human based philosophy of Creative Humanism.

The question is twofold: what do the people want the role to be of the institutions that they are permitting to exist and what is the responsibility of individuals to society?

First, the role of the government is to help the people in the creation of their wealth and happiness both collectively and individually. Free enterprise helps. The government must nurture and support free initiative in business, in the arts, in scientific research and in social service organizations. Setting up Calgary as the hub for private financing (equity and debt) to finance these endeavours is a great step.

The government must also reduce red tape and even the playing field against foreign competition. It must help create and support successful people. It must allow the ones that are successful the ability to enjoy the results of their endeavours. It must also be there to support those who tried but that do not achieve that goal. More generous bankruptcy laws, constraints on personal guarantees and leading the nation to a more constructive attitude on failure can open up the opportunity to seek one’s own success for many more.

This responsibility that we are placing on government transcends every walk of like, business, arts, social services, bureaucracy and any other walk of life and is in favour of every living citizen. This position has some interesting implications on actions.

First, the government must charge income tax on global income and on all citizens including those that are not resident in the country. The government is responsible to them regardless of place of residency. Second, a wealth tax punishes success and the government instructions are to encourage success. Therefore, a wealth tax is contrary to the basic philosophy. However, a succession tax and a tax on relinquishing citizenship are logical. The government is directly to nurture and incentivize success. Taxing intergenerational wealth transfer does not impinge initiative; it merely reduces the head-start the 2nd generation might have. Facilitating that is not the job of the government. The same is true for someone that relinquishes citizenship. The government will no longer have responsibilities to that person so it should be treated as such.

People are also responsible to each other. There needs to be a sense of moderation. While the American system is based on unbridled individualism, Canada has always tempered that with a sense of responsibility to the community and fellow citizens. With is a character that Creative Humanism seeks to amplify. One of the ways of amplifying that responsibility is to communicate the path chosen by the individuals to the consuming public. The means to do this is the ESG tax which is proposed to replace the GST tax.

The ESG tax is a variable sales tax based on the environmental, social and governance performance of the making of the product or creation of the service. A company that allows extreme income inequity between the workers and the top of the organization would have a negative mark against it on the ESG performance. This would increase the tax rate on the product that it produces. More importantly, the system would inform the consumer about the inequity. Presumably, if the public is concerned about this issue it would pressure on the company. This would allow Canadian consumers to use their purchasing power on all products, both domestic and foreign made.

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