Taxing the Market Citizen: Fiscal Policy and Inequality in an Age of Privatization

Abstract

LISA PHILIPPS [*] I INTRODUCTION A new emphasis on privatization is rippling through many fields of state policy in various countries. The restructuring of tax policy to foster a more privatized social and economic order is often overlooked as an example of this pattern. Focusing on Canada, this article argues that recent efforts to revise important facets of the income tax system are best understood through the lens of privatization. That is, Canadian tax policy increasingly discourages people from relying upon government programs or services to meet their basic welfare needs, but encourages them to rely instead upon private resources obtained through the market, or, if necessary, from family or charity. I argue that by promoting personal responsibility in this manner, the tax code is contributing to an erosion of the ideal of social citizenship and replacing it with a new model of market citizenship. While the reforms may offer immediate fiscal benefits to some, the overall effect will heighten social inequalities, with specific effects o n gender inequality. Part II of the article expands on the concepts of privatization and market citizenship and considers their broad implications for social equality. Though privatization is often associated with deregulation and the withdrawal of the state, I suggest that it is better seen as a new regulatory project in which the state's role has merely shifted away from redistribution toward the legitimization and enforcement of market outcomes. Fiscal reform is a key element of this project, not only because of its role in allocating and distributing resources, but also because of its normative power. Changes to the tax law are actively reconstituting the ideal subject of politics around a norm of market citizenship. I compare the concept of social citizenship associated with the welfare state to the new market citizenship of neoliberalism, in terms of their respective understandings of inequality and of gender relations. Just as feminists have exposed the gendered nature of social citizenship, they are beginning to discern how the gender order is being reconstituted within market citizenship. Drawing on this literature, I explain why the privatization of tax policies may exacerbate gendered inequalities. The last two decades offer many examples of reforming Canadian tax law to encourage sell-reliance. These reforms include greater tax incentives to save privately for retirement [1] and post-secondary education, [2] or to donate personal wealth to charities, which increasingly are assuming responsibility for social services. [3] The tax system also has been used to convert formerly universal transfers such as the family allowance into means-tested programs that attempt to create incentives for wage earning. [4] Part III of the article focuses on two current tax policy debates in Canada: the trend toward personal income tax cuts and the campaign for tax recognition of unpaid caregiving work. I argue that each of these developments demonstrates how tax policy is being deployed to promote the norms and practices of market citizenship. My case studies parallel the two private sectors that are meant to supply most of the resources for personal self-reliance: the market and the family. I analyze both areas of tax policy change in terms of their effect on gendered patterns of social inequality, including their likely impact on the distribution of income and on women in their capacities as market actors, unpaid caregivers, and welfare state clients. Together they illuminate the contradictory pressures placed on women to increase their market incomes while simultaneously absorbing more unpaid caregiving responsibilities in the family household. These initiatives demonstrate how tax policy is redistributing the costs of cari ng for people away from those who fare best in the market--including some women--to those who fare poorly. II FROM SOCIAL CITIZENS TO MARKET CITIZENS: PRIVATIZATION AND TAX POLICY The central theme of this article is that recent tax reforms in Canada are promoting private responsibility for human welfare, signaling a shift away from the solidaristic ideals of social citizenship toward a more individualistic model of market citizenship. …