The tax expenditure concept misapplied

Vincent J. Curtis

17 Dec 2013

 

Brian Hinkley is a former city councillor for my hometown.  He was, and likely still is, a member of the New Democratic Party, a party of the left.  Yesterday, he had published a letter in my hometown newspaper which began by decrying government waste.  Included in the "waste" were so-called "tax expenditures" by which taxes were "deferred" on churches.  Hinkley argued that waste would end in that quarter if churches were taxed, especially those churches which were politically active against abortion and gay marriage.  One wonders whom he meant.

 

Below is an unpublished reply.

 

Brian Hinkley answers his own question.  He began with a list of examples of money being squandered by government.  Well, therein lies the answer.

If you give government more money, they simply have more to squander.

As a former politician, Mr. Hinkley was taught to look upon money as belonging to the government first.  Anything not taxed was considered to be a “tax expenditure”.  A "tax expenditure" is merely an accounting convention which easily lends itself to Mr. Hinkley's unwarranted moral conclusion.

 

Something which a government accountant thinks could be taxed and is not, is regarded by him as a "tax expenditure."   Since church properties are not taxed, that non-tax is considered a "tax expenditure" of the government by the political class.  Any money the government could take but does not is susceptible to becoming money the government should take and presently does not by the tax grubbers of the political class.

Mr. Hinkley thinks churches should be taxed and are not, consequently, this “tax expenditure” is money being graciously given by the government to churches.  By Mr. Hinkley’s reasoning government is subsidizing churches.  A direct subsidy or a deferral of taxes are equivalent things in the “tax expenditure” view.  Mr. Hinkley concludes that government is subsidizing religions. 

Taxpayers are not subsidizing religions (disregarding the difference between religion and churches).  Taxpayers are paying the government to run its operations.  A church going taxpayer gives money to his church to run its operations and fund its services.  From the taxpayer’s perspective, his church provides him certain necessary services just as government does, those services simply being different in kind.  Unlike government, his church takes only voluntary contributions since it does not have the coercive force of temporal law behind it.

From the church-going taxpayer’s perspective, taxing his church is simply another way by which government taxes him.  Turning Mr. Hinkley’s question around, why should church going taxpayers pay more in taxes than non-church goers?  Why should government take advantage of one taxpayer’s concern and charity towards his church, and exempt the non-church goer.  Perhaps non-church going should be taxed just to keep things equal!

Taxpayers, whether church going or not, need to be wary of the political philosophy which, in the face of wasted tax dollars, concludes that more tax dollars needs to be collected.
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