The Tax System Is Not Complicated by Accident
Canada’s federal tax code runs to thousands of pages. It contains dozens of credits, scores of deductions, multiple brackets, and enough fine print to guarantee that almost no Canadian can tell you, from memory, what percentage of their income actually goes to Ottawa. This is presented as an unavoidable feature of a modern economy. Working Paper WP057, The Single Rate, makes a direct and documented case that it is nothing of the kind.
The paper tests a specific alternative: a single federal tax rate applied only to income above a living-wage exemption set at approximately $42,000, with all deductions and credits removed. The modelling shows this structure can match current federal revenue, exempt every Canadian earning below a living wage from federal income tax entirely, and replace thirteen overlapping tax layers with one number that any citizen can read, remember, and scrutinize.
The implications run deeper than administrative convenience. The current system’s complexity is not incidental — it is functional. Hidden tax layers allow governments to raise effective rates without announcing them. Credits and deductions allow political favour to flow to preferred industries and behaviours without appearing in a budget line. Every complication added to the tax code is a complication subtracted from democratic accountability. When citizens cannot see what they pay, they cannot evaluate whether what they receive is worth it.
WP057 also addresses the corporate side. Under the single-rate framework, companies would be taxed on profit rather than sales — a change that eliminates the competitive distortions embedded business tax preferences create and puts the honest measure of economic activity back at the centre of fiscal policy. The paper is explicit that this is not a revenue-cutting exercise. It is a visibility exercise. The rate is set to match what Ottawa currently collects. The difference is that every Canadian would know exactly what that rate is.
Modern Mutualism’s broader argument is that fiscal opacity is a governance problem before it is an economic one. A citizen who cannot read their own tax system cannot hold their government accountable for how that system is run. The Single Rate is not a complete fiscal platform — it is a transparency argument with numbers behind it. The full workings are in WD-057. Read it, share it, and the next time a politician tells you the tax system is simply too complex to simplify, ask them who that complexity is actually serving.