The taxman cometh
I got asked to a special birthday party on Wednesday, Sept. 20. It was for an honoree who turned 100, but whose anniversary we rarely think to celebrate with cake-and-candle fanfare, even though said honoree is known to us all.
I’m referring to Canadian income tax. (And if I had to serve myself up before one of the two proverbial “certainties” in life, better it than the alternative.)
Tax lawyer John Loukidelis extended the invitation to the lunch, put on by the Hamilton Law Association, with kindly no expectation I’d write about it, but how could I not?
After all, income tax is arguably the driveshaft of Canadian destiny, transmitting the force of our collective means to the ongoing agency of being who we are. It could be considered our central story, at least over the last century.
Every Canadian has a relationship with income tax. We are vassals to it, sitting down each April, ritually, le sacres du printemps, afloat in a confetti of receipts and forensic accounting documents trying, by sleight of deduction, to unmake in the eyes of an auditor as much as possible of the money we actually did make in the course of the year.
If nothing else, the 1917 Income War Tax Act was the fuse of a great ongoing drama.
Deal-brokering, breach of promise, raging controversy (persisting to this day) and an incredible snowballing that transformed the tax from a slender wartime makeshift to an enormous permanent institution, embedded in our very way of life.
The act gave us income tax — first time federally. As the name suggests, in it came. But, despite being sold as temporary, out it never went.
At the birthday party on Wednesday, there was a copy of the original act. It’s only 11 pages long. Not lively reading, I’ll tell you. The sentence defining what “income” is runs about 400 words long.
They also had a copy of the Income Tax Act Annotated, 2017, 61st Edition. It must be 1,100 pages long. It probably weighs 11 pounds. The contrast says a lot.
The idea for the “celebration” came from Loukidelis, of Loukidelis Professional Corporation, and his tax lawyer colleague Craig Burley, under sponsorship of the HLA’s Memory Book Committee.
“Even now some tax policy specialists advocate for the complete replacement of income tax,” says Loukidelis, “and argue that a tax at the source of expenditure is more equitable.”
At the party, Burley gave a short income tax history; Britain had it a 100 years before we did; and America 50 years before, having instituted it for its Civil War.
It was tied to the conscription issue, a volatile one during the First World War, not just because of the French-English thing.
Organized labour and the working class felt they were bearing an undue burden, finding themselves leaned upon to provide bodies both for war and the war economy.
They wanted a “conscription on wealth,” says Burley. Hence, income tax, a sweetener to help labour swallow the Conscription Act, but not before much “strident debate.”
In its original form it was basically a tax on the wealthy, says Burley; everyone who made under $1,500 a year was exempt — which was most people. Even those who were taxed, were taxed at only four per cent. (Can you imagine?)
It was supposed to expire at war’s end, but it proved irresistibly popular to governments as a source of revenue. And, as Burley says: “You only have to leash a dog once.”
So they never did revoke it. There was always an excuse or a need not to.
And here we are, ahead by a century, behind by all we’ve paid to Revenue Canada over that time. But, face it, we would’ve just blown the money anyway.
So I celebrated, with 60 lawyers. There was a beautiful cake. And delicious Thai food, which I don’t think they had at the original signing.
I hope they left a quarter of the cake aside — for the government of Canada. Only fitting. Many happy returns. Groan.