Raising taxes on the wealthy

[erinmore3775]

Here are a couple of quick references related to flat income tax schemes for Canadians.

http://www.canada.com/topics/news/polit ... a63&k=6820

http://www.fraserinstitute.org/WorkArea ... px?id=2116

http://oldfraser.lexi.net/publications/ ... on_03.html

As you can see that idea has been around for a long time. Opposition is related to two fronts. The first is that the "poor" would be adversely affected, however the suggestion of a gross low income cutoff point would solve that criticism. The second major opposition comes from those who would lose their deductions for RSP's, dividends, business expenses, etc. Also there was huge opposition from corporations, who would lose exemptions and deductions.

It is interesting to note, that one of the chief supporters of the plan was the Fraser Institute.
I believe that one of the reasons that the flat tax idea was never pursued was that it would require the government to become more accountable and transparent. Taxes on taxes could not exist.

[The Green Barbarian]

thanks for that Erin - good reading.

[maple leaf]

So you are jealous that your co worker's furnace didn't blow up like yours did and he got to put money into a tax deferred account for retirement and you didn't? My god, it is irrational thoughts like this that scare the hell out of me because there appears to be more and more of you with this level of economic understanding being born every day.
What about the third co worker that instead of a new furnace, chose to spend 3k on a Mexican Holiday. Should he too demand that the guy that saved be denied? Just be honest, you could care less about fair taxation and are only jealous of people that have accumlated more than you even if it's because your furnace blew up and theirs didn't.

Just a hypothetical example for discussion sake.Not jealous of anyone,but you are missing the point.Why do people think that they are entitled to pay less tax than others?( you would probably say because they are better stewards of their money and rewarded for that)Well I'm challenging that sense of entitlement that the government should reward you in that manner.A lot of people won't like it because they pay very little to bare minimum in tax under such a system.I'm putting out there, If everyone paid what was due,everyone on level playing field, most everyone would probably be further ahead and would in the long run end up paying less in tax and have better services than they do now.Whatever each individual ends up gaining he can choose to save that or squander it,do whatever you want.Why should the government be expected to reward .
Just trying to have a discussion here,there is no need for insults .

[The Green Barbarian]

Just a hypothetical example for discussion sake.Not jealous of anyone,but you are missing the point.Why do people think that they are entitled to pay less tax than others?( you would probably say because they are better stewards of their money and rewarded for that)Well I'm challenging that sense of entitlement that the government should reward you in that manner.A lot of people won't like it because they pay very little to bare minimum in tax under such a system.I'm putting out there, If everyone paid what was due,everyone on level playing field, most everyone would probably be further ahead and would in the long run end up paying less in tax and have better services than they do now.Whatever each individual ends up gaining he can choose to save that or squander it,do whatever you want.Why should the government be expected to reward .
Just trying to have a discussion here,there is no need for insults .

so - you want to abolish RRSP's? Seriously? You want to trust the government to take care of everybody? That's just not going to happen. It's not entitlement, it's the government admitting that they can't take care of everyone, and saying "here's you only hope of having a decent retirement, so take it". It's called reality.

[NAB]

I don't understand why the focus suddenly becomes RRSP's in some folks minds. That's just peanuts in relation to the bigger picture of providing so many other methods of taxation avoidance to the "wealthy".

Perhaps just a way to divert attention from the topic at hand and threaten the 'little guy' with loss of a small way to encourage saving at least some pittance of their pre retirement income for their retirement.... if they don't back off looking at the variety of means the wealthy and the corporations have to minimize or defer their annual tax contribution?

Nab

[The Green Barbarian]

I don't understand why the focus suddenly becomes RRSP's in some folks minds. That's just peanuts in relation to the bigger picture of providing so many other methods of taxation avoidance to the "wealthy".

Perhaps just a way to divert attention from the topic at hand and threaten the 'little guy' with loss of a small way to encourage saving at least some pittance of their pre retirement income for their retirement.... if they don't back off looking at the variety of means the wealthy and the corporations have to minimize or defer their annual tax contribution?

Nab

like what Nab? Rather than speak in general Nabian terms, please tell us how "the wealthy" have all of these means that others don't, to avoid paying or defer their taxes. We are all ears.

[NAB]

With your often professed high level of understanding of taxation, accounting, business, and economics in general GB, (and frequent accusations that the great unwashed masses know diddly squat about any of it) ....I would have thought you would be one of the last people such things would have to be explained in detail to.

Nab

[The Green Barbarian]

With your often professed high level of understanding of taxation, accounting, business, and economics in general GB, (and frequent accusations that the great unwashed masses know diddly squat about any of it) ....I would have thought you would be one of the last people such things would have to be explained in detail to.

Nab

Translation: I don't know of any and am just helping to perpetuate the myth that "the wealthy" get all the tax breaks in Canada at the expense of the little guy." So sad. You are correct, I do have a high level of understanding, which is why every time some brain-washed product of our pathetic educational system stumbles out of their union/NDP meeting crying about "fair shares" and about "tax breaks" I just shake my head and swallow my sadness that I have to share this great country with such uneducated types who won't even take a few minutes to learn even the basic concepts behind the policies they are pontificating (wrongly) about.

[NAB]

Translation: Deflect, and divert the discussion to something less threatening ;-).

Nab

[normaM]

you guys are on a roll this morning.

[maple leaf]

so - you want to abolish RRSP's? Seriously? You want to trust the government to take care of everybody? That's just not going to happen. It's not entitlement, it's the government admitting that they can't take care of everyone, and saying "here's you only hope of having a decent retirement, so take it". It's called reality.

I don't understand why the focus suddenly becomes RRSP's in some folks minds.

Nab, It started with a simple suggestion that I made .What if we got rid of all deduction,(legal and I'll add illegal).To me if everyone paid the same with no deductions.If people think about it, how much extra money would the government be pulling in.It would be a great significant amount more than they take in today.Then they could lower the amount of tax everyone pays,and my feeling is it could be lowered overall to give the majority of people less tax to pay,less,than they pay now .People can still buy mutual funds or gold or what ever they want to save for retirement,if that is the biggest concern with this idea. Really it would be a flat tax on everyone.Everyone is equal.

[Urbane]

Nab, It started with a simple suggestion that I made .What if we got rid of all deduction,(legal and I'll add illegal).To me if everyone paid the same with no deductions.If people think about it, how much extra money would the government be pulling in.It would be a great significant amount more than they take in today.Then they could lower the amount of tax everyone pays,and my feeling is it could be lowered overall to give the majority of people less tax to pay,less,than they pay now .People can still buy mutual funds or gold or what ever they want to save for retirement,if that is the biggest concern with this idea. Really it would be a flat tax on everyone.Everyone is equal.

While I think the idea of a flat tax is worth looking at it's not going to be enacted anytime soon and probably not within the lifetime of most of us (if ever). And can you imagine the uproar if low income people currently not paying income tax were forced to pay it? Mind you, voters in BC recently voted to kill the HST which is forcing a return to the PST and along with it some bad news for low income people and reinstated tax breaks for the wealthy (e.g. tax exemption for yacht moorage and country club fees as well as dining out which wealthy people presumably do more of than poor people). But the real question is: Do higher taxes on the wealthy bring in more revenue? The answer is no. And for those interested in fairness higher taxes on the wealthy don't pass the test.

[NAB]

You may wish to review erinmore's post at the top of page 3 Urbane.

But I agree that a flat tax, particularly of the type I envision that captures ALL gross income from Canadian sources by whomever wherever and establishes a low income cut off from paying income tax much higher than it currently is at both the federal and provincial levels, is not something we will probably see in our lifetimes, at least as it will affect you and me at our points in life (although our kids and grandkids may well see it as the "free enterprise" system and globalization as we currently know it in North America collapses under its own dead weight). And while the relevance of the HST/PST seems misplaced and off topic here, that old script with respect to it being bad news for low income people, or even any guarantee that the wealthy will continue to escape some tax on their country club membership and yacht club moorage isn't a fer sure either so it doesn't wash any more anyway. The government can "fix" those little issues in the blink of an eye, and most likely will within the next year or two.

As for "Do higher taxes on the wealthy bring in more revenue?" Of course it can if some of the dodges from tax got "fixed" as well. It's not a matter of can it or does it, for it can and will. The more appropriate question IMO is, "for how long?"

Nab

[maple leaf]

[list]
While I think the idea of a flat tax is worth looking at it's not going to be enacted anytime soon and probably not within the lifetime of most of us (if ever). And can you imagine the uproar if low income people currently not paying income tax were forced to pay it? Mind you, voters in BC recently voted to kill the HST which is forcing a return to the PST and along with it some bad news for low income people and reinstated tax breaks for the wealthy (e.g. tax exemption for yacht moorage and country club fees as well as dining out which wealthy people presumably do more of than poor people). But the real question is: Do higher taxes on the wealthy bring in more revenue? The answer is no. And for those interested in fairness higher taxes on the wealthy don't pass the test.

Yes the articles posted above are very good and here is a link to further explore the Hall Rabushka's thoughts .

http://home.uchicago.edu/~cbm4/brhallrab.html

I do agree that the idea of a flat tax won't be anytime soon,and my idea of getting rid of all the deductions isn't the answer,although like Nab says there are some that could be tweaked and some (loopholes) closed .And do think that there might be a better way of taxing us in a more fair way,using the Flat tax as a bases of developing something. But it will take some open minded people with some sense of vision and a desire to come up with that better way.And I agree that taxing the wealthy, will not bring in more revenue.


Snip fron urbans original post:

The simple notion that rich people should pay more sells well, if you assume the government can simply raise the rates and happy millionaires will fork over the cash. But that’s generally not what happens: there are plenty of legal and wholly ethical ways to reduce the share of income that’s exposed to tax, and the higher the rate, the greater the motive there is to do so

I think the government needs to do a study(I know another study) but to find out just what tax deduction go to far ,giving unfair advantage to some in allowing some to pay not their fair share compared to everyone else.And don't try to tell me that doesn't happen.Weather legal or illegal.It needs to be gone over with a fine tooth comb and adjusted were it needs to be.

And how about that all done with no insults,by either party.

[Captain Awesome]

This is pretty much the 10% plan that was floated recently by the GOP candidate (godfather's pizza owner). It gained some attraction there too initially as it sounded attractive. Once people actually started to crunch the numbers though, it was totally debunked and would not raise even close to what was required.

Are you talking about Herman Cain?

His idea was a bit more complex - he was running with 9-9-9 tax system - 9% on all income, 9% on all corporate income, and 9 sales tax. Even then it was calculated it wouldn't raise enough money - and it includes tax on consumption, rather high one.

Yet Nab wants to tell us that 10% flat tax (with no other taxes of any kind) would guarantee prosperity and free pretzels for everybody - like I said, nothing but a pipe dream.