Morley's Rejoinder

February 1984

Since Morley Evans left Vancouver for the brisk climes of Saskatchewan, he has not been idle in promoting the ideals of liberty. On December 21, the Regina Leader-Post published Morley's analysis of an article on taxation by Professor Robert McLaren that had appeared previously. We're sure you'll find it as interesting as we did.

Morley has also written two articles for The Women's Guide, an article on abortion published in December and one on the threat of nuclear war in January. These may be reprinted in future issues of West Coast Libertarian.

A 'fair' tax, they claim; but is a property tax fair at all?

By Robert I. Mclaren

Mclaren is a professor of administration at the University of Regina.

Reassessment is not only in the air in our daily conversations, as it has been for several months; reassessment is now in our mailboxes, too.

Not just in Regina, but throughout the province of Saskatchewan, the value of property is being reassessed so as to correlate the figures with more current values and to create equity throughout. Municipalities will then base their mill rates on these new, reassessed values and collect the bulk of the revenues they need in order to provide local services and facilities.

Yet the concept is now well over a hundred years old. It was created in a different country where the composition of the populace, landowners and tenants had little in common with today's demographics. Does the property tax any longer correlate with the wealth of the community members?

For example, in the pamphlet circulated by the City of Regina to allay the fears of citizens concerning reassessment, the following statements were made: "None of us would expect someone who owns a small two-bedroom bungalow on a modest-sized lot to pay the same taxes as someone who owns a large, five-bedroom home with three fireplaces on a huge lot. That wouldn't be fair."

Why would it not be fair? Or to phrase it differently, if it is possible that it would be very fair for those two people to pay the same taxes, are we doing an injustice when we do not tax in that way?

That is, there is an assumption in the above example that the size of the house and lot reflects the wealth of the property owner. We then require the owner of the more ostentatious property to pay a higher tax, as if that correlates with his or her wealth.

To return to the example in the City of Regina pamphlet, let us assume that the two properties are side by side, the two families are identical in composition (a man, a woman and two school-age children) and the total family income of each household is identical at $50,000. One owner chooses to travel each year with the family to various parts of the world and uses the family income for that; the second owner does not like to travel, but prefers to aggrandize the property and uses the annual income for that. Is it really fair for the second owner to pay a far higher property tax each year? After all, as far as the local economy is concerned, the first household has spent a great portion of its annual income elsewhere; it is the owner of the large property who has kept money in the local economy.

Should the municipal assessment each year be based on the value of the property -- land and buildings -- or the actual wealth of the people?

It should be noted that the owner with the large property does not get more services and facilities to compensate for the higher tax bill. The City of Regina pamphlet notes some of the benefits received from paying taxes -- schools, police and fire protection, a library system, parks, swimming pools, golf courses, public health. None of these are necessarily used more by owners of large properties than by owners of smaller properties.

There may well be an argument that people who live farther from the city centre use the streets more or require a disproportionate increase in the costs of police and fire protection. However, there would be many exceptions to that and, anyway, no one has suggested that the reassessment reflects one's position on a series of concentric circles. It is merely assumed that "fairness" is proportional to property size.

A hundred years or so ago, perhaps it could be said that wealth and/or the use of local services and facilities could be correlated with property size. After all, only property owners were given votes then on money bylaws as they were the only ones considered to have a stake in the community. Tenants were transients or ne'er-do-wells, people who did not use the schools or libraries and did not need paved streets upon which to travel by foot.

Today's world is vastly different, at least for those of us lucky enough to live in Saskatchewan. The value of land and buildings is today only a very crude indicator of wealth and ability to pay. And the value of land and buildings certainly does not correlate with our use of local services and facilities.

Saskatchewan has spent a great deal of money in the last few years reassessing its property, at least its land and buildings. It might well have spent less money, and got better value for it, if it had first reassessed the whole concept of property tax.

Article ignores justice, reader says

By Morley Leonard Evans

Robert I. McLaren's December 14 article, A 'fair' tax, they claim; but is a property tax fair at all, caught my eye. Was this article really by someone who had examined the fundamentals of this issue?

I was further encouraged as McLaren (a Regina professor of administration) continued, "Everyone seems to take for granted that there should be such a thing as a property tax; the one thing that is not being reassessed is the very concept of a property tax." Wow!

But my excitement was short-lived as I read, in his next paragraph: "Does the property tax any longer correlate with the wealth of the community members (emphasis mine)?" I realized that what was to follow would rest, not on some new approach, but instead on the tried and true ethic of "ability to pay", a sacred ideal of nearly everyone.

Prof. McLaren's article contains two contradictions: he equates apples and oranges by saying that fairness and justice are the same thing, and combines the mutually antagonistic concepts of "ability to pay" and "user-pay" to support his argument. He seems to conclude that a reassessment, using this mess, will somehow lead to an equitable solution.

First, fairness and justice are not the same thing.

Fairness is subjective (like beauty and ugliness). It is the arbitrary opinion of every individual, based on the values he has chosen, determined from his unique experience of the world. It cannot be absolutely defined. Fairness and justice may sometimes represent the same thing, but only by coincidence.

Justice is an objective concept which may be universally applied to all people, in all situations, at all times, to resolve disputes between antagonists and provide a framework for interpersonal transactions. Justice involves the application of the following processes: a definition of ownership, determination of any violation of ownership, and award of restitution. "Justice" is often personified wearing a blindfold, indicating that justice will be done, regardless of anyone's opinion of fairness. Justice, today, is on the endangered species list.

Second, ability to pay an user-pay are mutually antagonistic and cannot be combined. Prof. McLaren can't determine how much tax we will pay by using formulas that give different answers. He must choose one.

He asserts that, on one hand, property tax does not represent an equitable payment because it is not an accurate measure of a person's wealth. This assumes that the method used to determine how much someone will pay rests on how much wealth he has: on his ability to pay. On the other hand, he asserts that because "schools, police and fire protection, a library system, parks, swimming pools, golf courses and public health" are not "necessarily used more by owners of smaller properties," owners of large properties should not necessarily have to pay more.

But this is not consistent with this first assertion. It is an argument for user-pay.

The "ability to pay" concept rests on the assumption that "thems what ain't got can grab from thems what do". Justice has no part in this whatever. Property ownership need not even be defined to implement this policy (except to say that to have any is a crime.) The modus operandi of this system is coercion and violence.

The user-pay concept (generally considered to be "evil" today) rests on the idea that a person can exchange something that he has for something that he would rather have. It rests on the sanctity of property ownership (beginning with the individual's ownership of himself); and on justice. By definition, such exchanges are voluntary, and not coerced or violent. The intricate, interrelated matrix of such exchanges is the much-hated and derided "market". In passing, it is interesting to note that whenever people begin trying to make taxation "equitable", they invariably attempt to imitate (by force) what would otherwise occur spontaneously (in the market).

Prof. McLaren has accurately included all of the elemental concepts necessary to analyse the question of property taxation and equity. His analysis, however, is fatally flawed. "Fairness" is not justice. The violence of the coercive "taxation" system cannot be combined with the non-violence of the market to support his position, and so I offer my own analysis:

If we want to solve such questions as, "How can we make the payment for such things as schools, police and fire protection, a library system, etc., equitable," our course is clear. We must recognize the concept of "ability to pay" for what it is: the ethic of envy and theft, and a prescription for social chaos and conflict. It is an ethic that rests on the fundamental proposition that whichever group can muster the most force can do what it wishes, and take whatever it wants, from whoever is left. Its inevitable consequence is to lead to what Hobbes called a "war against all." You don't need to look all the way to Lebanon to see what happens when justice is thrown out the window and people decide to settle things in the only other way. Look at the local news. "Ability to pay" substitutes for the voluntary, peaceful exchanges of the market, the ethics of the thief and killer. It is not some fair and moral ideal. It is an abomination.

M.L. Evans is a Regina freelance writer.