An Ecology of Taxpayers

In Canada and other western nations, government provides allot of services to its citizens. All of this is funded by taxpayers. The biggest problem is that governments and its agencies spend the taxpayers’ money in ways that ends up creating further obligations on the taxpayer. The Canadian Taxpayers Association tirelessly works to make government more accountable and while they can be too ideological and short sighted in their criticism of all taxes, I do agree with their general view that governments are bigger than they should be.

Taxpayers are the source for all government income yet not all taxpayers are created equal and like any ecological system, some species are more critical than others. I see there being four different kinds of taxpayers, each distinguished by their importance to the healthy functioning of the tax and government systems.

• Essential Taxpayers – Individuals and corporations that work in private industry. In addition to consumption taxes, they also pay high personal income taxes. These guys are the main funders of the tax system and without them no system is sustainable.
• Productivity Taxpayers – Individuals and corporations that work in the private industry but do not earn much money or profit. Instead their productivity in the private sector allows their employer/vendor to make more money and thus pay taxes. A sole proprietorship that is not profitable and pays no taxes remains an asset since the money they spend in running their business generates money for the Essential Taxpayer and thus increased taxes for government.
• Deficit Taxpayers – Those who work for government or one its multitudes of agencies (schools, hospitals, etc) whose taxes just partially pays for their own salaries and benefits and are really deficit contributors. The taxes they pay do not come close to paying for their own employment and end up costing the other taxpayers. Of benefit to society is that their spending does stabilize the economy and helps strengthen the Essential Taxpayer.
• Minimal Taxpayers – Those who do not work at all. They contribute through their consumption taxes and spending. Fine to have as long as they are contribute to society in some other beneficial way such as proper rearing of children, volunteering, etc.
• Tax Spenders – Governments and their various incarnations (Federal, Provincial, Municipal, Crown Corporation, Special Operating Agencies, etc) including any non-profit and for-profit corporations that they commission. This is the taker and user of all tax money that is collected. Governments that are too big, inefficient, and corrupt will end up collapsing the ecology.