Alberta economy & donations

Alberta is leading the nation in donations. Which speaks well of people but screams volumes on the state of our infrastructure/social support.

Favorite topic of corporate supporters is how much those (frequently oil and gas) corporations donate which is somehow a good thing. Yet that doesn’t add up since those same entities dodge taxes and pay low royalties for extracting resources that belong to the people of this province.

Lets dissect the math here. First off, lets shrink population of this province down to 10 people and number of corporations down to 1 to simplify matters.

So, lets assume that 10 people pay $100 in taxes each while corporation pays $10000 in taxes. So far so good – things are simple enough. we get $10100 taxes collected that go to common pool from which services for public are being financed (healthcare, education, infrastructure, police, etc).

Now lets see what happens when corporation donates $1000 to some charity of their choosing. From their donation they get a tax break of around 30% which is $300. What does it mean? It means that while 10 people contributed $1000 in taxes hoping to finance services they wanted, they end up sponsoring $300 of corporate donation. Which means two things:
* total tax pool is now $9800 instead of $10100
* tax dollars have been directed into areas individual tax payers did not choose or voted on.

So what we see that corporate donation just did exactly what free market advocates are arguing against: corporation selected winners and losers in public service.  I.e. the economic process just subverted democratic process.

Now is time to dive deeper: now lets cut corporate taxes and leave everything the same: now our corporate taxes are only half of precious levels and total pool of available tax money is $50100  now with corporate donation even larger percentage of tax money is being diverted towards corporate-defined goals and *not* towards the people’s goals.

Now is the time to re-paint the picture in full: we have more than 1 corporation donation and thus redirecting public funds towards their pick of charities thus starving core services.

Now we have a background for Alberta painted: starved social support network which leads to… more donations! So this re-inforces the cycle of depletion of public funds. Because government doesn’t have enough money for it’s basic functions.

Now let’s re-evaluate situation with corporate donations. If there were no tax breaks *for corporate donations* public would be the one deciding where money is going to either via taxes or donations, while corporations would be free to donate wherever they please without tax exemptions. And with full corp taxation we would have enough money to support core services.

With all that in mind it is good to define the role of taxes and donations: taxes are there to support our common infrastructure and services we *all* rely on. Charity is about supporting causes we have personal biases towards *today* and not necessarily in the future. There is an argument to be made that if enough of us feel strongly about certain causes it should become a core service and be supported as a government program permanently rather that charity du jour.

NY Times seems to have come to similar conclusions:

…except they didn’t follow through the entire logic of it.

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