Unlike the traditional, minuscule pre-election tax cuts of the past, this offers a prospect of real tax relief. How much tax relief? 

That depends on how much politicians prune government. The current crop of them is content merely to trim at the edges of the welfare state. This limits the possible tax relief. Premier Mike Harris in Ontario has promised to reduce provincial personal income taxes by 20%. (I know, I know: a politician’s promise. But we can think about the number.) 

In the spirit of a back-of-the-envelope calculation, we can put that 20% in context. Provincial income tax is about a third of total income tax, so the overall income tax reduction would be about 7%. Income tax is only one of many taxes, so the reduction of overall taxes would be correspondingly shrunken, say about 4%. 

So the impressive 20% cut dwindles to maybe 4%. This is a wonderful start, and won Harris the reputation of a radical pruner of government, but the tax relief it offers really isn’t very much in the whole scheme of things. 

Let’s estimate the ultimate possibilities of tax relief. In the spirit of a back-of-the-envelope calculation, let’s compare the burden of today’s government to the burden of a really small government. 

Governments today take about half of everything produced in the country. Tax freedom day—the day calculated by experts at the Fraser Institute as the day each year when you stop working for the government, and start working for yourself—is well on into June. 

Just how much money does it take to run a government? 

For the welfare state, there is a simple answer: more! Though we suffer from the highest taxes in our history, governments notoriously outspend their vast revenues. 

What about a non-welfare state? Where to find one? It turns out there are US Department of labor figures ^1. which show total government spending in the US in 1900 was 7.3% of GNP. 

On the reasonable assumption that a third even of that comparatively low figure was waste and meddling, it should be possible to run a minimal government for 5% of GNP. 

Compare 5% to today’s 50%, and note the potential for a 90% reduction in the cost of government! The average taxpayer would go from having the use of 50% of his income to 95% of it. That is close enough to a doubling of income that the difference hardly matters. 

Minimize government and double your income! Put tax freedom day back to about January 18th! 

But wouldn’t this mean doing without “government services?” It would. You’d have to learn how to write cheques to private medical insurers or doctors. You’d have to budget for your kids’ education, and learn to pick and choose among private schools. You’d have to start saving for your retirement, instead of hoping for a government pension. You’d have to decide for yourself which charity cases deserve your support. 

But you’d have twice today’s income! You could manage it!. 

Besides, a rule of thumb says that everything done by government costs about twice what it would cost if handled privately. So you’d have to get used to paying less for these services than you now do through taxes. You could get used to it! 

You’d have to learn to get along without paying an army of bureaucrats to meddle in your business. You’d have to somehow survive without the CBC, the National Film Board, tax-funded obscene art shows and tax funded “culture” in general. I’ll bet you could manage that! 

Meanwhile, that demobilized army of bureaucrats would find real work, and begin producing things of real value. Total production would increase, and along with it, the value of your earnings. 

What about the longer term? Would this just be a party with a bad hangover? Nope. Economic progress would accelerate, generating ever-rising levels of prosperity. 

There is a myth floating about that “older,” or “mature” economies necessarily have slower economic "growth" than “young” or “emerging” countries. But what the evidence actually shows is that low taxes and rapid economic progress go together. 

Countries which have been too poor to afford high taxes and welfare state programs progress rapidly once they begin to modernize. Until, that is, they raise taxes and begin to indulge in government on a grand scale. Then their economies bog down. 

That was the history of Europe and North America. If our burden of government were trimmed back to 5% of GDP, our progress would blow the doors off that of the “emerging” economies—to our great benefit, and to the benefit of the whole wide world! 

The explanation is simple. The main limit to economic progress is the scarcity of capital available to finance new methods and enterprises. Capital comes from savings. When taxes are lower, men can save more. So low taxes equal rapid economic progress. 

This is nothing new, really. Why haven’t you heard it before? Chiefly because it is a clarion call to seek your own interests, and most people are uncomfortable with that. 

Don’t you be. According to a moral tradition going back (at least) to Aristotle, self-interest is the motive of morality itself. Why be moral? For your own good! Self-interest is something to be proud of! 

When can we expect tax relief on this scale? In terms of pre-conditions, when enough people have seen and accepted the idea of the 5% solution; ^2. when reform-spirited politicians shake off their timidity, and press for big reforms; and when the mess of debt left by the welfare state has been cleaned up. 

In terms of years, sooner than you probably think. In case you haven’t noticed, there’s a wave of reform sweeping North America, symbolized by Alberta’s Klein, Ontario’s Harris, and the US’ Gingrich. “Less government” is already a political slogan. 

Reform accelerates, bewildering those who don’t understand it. Ten years ago, the Soviet Union looked permanent: it’s been gone for nearly five years! 

The 5% solution is a goal which is meaningful to every taxpayer! 

^1. Presented by Doug Casey in Crisis Investing, Pocket Books, 1979. 
^2. So show it to them! Copy this article and spread it around! 

You needn’t despair at outrageous taxes—you can become a Quackgrass activist! Copy this article! Keep the original for future copies. Paper meetings with it! Paper your office! Leave a stack on your business counter! If you expect hostility, use stealth and cunning—it’ll drive your opponents wild! Be ingenious! Have fun! 

Michael Miller is an engineer and Objectivist philosopher with thirty years of experience. He had been a member of Boycott Alberta Medicare in 1969 and of the Association to Defend Property Rights from 1973 on. He writes in-depth philosophical theory at his publication, Quackgrass Press, which can be accessed at http://www.quackgrass.com.

This TRA feature has been edited in accordance with TRA's Statement of Policy.

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