Raising taxes on the wealthy

[maple leaf]

Well, you are free to believe whatever you choose to. After all, I didn't expect you to change your mind simply because the "proof" you've posted was shown to be complete baloney. Same goes for Nabsy - his "rich people get rich by buying toilet paper for their house on company account" theory still gives me giggles. After all, "the rich people steal from us and us working stiffs pay for everything" is the oldest rhetoric of them all, and some people live their entire lives surrounded with these myths. I just like to point out baloney to people, not change their minds.

I wasn't really claiming that as" proof" of anything, was just asking you as you seem to be claiming to know better.Asking if you were sure it worked that way for a soul proprietorship.So far I only have your word for it,which does not prove it to be baloney,just someones opinion. .Not being a tax expert I won't argue with you over it,but will try to find out for myself for sure.If your right good on you.Don't worry it will take more than just some guy's opinion on castanet to change my mind ,but having said that I am not afraid to change my mind or view on something,if it make sense.

[Urbane]

Well, you are free to believe whatever you choose to. After all, I didn't expect you to change your mind simply because the "proof" you've posted was shown to be complete baloney. Same goes for Nabsy - his "rich people get rich by buying toilet paper for their house on company account" theory still gives me giggles. After all, "the rich people steal from us and us working stiffs pay for everything" is the oldest rhetoric of them all, and some people live their entire lives surrounded with these myths. I just like to point out baloney to people, not change their minds.

So true. In Canada the top 20 per cent received 46.8 per cent of total income but paid 54.4 per cent of the total tax bill in 2011. Canada is already near the top of the list of OEDC countries in terms of taxing the wealthy but it's never enough for some people.

[Homeownertoo]

try reposting without personal attacks - Jennylives

[Homeownertoo]

Yup, and it is that ambiguity loophole that the tax avoidance snakes, be they Canadian or Foreign, continually crawl through, ...and the government does nothing (or at least very little of any consequence) to plug. In fact, on some days I actually think they condone it. And (IMO) treaties are meaningless, particularly if they involve the USA.

Nab

Actually, CRA does a pretty good job of monitoring, and frequently stopping, use of loopholes. Here's a test you can do. Next time you see some 'tax seminar' advertised promising some way to make piles of money on some investment scheme, attend it and pay very close attention to what they have to say about the scheme's tax status. Then check with CRA. Chances are it hasn't received their approval, probably won't, and the promised tax benefits will never materialize. I've seen lots of these things where, in the end, the only ones making money are the promoters.

And opinions don't carry much water when not based on fact.

[Homeownertoo]

Nope, I just know for a fact that taxes paid as employee and taxes paid as business owner are completely separate. The business expenses this fella claimed (legitimate and illegitimate) would only go as far as his business revenue - $3,000. It would not in any way affect his taxes he paid as employee of Walmart. Ask any accountant, they'll tell you the same thing. So he wouldn't get the big refund the guy writes about, and he wouldn't be able to claim most of those expenses - CRA would laugh at him for claiming a motorhome as business expense. I own a small business myself, and write off things myself. My wife is an accountant and fills out year end taxes for individuals and businesses, just in case I confirmed it with her. The guy who wrote the story is full of baloney.

Please don't blindly trust things you hear from people. There are legitimate write offs and deductions - and writing off a portion of your living expenses against your business income is quite legitimate. But what the fella described in the story you've posted is a fantasy.

I just read the offending piece. It was good for a laugh since, as you obviously know, if this guy is doing what he claims (doubtful), he's breaking the law and it's just a matter of time till CRA discovers him. But these kinds of fables do explain why so many people believe there's gotta be a way all these rich people have cheated their way to the top.

[Homeownertoo]

The story claimed "the business is in both their names" - which would be an incorporated company.

And incorporation involves costs and tax requirements that would make it absurdly expensive for such a small operation to work. Which is why most small businesses start out as sole proprietorships.

edit to add: it could be a partnership

[Homeownertoo]

"So true. In Canada the top 20 per cent received 46.8 per cent of total income but paid 54.4 per cent of the total tax bill in 2011. Canada is already near the top of the list of OEDC countries in terms of taxing the wealthy but it's never enough for some people.

According to the CD Howe Institute, in Ontario, “The top 1% of earners shoulder more than one-quarter of all income taxes, while the bottom 75% shoulder about 12%.” And, according to the same source, the top 10% pay two-thirds of all net income taxes. I can't vouch for the numbers myself, but they accord with what I have heard elsewhere and indicate "the rich" pay considerably more than the numbers you have.

I realize this doesn't accord with the fable, widely propagated on this forum, that the rich pay no taxes due to abundant use of all those loopholes most of us don't know about. But someone has to be right. Nab and Maple Leaf, or the CD Howe Institute. I wonder which it could be?

[steven lloyd]

After all, "the rich people steal from us and us working stiffs pay for everything" is the oldest rhetoric of them all, and some people live their entire lives surrounded with these myths.

A bit off topic, but this very much reminds of the erroneous myths people use to form opinion about working in unions or the public sector, despite the fact that aside from isolated incidents or overheard rhetoric they have no actual experience of it.

[twobits]

Although over the last while governments have been working on closing some loopholes,such as changing rules applied to off shore banking.But there are still legal ways for people to reduce their taxes to bare min.or even to zero as this article shows how the wealthy do it,or anyone for that matter.there are other ways to legally avoid paying taxes ( loopholes) as well. http://www.youtube.com/watch?v=TQ3lzpKq0Is

This article you posted is total malarky. It all sounds great but the reality is CRA would be all over those folks like flies on chit. They might get away with it for a year or two but with dubious deductions such as claimed, and the amounts, CRA scanning software would eventually flag them for an audit. What you are failing to understand is differentiating the source of income, expenses related to earning that income, and the reasonable expectation of profit. The prosposed senario just does not pass the smell test.
There can be some advantages to owning a sideline business but they are no where near what is presented. You can write off a small home office and utilities in a true proportion, perhaps even some of your personal car.......things like that. But don't get greedy, claim only legitimate expenses, and have an honest expectation of reasonable profit.....even if it is just break even after say three years. Get greedy and CRA will make the last 6 years of your receipts a miserable experience.

[maple leaf]

But don't get greedy, claim only legitimate expenses, and have an honest expectation of reasonable profit.....even if it is just break even after say three years. Get greedy and CRA will make the last 6 years of your receipts a miserable experience.

Exactly,like I said earlier, do I think this is right? and my answer was IMO no.Weather you people want to accept that this kind of thing is taking place or not ,it is.And there are those people who get creative and will be greedy.No one likes to pay tax and people will always try to get away with paying the least as possible.It is taking place on a lower income scale and you can bet your bottom dollar it is taking place in the millionaire crowd and billionaire crowd as well, probably to a greater scale as they can afford the tax experts and lawyers to be creative to where they pay little to no tax.

So raising taxes on the rich ,wealthy I agree will not work,but,what needs to happen on every level is for government to be examining all tax deductions and (loopholes) and closing what is not in the best interest of the whole. Which they are to a certain degree,but needs to go further. And I think the CRA should be even tougher on those folks who take advantage.

From Urbans original article that he posted.
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. That’s why jurisdictions that once levied draconian levels of taxation — at one time Britain’s marginal rate could reach 98% — eventually reduced them, finding they just didn’t work.

[twobits]

Exactly,like I said earlier, do I think this is right? and my answer was IMO no.Weather you people want to accept that this kind of thing is taking place or not ,it is.And there are those people who get creative and will be greedy.No one likes to pay tax and people will always try to get away with paying the least as possible.It is taking place on a lower income scale and you can bet your bottom dollar it is taking place in the millionaire crowd and billionaire crowd as well, probably to a greater scale as they can afford the tax experts and lawyers to be creative to where they pay little to no tax.

So raising taxes on the rich ,wealthy I agree will not work,but,what needs to happen on every level is for government to be examining all tax deductions and (loopholes) and closing what is not in the best interest of the whole. Which they are to a certain degree,but needs to go further. And I think the CRA should be even tougher on those folks who take advantage.

From Urbans original article that he posted.
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. That’s why jurisdictions that once levied draconian levels of taxation — at one time Britain’s marginal rate could reach 98% — eventually reduced them, finding they just didn’t work.

You are not getting it. What you are proposing to eliminate as being loopholes are legitimate and neccessary expense deductions for the purpose of conducting legitimate business. If you tried to eliminate input expense deductions from business one of two things would happen. All businesses would cease to operate because it would be impossible to operate with a profit or they would leave the country. There is not a business in the country that could operate, not even a koolaid stand, if taxes were imposed on gross income without input deductions.

In the article you posted, what the husband and wife were utilizing were not loopholes. What they were doing is trying to abuse legitimate expense deductions and that is illegal. That is were the author was completely wrong in suggesting everything was legimate and CRA would happily let them carry on their merry way. Not a hope in hell and they would be caught, repay all back taxes owing plus a penalty, and possibly even face criminal charges. I can assure you that any accountant with even the most basic certification, and presumably morals, would never recommend a client submit a tax return as suggested.

Now having said all that, I would have to add that our tax code could use a review, specifically with regard to some tax deductions and tax credits that are of dubious benefit. Some things that tend to get under my skin are any portion of meals or entertainment being expensed or lavish things like corporate jets unless a business case can be made that so much travel is done that it is cheaper than flying commercially.

[The Green Barbarian]

Now having said all that, I would have to add that our tax code could use a review, specifically with regard to some tax deductions and tax credits that are of dubious benefit. Some things that tend to get under my skin are any portion of meals or entertainment being expensed or lavish things like corporate jets unless a business case can be made that so much travel is done that it is cheaper than flying commercially.

having been through several CRA corporate audits myself, I can assure you that the auditors do look at all of these expenses, and question almost all of them. If you can't support the expenses as reasonable in the course of business, they get denied.

[twobits]

having been through several CRA corporate audits myself, I can assure you that the auditors do look at all of these expenses, and question almost all of them. If you can't support the expenses as reasonable in the course of business, they get denied.

Yes I know this and precisely the point I was trying to make to Maple Leaf but at the same time, there are some grey areas and a lot of it also comes down to what CRA auditor one gets too. Rather than a determination of whether a lunch or hockey tickets where used as legitimate business tools to earn revenue.....some yes......some no.......just say no to all meals and tickets regardless of who was there and what was discussed. The exception of course would be living out allownace. As an accountant, I am sure you can list some available tax credits and legitimate deductions that are of questionable merrit.