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A proposition: equality in taxes.






Like the proposition?
No! Never!
0%
 0%  [ 0 ]
No! You're a racist!
0%
 0%  [ 0 ]
It could be done much better in other ways.
0%
 0%  [ 0 ]
Yes! It would mean my taxes go down!
0%
 0%  [ 0 ]
Yes. That's the right way to do it.
100%
 100%  [ 8 ]
Proposition? What proposition?
0%
 0%  [ 0 ]
Total Votes : 8

ocalhoun
Lets start with the basic premise: All men are created equal.
Now, lets apply that to taxation.

I would like to ask, why are they not taxed equally? By that, I mean an equal percentage, not an absolutely equal amount. (Taking an equal dollar amount from each person would be extremely disadvantageous to the poor.)

Suppose this tax level would have to be, say, 25% in order to fund the government we're used to.
If you made $10 Million per year, you would pay $2.5 Million in taxes. If you made $10,000 per year, you'd pay $2,500.

This seems perfectly fair to me, the rich still pay much more, while the poor still pay much less. And actually, it still benefits the poor more, because while the poor receive the same or even better benefits from the government, they have to pay less to get those benefits.

Simplicity would also be important. Putting in tax breaks to encourage different things is good, but it also gives more room for tax cheats to play with. A simple 25%, no questions asked means that discrepancies will be easy to see. (And easy to prosecute.)

Is 25% too high? I suspect that would be a low estimate. Perhaps it will motivate the average voter to be concerned about lowering spending and taxes, which is the only thing that can stop runaway fraud, waste, and abuse of government (our) money.
Xanatos
I like to stick to the less government means less taxes for all idea, but I agree with a flat tax. In my opinion, when it comes to government simpler is always better. For Everyone.
ocalhoun
Xanatos wrote:
I like to stick to the less government means less taxes for all idea, but I agree with a flat tax. In my opinion, when it comes to government simpler is always better. For Everyone.

I was thinking that hopefully a flat-rate tax could lead to less government and less taxes.
lagoon
At the moment, the fact that you guys dont pay a penny of tax over $125,000 is a travesty. As a socialist, I can only condemn such a system.
Moonspider
lagoon wrote:
At the moment, the fact that you guys dont pay a penny of tax over $125,000 is a travesty. As a socialist, I can only condemn such a system.


I assume that you are speaking of Social Security taxes. The cap is there not as some capitalistic nod to the wealthy. It's there to limit the social security benefit that the wealthy receive after they retire.

Respectfully,
M
Xanatos
lagoon wrote:
At the moment, the fact that you guys dont pay a penny of tax over $125,000 is a travesty. As a socialist, I can only condemn such a system.


As a libertarian I can only condemn socialism. Way way way way too much government involvement with socialism.
LumberJack
How about get rid of income taxes all together? I would rather just pay consumption taxes Smile
fx-trading-education
Some countries have a flat tax system.
I have lived in one (I also lived in 2 other countries that have a progressive taxation system). The idea is to make simpler and to encourage entrepreneurship (of course the later doesn't work so well as people will rather put the extra money in their pocket rather than distribute it)

In my opinion the results I saw were not so great. If the general situation is ok, it is not a problem but for instance now the ountries I know with this system simply don't have money anymore and they are in a quite bad situation.
Also I think that all the richest countries of the world don't have a flat tax system and I don't think it is by chance.

I would be interested to know the opinion of other people who have really experienced this system in their life and are not only discussing theory about it.
deanhills
I have not paid taxes in a while. I am a resident of Canada, and if you live abroad when you are not earning taxable income in Canada, then you don't have to pay taxes. Where I am we are charged sizable sums for services rendered, i.e. visas, identity cards, car licenses, etc. I like that system of course where Government only charges for services. Everything is almost double, i.e. water and electricity, etc etc, but you don't pay taxes on top of those.

The tax system in Canada is a simple one. As far as I know they totally overhauled it somewhere in the nineties as it became much too complicated. It is a progressive one going from poor, to middle income and then wealthy in percentages of income earned. It does have some incentives for people with small businesses, but much less than what it used to be. Probably one of these days they will have to simplify it again as they seem to always need to make changes to it to make politicians look good, or to get more money.

Taxation is a bit like day-light robbery. It has become an institution of sorts. I wonder if all the countries with heavy Government should just start from scratch in Year0, do we really need all of this Government machinery? Where I am there is very little Government, sort of seems to work well.
LostOverThere
I definitely agree with a Graduated Tax rate. To me a fixed tax rate is just ridiculous, and simply encourages the rich to get richer and the poor to get poorer. Why we all aren't taxed equal is a mystery to me.

Unfortunately, most governments don't seem to believe all men are created equal.
deanhills
LostOverThere wrote:
Unfortunately, most governments don't seem to believe all men are created equal.
Think most of society is like that. Some of the citizens are always more equal than others.
Moonspider
LostOverThere wrote:
I definitely agree with a Graduated Tax rate. To me a fixed tax rate is just ridiculous, and simply encourages the rich to get richer and the poor to get poorer. Why we all aren't taxed equal is a mystery to me.

Unfortunately, most governments don't seem to believe all men are created equal.


I am a little confused. You said that you agree with a graduated tax rate but then ask, "Why we all aren't taxed equal is a mystery to me." Those seem to be in conflict to me, since a graduated tax is by it's nature, unequal.

By the way, don't you want to encourage the rich to get richer?

Respectfully,
M
LostOverThere
Moonspider wrote:
LostOverThere wrote:
I definitely agree with a Graduated Tax rate. To me a fixed tax rate is just ridiculous, and simply encourages the rich to get richer and the poor to get poorer. Why we all aren't taxed equal is a mystery to me.

Unfortunately, most governments don't seem to believe all men are created equal.


I am a little confused. You said that you agree with a graduated tax rate but then ask, "Why we all aren't taxed equal is a mystery to me." Those seem to be in conflict to me, since a graduated tax is by it's nature, unequal.

By the way, don't you want to encourage the rich to get richer?

Respectfully,
M

Sorry I got quite mixed up there as you can see. In no way would I want the rich to get richer. When I referred to graduated tax I more meant an equal percentile where the tax level increases the larger the persons income.
Voodoocat
The tax code desperately needs to be simplified and a flat tax should do that. People that support a graduated tax don't seem to realize what Ocalhoun stated: even with a flat tax, the higher your income, the more taxes you pay. Mix that with the basic idea that all people are equal, and a flat tax just makes sense.

Having stated that, I also like the idea of a consumption tax. Once again, the higer income earners buy more, and will pay more. I also like the idea of having the tax in your face: when you pay an extra dollar for you hamburger you will be sure to thank the government! Maybe then we will stop paying for tattoo removal for gang members. And if we ever get swindled into universal health care, everyone, rich or poor, will see exactly how much they pay for their "free" health care.
Moonspider
LostOverThere wrote:
Moonspider wrote:
LostOverThere wrote:
I definitely agree with a Graduated Tax rate. To me a fixed tax rate is just ridiculous, and simply encourages the rich to get richer and the poor to get poorer. Why we all aren't taxed equal is a mystery to me.

Unfortunately, most governments don't seem to believe all men are created equal.


I am a little confused. You said that you agree with a graduated tax rate but then ask, "Why we all aren't taxed equal is a mystery to me." Those seem to be in conflict to me, since a graduated tax is by it's nature, unequal.

By the way, don't you want to encourage the rich to get richer?

Respectfully,
M

Sorry I got quite mixed up there as you can see. In no way would I want the rich to get richer. When I referred to graduated tax I more meant an equal percentile where the tax level increases the larger the persons income.


Yes an equal percentile is exactly the flat tax to which ocalhoun referred. Currently in the United States, there are tax brackets. So the more money you make, the larger the percentage that goes to federal taxes. I received a payraise once which looked nice but netted me very little in take home pay because it moved me into a higher tax bracket. Uncle Sam received the raise, not me!

As for the rich getting richer, I always want the rich to get richer and the poor to get richer, and the middle class to get richer. If the rich aren't getting richer, I can guarantee you that the poor and middle class are not doing so either.

Respectfully,
M
deanhills
Moonspider wrote:
As for the rich getting richer, I always want the rich to get richer and the poor to get richer, and the middle class to get richer. If the rich aren't getting richer, I can guarantee you that the poor and middle class are not doing so either.

Respectfully,
M


Interesting point of view. Then how would one explain the huge gap between rich and poor in countries like India, Brazil, Argentina, South Africa, and we are talking about a serious gap here. In these countries when the rich become richer, that does not necessarily mean the poor will become richer. Perhaps for the poor to get richer when the rich get richer it has to be an open and democratic capitalist system? In a socialist or autocratic system it will be up to the benevolence of the rich whether the poor will get richer when the rich get richer?
Xanatos
deanhills wrote:
Interesting point of view. Then how would one explain the huge gap between rich and poor in countries like India, Brazil, Argentina, South Africa, and we are talking about a serious gap here. In these countries when the rich become richer, that does not necessarily mean the poor will become richer. Perhaps for the poor to get richer when the rich get richer it has to be an open and democratic capitalist system? In a socialist or autocratic system it will be up to the benevolence of the rich whether the poor will get richer when the rich get richer?


This is true, however if the rich get poorer, chances are that the poor are not getting richer. I think that this is the point that Moonspider was making.
lagoon
Money must be generated from somewhere, and if the rich are losing wealth, the market usually is as well.
Moonspider
Xanatos wrote:
This is true, however if the rich get poorer, chances are that the poor are not getting richer. I think that this is the point that Moonspider was making.


Yes, my point exactly.

M
Bikerman
Quote:
Money must be generated from somewhere, and if the rich are losing wealth, the market usually is as well.

I really don't see the logic for this. Trickle-down economics has been the main dogma of Republican and Tory party economic policy for decades. Thatcher was a great believer in it. The theory is that as the rich get richer some of the wealth trickles down to the poor and everyone is happy. Doesn't really work like that. You need some sort of redistributive measures in order to push-up the wealth of the poorer members of society. Most countries do this via the taxation system by having higher tax rates for higher earners. This is, in part, a recognition that remuneration is often deeply unfair. Those in positions of power often decide for themselves how much they will earn and how much they will pay to others. Take, for example, the case of CEOs of large nationals and multinationals. Their pay is decided by 'remuneration committees', which consist of executives from other nationals and multinationals. In other words they form little committees which operate on the 'you scratch my back and I'll scratch yours' principle. This effectively sets-up a rigged market.
Now, they support this in public by constantly repeating the mantra that 'you have to pay high wages to attract the best'. It would be funny were it not so dishonest. First they rig the market and then they appeal to it.
(Notice that this argument is NEVER used for anyone at a 'lower' level. The argument for the less well paid is turned around and becomes 'there are plenty of other people who could fill the role'. The notion of 'attracting the best' simply disappears from the argument.)
handfleisch
Bikerman wrote:
Quote:
Money must be generated from somewhere, and if the rich are losing wealth, the market usually is as well.

I really don't see the logic for this. Trickle-down economics has been the main dogma of Republican and Tory party economic policy for decades. Thatcher was a great believer in it. The theory is that as the rich get richer some of the wealth trickles down to the poor and everyone is happy. Doesn't really work like that. You need some sort of redistributive measures in order to push-up the wealth of the poorer members of society. Most countries do this via the taxation system by having higher tax rates for higher earners. This is, in part, a recognition that remuneration is often deeply unfair. Those in positions of power often decide for themselves how much they will earn and how much they will pay to others. Take, for example, the case of CEOs of large nationals and multinationals. Their pay is decided by 'remuneration committees', which consist of executives from other nationals and multinationals. In other words they form little committees which operate on the 'you scratch my back and I'll scratch yours' principle. This effectively sets-up a rigged market.
Now, they support this in public by constantly repeating the mantra that 'you have to pay high wages to attract the best'. It would be funny were it not so dishonest. First they rig the market and then they appeal to it.
(Notice that this argument is NEVER used for anyone at a 'lower' level. The argument for the less well paid is turned around and becomes 'there are plenty of other people who could fill the role'. The notion of 'attracting the best' simply disappears from the argument.)


Thanks for the concise summary. Yes, "trickle down" (AKA "voodoo ecomomics" as Bush1 called it before serving it) for both Reagan/Bush1 and Bush2 led only to huge deficits and worse income disparity.

Some good info about the CEO caste can be found in the book "The Unconscous Civilization" by John Ralston Saul. Among the things he posits is that the whole managerial system of the CEO is just a private bureaucracy, existing at the upper levels only to rig their own privileged position, and are in fact the opposite of "capitalists" in that they don't take any risks, they just "manage" according to rules that are arbitrary, dogmatic or conveniently-changing (like your example of the "higher wages to attract the best" for CEOs, "plenty of others to work the lower wage jobs" for teachers, etc).
deanhills
handfleisch wrote:
Some good info about the CEO caste can be found in the book "The Unconscous Civilization" by John Ralston Saul. Among the things he posits is that the whole managerial system of the CEO is just a private bureaucracy, existing at the upper levels only to rig their own privileged position, and are in fact the opposite of "capitalists" in that they don't take any risks, they just "manage" according to rules that are arbitrary, dogmatic or conveniently-changing (like your example of the "higher wages to attract the best" for CEOs, "plenty of others to work the lower wage jobs" for teachers, etc).


Wow handfleisch, you have such a way with twisting things to suit whatever your latest wild theory is. Have you forgotten that the latest bail-out package that the Republican Party did not support and Obama got through in a nick of time (to the detriment of the US and the World) was exactly to keep CEO's in their jobs!!!!! What do you think the bail-outs were for? And how come CitiBank all of a sudden showed a handsome profit? I agree with your theory about CEOs being a private bureacracy, and of course they are also in cahoots with Government, especially at a time when they need bail-out packages. Forgotten the auto companies who got bailed out too? Who were the people who did the wheeling and dealing with Obama and his Government? CEOs!
ocalhoun
Bikerman wrote:
Quote:
Money must be generated from somewhere, and if the rich are losing wealth, the market usually is as well.

I really don't see the logic for this. Trickle-down economics has been the main dogma of Republican and Tory party economic policy for decades. Thatcher was a great believer in it. The theory is that as the rich get richer some of the wealth trickles down to the poor and everyone is happy. Doesn't really work like that. You need some sort of redistributive measures in order to push-up the wealth of the poorer members of society. Most countries do this via the taxation system by having higher tax rates for higher earners. This is, in part, a recognition that remuneration is often deeply unfair. Those in positions of power often decide for themselves how much they will earn and how much they will pay to others. Take, for example, the case of CEOs of large nationals and multinationals. Their pay is decided by 'remuneration committees', which consist of executives from other nationals and multinationals. In other words they form little committees which operate on the 'you scratch my back and I'll scratch yours' principle. This effectively sets-up a rigged market.
Now, they support this in public by constantly repeating the mantra that 'you have to pay high wages to attract the best'. It would be funny were it not so dishonest. First they rig the market and then they appeal to it.
(Notice that this argument is NEVER used for anyone at a 'lower' level. The argument for the less well paid is turned around and becomes 'there are plenty of other people who could fill the role'. The notion of 'attracting the best' simply disappears from the argument.)

I don't see why the separate issue of insanely high CEO pay should change the tax laws.
I don't care about wealth trickling down, and don't want taxes to be any lower for high earners. I want taxes to be an equal percentage for everyone. High earners are still penalized because 30% of 10,000,000 is a whole lot more than 30% of 10,000. You'll still have your beloved socialistic redistribution of wealth, but the taxes that pay for it would be fair.
Bikerman
Err...no I disagree.
30% of ten mil might indeed be substantially more than 30% of ten grand but then you need to consider what it costs to live. The person earning the 10 mil still pays the same amount of tax on the first ten grand as the person earning the 10 grand. The fact that he/she goes on to earn an obscene amount more than this is not, surely, because he/she is several thousand times a 'better' person, but simply because he/she relies on those of 'lesser' worth to generate that income for them. Nobody 'earns' several million dollars a year* - they get paid it because of the efforts of those who actually produce the goods or services that they trade.

*There are a few possible exceptions, such as musicians & sportsmen/women.
LumberJack
We have a flat tax in my province, the economy is still doing terrible. We still pay taxes. The government just takes it other ways...
deanhills
LumberJack wrote:
We have a flat tax in my province, the economy is still doing terrible. We still pay taxes. The government just takes it other ways...

I liked the way people in Vancouver, Canada work out how long they have to work before the money they earn are there's to keep, i.e. quite a number have to work for at least 5 months for Revenue Canada for the tax year, before they get to pay themselves I moved from a South Africa where people were suffering from post traumatic stress from terrorism and brutal crime, to Canada where people were suffering from anxiety about taxes, and even the daily labourer taking their taxes to an Accountant so as to make sure Revenue Canada does not get overpaid through ignorance. Two professions who are really making good money in Canada are accountants and lawyers. The taxation system has to be very beneficial to them. Laughing
ocalhoun
Bikerman wrote:
Err...no I disagree.
30% of ten mil might indeed be substantially more than 30% of ten grand but then you need to consider what it costs to live. The person earning the 10 mil still pays the same amount of tax on the first ten grand as the person earning the 10 grand.

Quite so. And I should think that it is quite fair that both should pay the same 30% of the first 10,000 they make. If they are equal, then they can both support the government equally, according to their means.
If 70% of minimum wage isn't enough to live on, then the minimum wage should be adjusted, not the taxes.
Quote:

The fact that he/she goes on to earn an obscene amount more than this is not, surely, because he/she is several thousand times a 'better' person, but simply because he/she relies on those of 'lesser' worth to generate that income for them. Nobody 'earns' several million dollars a year* - they get paid it because of the efforts of those who actually produce the goods or services that they trade.

*There are a few possible exceptions, such as musicians & sportsmen/women.

I'm not sure what this is supposed to mean...
Do you mean that exponentially more money should be taken from the rich because they didn't earn it?

Let me think up a fictitious example here, just to work with some real numbers:
Person A makes 10,000,000 per year. So, he pays 3,000,000 in taxes. Since he doesn't need help, he receives 1,000 in various benefits from the government. (From all kinds of sources, from roads to drive on to military protection.)
Person B makes 10,000 per year. So, he pays 3,000 in taxes. Since he does need help, he receives 5,000 in benefits from the government: social programs give him some help in addition to everything Person A gets.
Person C is jobless and for some reason or other can't possibly get a job. He gets only 1000 per year for doing some odd jobs now and then. So, he pays 300 in taxes. He relies almost entirely on government support to live, and gets 11,000 per year in benefits, including things like housing and food stamps.
In this example:
The rich man gets only 1,000 for the 3,000,000 he put in: a very poor return.
The working poor man gets 5,000 for the 3,000 he put in: not bad.
The very poor man gets 11,000 for the 300 he put in: a fabulously good deal.

So, with a system that give everyone equal benefits, and especially with a system that gives the poor more benefits, a flat tax rate still benefits the poor far more than the rich.
Bikerman
ocalhoun wrote:
The rich man gets only 1,000 for the 3,000,000 he put in: a very poor return.
The working poor man gets 5,000 for the 3,000 he put in: not bad.
The very poor man gets 11,000 for the 300 he put in: a fabulously good deal.

So, with a system that give everyone equal benefits, and especially with a system that gives the poor more benefits, a flat tax rate still benefits the poor far more than the rich.
LOL...that is some example. Now, let's get real.
In the UK the guy at the bottom would get Jobseekers Allowance - about £60 per week. I don't think that many people could actually live on that - I couldn't. For that benefit he will pay national insurance on every penny he earns throughout his lifetime.
When you add-up the benefit to the three examples in real life you find that
1) The rich guy doesn't pay anything like 30% because he has smart accountants, trust funds and off-shore accounts.
2) The reason he gets the 10 mil is because he is either exploiting his workers or he belongs to a corrupt self-serving system of remuneration.
3) The poor guy at the bottom is effectively homeless which means he doesn't even receive the normal services that the rich guy enjoys.
deanhills
Bikerman wrote:
ocalhoun wrote:
The rich man gets only 1,000 for the 3,000,000 he put in: a very poor return.
The working poor man gets 5,000 for the 3,000 he put in: not bad.
The very poor man gets 11,000 for the 300 he put in: a fabulously good deal.

So, with a system that give everyone equal benefits, and especially with a system that gives the poor more benefits, a flat tax rate still benefits the poor far more than the rich.
LOL...that is some example. Now, let's get real.
In the UK the guy at the bottom would get Jobseekers Allowance - about £60 per week. I don't think that many people could actually live on that - I couldn't. For that benefit he will pay national insurance on every penny he earns throughout his lifetime.
When you add-up the benefit to the three examples in real life you find that
1) The rich guy doesn't pay anything like 30% because he has smart accountants, trust funds and off-shore accounts.
2) The reason he gets the 10 mil is because he is either exploiting his workers or he belongs to a corrupt self-serving system of remuneration.
3) The poor guy at the bottom is effectively homeless which means he doesn't even receive the normal services that the rich guy enjoys.

I found both very entertaining. It looked like a Government presentation to the media of its annual budget ... creative, inventive! A game of numbers ... Laughing
ocalhoun
Bikerman wrote:

1) The rich guy doesn't pay anything like 30% because he has smart accountants, trust funds and off-shore accounts.

That's how an extremely simple tax code can help. The fewer tax laws there are, the fewer loopholes the super-rich's accountants can find.
Quote:

2) The reason he gets the 10 mil is because he is either exploiting his workers or he belongs to a corrupt self-serving system of remuneration.

Possibly, but A) That has nothing to do with taxes, and B) Those workers choose to work there, and given the current economy, most of them are glad they have a job. I certainly never felt exploited by any place I worked at, and if I did, I would leave and find a different job. (Wait... I did feel exploited once: one job would keep me working after being clocked out. What did I do? I quit and got a new job!)
Quote:

3) The poor guy at the bottom is effectively homeless which means he doesn't even receive the normal services that the rich guy enjoys.

Perhaps in the UK he is, but in the US it isn't uncommon for someone to live entirely on government assistance. Welfare and Social Security support many people, and many people also qualify for free government-supplied housing.
deanhills
ocalhoun wrote:
but in the US it isn't uncommon for someone to live entirely on government assistance. Welfare and Social Security support many people, and many people also qualify for free government-supplied housing.
How would the homeless and street people of the big cities fit into this category? You know, the ones that only have a trolley, and sleep in the streets and parks? I've always been fascinated by their spunk to survive on virtually nothing. I remember in Vancouver when one of them would enter the coffee shop, and of course there is no discrimination allowed and you have to treat all people equal, but with the aroma that accompanied them, the coffeeshop owners would do anything they could with coffee or treats to get rid of them. I sometimes wonder whether that will have to my retirement plan one day. Think I will choose Stanley Park Smile
Bikerman
ocalhoun wrote:
Bikerman wrote:

1) The rich guy doesn't pay anything like 30% because he has smart accountants, trust funds and off-shore accounts.

That's how an extremely simple tax code can help. The fewer tax laws there are, the fewer loopholes the super-rich's accountants can find.
Not really. What is so complex about saying you pay (say) 25% to a certain level, then 40% above that level? It is not rocket science. Those who wish to avoid paying tax will still do so by putting their money off-shore.
Quote:
Possibly, but A) That has nothing to do with taxes, and B) Those workers choose to work there, and given the current economy, most of them are glad they have a job. I certainly never felt exploited by any place I worked at, and if I did, I would leave and find a different job. (Wait... I did feel exploited once: one job would keep me working after being clocked out. What did I do? I quit and got a new job!)
It has a lot to do with taxes. Taxes are a means of redistribution of national wealth. The fact that a CEO is in a position to earn 10 mil is because the people that actually make the things that his company sells earn much less. This is not based on 'merit' but on a spurious notion of supply and demand. The assumption is that the CEO is a special person who could not be replaced, whereas the workers are easily replaced. That may be true in some limited examples (not many, I would say) but it leads to a system of wage slavery - as was acknowledged by libertarians like Thomas Paine and proto-capitalists like Adam Smith. Capitalism functions by keeping the vast majority of people 'replaceable' and deeming the elite 'irreplaceable'.
Quote:
Quote:
3) The poor guy at the bottom is effectively homeless which means he doesn't even receive the normal services that the rich guy enjoys.

Perhaps in the UK he is, but in the US it isn't uncommon for someone to live entirely on government assistance. Welfare and Social Security support many people, and many people also qualify for free government-supplied housing.
I think you will find that most of those benefits are actually for children, not for the adult concerned. Now, we could have a whole other debate about the morality and practicality of those without jobs having large families, but that takes us off on a tangent.
deanhills
Bikerman wrote:
Not really. What is so complex about saying you pay (say) 25% to a certain level, then 40% above that level? It is not rocket science. Those who wish to avoid paying tax will still do so by putting their money off-shore.
Think the Canadians have a very good formula, what do you think about it? And it IS easy to think about it as it is so very simple Smile :
http://www.cra-arc.gc.ca/tx/ndvdls/fq/txrts-eng.html

Quote:
15% on the first $38,832 of taxable income, +
22% on the next $38,832 of taxable income (on the portion of taxable income between $38,832 and $77,664), +
26% on the next $48,600 of taxable income (on the portion of taxable income between $77,664 and $126,264), +
29% of taxable income over $126,264.
Note
For 2009, the federal budget proposes to increase the upper taxable income thresholds of the 15% and 22% tax brackets. For more information about these proposed changes, see the questions and answers in CRA 2009 Budget News.


Only part that makes it a little complicated is that you also have to calculate Provincial Sales Tax at the end of your tax form. This is not complicated by much though, as it also works on a similar sliding scale as for the Federal tax (see Web page above).
ocalhoun
Bikerman wrote:
ocalhoun wrote:
Bikerman wrote:

1) The rich guy doesn't pay anything like 30% because he has smart accountants, trust funds and off-shore accounts.

That's how an extremely simple tax code can help. The fewer tax laws there are, the fewer loopholes the super-rich's accountants can find.
Not really. What is so complex about saying you pay (say) 25% to a certain level, then 40% above that level? It is not rocket science. Those who wish to avoid paying tax will still do so by putting their money off-shore.

True, as long as taxes are absurdly high, people will go to great lengths to avoid them. If they get high enough, they might drive the super-rich out of the country altogether.
If the money is both earned and stored off-shore, then I don't see what legitimate claim the government has to it.
If they are deliberately hiding it, then that problem should be solved by reforming the IRS, and having them investigate the worst offenders first. It should NOT be solved by raising the taxes only for the rich even more, which causes the ones who are being honest to be disproportionally hurt, while not affecting the dishonest ones as much.
Quote:

Quote:
Possibly, but A) That has nothing to do with taxes, and B) Those workers choose to work there, and given the current economy, most of them are glad they have a job. I certainly never felt exploited by any place I worked at, and if I did, I would leave and find a different job. (Wait... I did feel exploited once: one job would keep me working after being clocked out. What did I do? I quit and got a new job!)
It has a lot to do with taxes. Taxes are a means of redistribution of national wealth. The fact that a CEO is in a position to earn 10 mil is because the people that actually make the things that his company sells earn much less. This is not based on 'merit' but on a spurious notion of supply and demand. The assumption is that the CEO is a special person who could not be replaced, whereas the workers are easily replaced. That may be true in some limited examples (not many, I would say) but it leads to a system of wage slavery - as was acknowledged by libertarians like Thomas Paine and proto-capitalists like Adam Smith. Capitalism functions by keeping the vast majority of people 'replaceable' and deeming the elite 'irreplaceable'.

CEO's are a bad breed, to be sure. The truth is that everyone is replaceable. Their trick of convincing companies that they can't be replaced has worked far too well. The fact that these people are getting much more than they deserve is a problem, but I don't think that it is the government's problem. Even if it is the government's problem, it should probably be solved by wage cap legislation, not by using taxes to take it away from them.
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3) The poor guy at the bottom is effectively homeless which means he doesn't even receive the normal services that the rich guy enjoys.

Perhaps in the UK he is, but in the US it isn't uncommon for someone to live entirely on government assistance. Welfare and Social Security support many people, and many people also qualify for free government-supplied housing.
I think you will find that most of those benefits are actually for children, not for the adult concerned. Now, we could have a whole other debate about the morality and practicality of those without jobs having large families, but that takes us off on a tangent.

True; though I would still think that, on average, the poor get more from the government while paying much less for it.
I've stated my opinions about government charity on other threads, but I think it would suffice to say here that a flat percentage rate tax wouldn't change that situation much at all.
Bikerman
ocalhoun wrote:
Bikerman wrote:
ocalhoun wrote:
Bikerman wrote:

1) The rich guy doesn't pay anything like 30% because he has smart accountants, trust funds and off-shore accounts.

That's how an extremely simple tax code can help. The fewer tax laws there are, the fewer loopholes the super-rich's accountants can find.
Not really. What is so complex about saying you pay (say) 25% to a certain level, then 40% above that level? It is not rocket science. Those who wish to avoid paying tax will still do so by putting their money off-shore.

True, as long as taxes are absurdly high, people will go to great lengths to avoid them. If they get high enough, they might drive the super-rich out of the country altogether.
If the money is both earned and stored off-shore, then I don't see what legitimate claim the government has to it.
If they are deliberately hiding it, then that problem should be solved by reforming the IRS, and having them investigate the worst offenders first. It should NOT be solved by raising the taxes only for the rich even more, which causes the ones who are being honest to be disproportionally hurt, while not affecting the dishonest ones as much.
This argument about driving the super-rich out is getting old. It has been used by various Governments in the UK to justify decreasing the top rate of income tax for several decades. It was nonsense then and it is nonsense now. The people who decide to leave are often the ones already doing everything they can to avoid taxes - screw them! If people work off-shore and don't pay any UK taxes then why should they be entitled to the benefits of UK Citizenship (consular help, a passport, the right to UK benefits etc etc) ? Within the EEC it is not a problem, since there are reciprocal arrangements in place.

I don't know how many honest super-rich people there actually are....
deanhills
Bikerman wrote:
I don't know how many honest super-rich people there actually are....
Does that then mean that the super-poor are honest or just super-poor Smile
Xanatos
deanhills wrote:
Bikerman wrote:
I don't know how many honest super-rich people there actually are....
Does that then mean that the super-poor are honest or just super-poor Smile


Just super poor. There are plenty of dishonest poor people too. The point here is that typically to get super-rich you have to cheat other people out of money, lie, deceive, and find the loopholes in the system. Most people don't get to be worth hundreds of millions by being honest, hardworking people.
deanhills
Xanatos wrote:
deanhills wrote:
Bikerman wrote:
I don't know how many honest super-rich people there actually are....
Does that then mean that the super-poor are honest or just super-poor Smile


Just super poor. There are plenty of dishonest poor people too. The point here is that typically to get super-rich you have to cheat other people out of money, lie, deceive, and find the loopholes in the system. Most people don't get to be worth hundreds of millions by being honest, hardworking people.

Everyone lies! Poor and rich equally. I don't think it is dishonest to avoid taxes, nor to find loop-holes, as the Government pretty much does the same, and in effect Government is probably most dishonest of all. I believe we are living in a dishonest world where dog eats dog and the devil for the rest. Lies are not only lack of truth but also withholding the truth. What I do not say, can be a lie. I pretty much so far in my life have never met an honest man and woman. I have seen people who try to be honest, but how is it possible to be honest in the world we are living in? How many good people do we know whose opinions are asked directly and who would not give it if they felt they would "hurt someone's feelings", or "it is not the polite thing to do". Truth and Honesty are totally rare, and I have not seen them yet, I've seen shadows of them, but not the real McCoy ....... yet I hope ... Smile
ocalhoun
Bikerman wrote:
- screw them!

Well, that pretty much sums it up...
Screw them if they do business off-shore by taking away benefits, screw them if they do business at home by taking away more money.
They are people too, you know.
And what of the simply well-off, who fall into the higher tax brackets, but who actually did earn it? Screw them too?
Quote:

I don't know how many honest super-rich people there actually are....

Not many... as I pointed out, the system we have in place now discourages the super-rich from being honest with taxes. Perhaps they justify it to themselves by saying that they are making up for being unfairly singled out for higher taxes than everyone else... Or perhaps not. *shrug*
Bikerman
ocalhoun wrote:
Bikerman wrote:
- screw them!

Well, that pretty much sums it up...
Screw them if they do business off-shore by taking away benefits, screw them if they do business at home by taking away more money.
They are people too, you know.
Yes, they are privileged whining people who threaten to take their toys away because other people want to play. As I said - screw them. Just before Labour won the election we had several high earners threaten that if Labour won they would emigrate. A 40% top rate of tax is too low - and I speak as someone who has paid it. 60% would be perfectly reasonable and if the super-rich don't like it then they can move and I doubt very much that they would be missed (many of them already live in tax exile in Jersey, Monaco or other tax havens). Using the argument that a higher top rate might scare off the super-rich is an old worn-out argument.
deanhills
Bikerman wrote:
ocalhoun wrote:
Bikerman wrote:
- screw them!

Well, that pretty much sums it up...
Screw them if they do business off-shore by taking away benefits, screw them if they do business at home by taking away more money.
They are people too, you know.
Yes, they are privileged whining people who threaten to take their toys away because other people want to play. As I said - screw them. Just before Labour won the election we had several high earners threaten that if Labour won they would emigrate. A 40% top rate of tax is too low - and I speak as someone who has paid it. 60% would be perfectly reasonable and if the super-rich don't like it then they can move and I doubt very much that they would be missed (many of them already live in tax exile in Jersey, Monaco or other tax havens). Using the argument that a higher top rate might scare off the super-rich is an old worn-out argument.

Well, they would probably say "screw you too" Smile They will find ways to recoup their taxes, or leave the country, so probably nobody will be winners in this anyway. They are the top earners (when they have been responsible for their own wealth of course) because they are savvy. More savvy than the Government and us mere mortals. Think it is far better to count on them to get richer by creating tax incentives that will help them in their business and help society as well. Quid per pro deals such as donations to community programmes that are tax deductible (and that they obviously can use for promotion purposes too). Play the game along I pat your back, you pat my back lines.
handfleisch
Bikerman wrote:
ocalhoun wrote:
Bikerman wrote:
- screw them!

Well, that pretty much sums it up...
Screw them if they do business off-shore by taking away benefits, screw them if they do business at home by taking away more money.
They are people too, you know.
Yes, they are privileged whining people who threaten to take their toys away because other people want to play. As I said - screw them. Just before Labour won the election we had several high earners threaten that if Labour won they would emigrate. A 40% top rate of tax is too low - and I speak as someone who has paid it. 60% would be perfectly reasonable and if the super-rich don't like it then they can move and I doubt very much that they would be missed (many of them already live in tax exile in Jersey, Monaco or other tax havens). Using the argument that a higher top rate might scare off the super-rich is an old worn-out argument.


An old worn-out argument based on historical amnesia:


Quote:

The 2010 proposed rate of 39.60% = socialism.
The 2002-2008 rates of 35.00% = capitalist nirvana.
The 39.6% rate of the 1990’s = socialism.
Everything else = down the memory hole.

That Obama fellow sure is soaking the rich, isn’t he?
http://www.balloon-juice.com/?p=18106
Bikerman
Here is a counter proposal to the main theme.
Why not tax excessive earnings at a massive rate - say 90%. Apply this to personal earnings above (say) $1,000,000 dollars per year. Interestingly the US have just apparently voted to apply this, in order to 'punish' the bankers who will be earning bonuses. Why not apply this more widely? Surely that amount of money is sufficient to live a very comfortable life and anything above that is simply 'hoarding' and profligacy? If people knew that their excess earnings would be taxed at a high rate then they would, surely, be more inclined to give them away in a philanthropic manner rather than pay the tax.
jmi256
Bikerman wrote:
Here is a counter proposal to the main theme.
Why not tax excessive earnings at a massive rate - say 90%. Apply this to personal earnings above (say) $1,000,000 dollars per year. Interestingly the US have just apparently voted to apply this, in order to 'punish' the bankers who will be earning bonuses. Why not apply this more widely? Surely that amount of money is sufficient to live a very comfortable life and anything above that is simply 'hoarding' and profligacy? If people knew that their excess earnings would be taxed at a high rate then they would, surely, be more inclined to give them away in a philanthropic manner rather than pay the tax.


Why punish people who succeed? If most people and businesses know that anything over a certain amount is taken away from them, there would be no reason for them to use their earnings to start businesses, invest in other businesses, buy shares/stakes in upcoming and struggling businesses, etc. And honestly if they earned the money they should be able to do whatever they want with the money, even if it means blowing it on luxury items, locking it away in a bank, stuffing it under a mattress, etc.. The thing to remember is that what a person earns does not belong to the government and that person shouldn’t have to justify why they should get to keep what they legitimately earn.

Now I know there will comments criticizing this, but I saw a phrase the other day that I thought was interesting: “Distribute my work ethic, not my wealth.”
Your theory that this would cause more people to give their money away has two problems that I see:

1. Human nature. I alluded to it before, and while I think there are many wealthy people and businesses who give a lot of money to charity, I think most people and business owners would rather “take it easy” if they knew that the fruits of their labor were to be confiscate by the government rather than work their arses of to make money and then donate it. Now I think if someone made say $2 mil one year and in your example they were presented with the choice of donating the “excess” $1 mil to a charity of having it confiscated by the government they would naturally choose to donate the money. But when planning out their year and efforts they would not be as motivated to make a dime over $1 million. I could see businesses lowering productivity, by cutting staff, decreasing sales efforts, etc. Maybe not for the expressed reason of avoiding having their earnings confiscated, but rather because there is no motivation for earning more. I could see them lowering work efforts to make the max and then using the extra spare time to relax, etc. and perhaps volunteer their time to charity. But what most charities really need are financial help.

2. Obama’s tax increases. I’m sure you have all seen Obama’s proposal to limit the amount taxpayers and businesses can donate to charity. They would rather confiscate their earnings via taxes than allow people to support causes they believe in. And if you as an individual don’t agree with what the government uses your earnings to fund, like using US federal money for abortions abroad, etc, tough luck. Obama believes he and the Democrats know how to spend your money better than you do. You can find out how the tax increase affects both families and charities here: http://blogs.wsj.com/wallet/2009/03/02/obama-tax-proposals-charitable-giving/
Bikerman
jmi256 wrote:
Your theory that this would cause more people to give their money away has two problems that I see:

1. Human nature. I alluded to it before, and while I think there are many wealthy people and businesses who give a lot of money to charity, I think most people and business owners would rather “take it easy” if they knew that the fruits of their labor were to be confiscate by the government rather than work their arses of to make money and then donate it. Now I think if someone made say $2 mil one year and in your example they were presented with the choice of donating the “excess” $1 mil to a charity of having it confiscated by the government they would naturally choose to donate the money. But when planning out their year and efforts they would not be as motivated to make a dime over $1 million. I could see businesses lowering productivity, by cutting staff, decreasing sales efforts, etc. Maybe not for the expressed reason of avoiding having their earnings confiscated, but rather because there is no motivation for earning more. I could see them lowering work efforts to make the max and then using the extra spare time to relax, etc. and perhaps volunteer their time to charity. But what most charities really need are financial help.
This is a silly argument. The notion that people would have a dis-incentive to succeed in business is daft. People who are motivated by money will continue to be motivated by money. I don't think that most entrepreneurs are actually motivated by money per se - money is just a way of 'keeping score'
jmi256
Bikerman wrote:
jmi256 wrote:
Your theory that this would cause more people to give their money away has two problems that I see:

1. Human nature. I alluded to it before, and while I think there are many wealthy people and businesses who give a lot of money to charity, I think most people and business owners would rather “take it easy” if they knew that the fruits of their labor were to be confiscate by the government rather than work their arses of to make money and then donate it. Now I think if someone made say $2 mil one year and in your example they were presented with the choice of donating the “excess” $1 mil to a charity of having it confiscated by the government they would naturally choose to donate the money. But when planning out their year and efforts they would not be as motivated to make a dime over $1 million. I could see businesses lowering productivity, by cutting staff, decreasing sales efforts, etc. Maybe not for the expressed reason of avoiding having their earnings confiscated, but rather because there is no motivation for earning more. I could see them lowering work efforts to make the max and then using the extra spare time to relax, etc. and perhaps volunteer their time to charity. But what most charities really need are financial help.


This is a silly argument. The notion that people would have a dis-incentive to succeed in business is daft. People who are motivated by money will continue to be motivated by money. I don't think that most entrepreneurs are actually motivated by money per se - money is just a way of 'keeping score'


What part exactly do you have a problem with? Your proposal to tax people and businesses above a certain income (whatever that limit is) at 90% and then expect them to remain as motivated to increase their income is quite honestly idiotic and lacks any kind of commonsense. Exactly what do you expect taxing them at 90% will incentivize them to do? If I told you that you could decide to continue to work hard and generate income, but I would come in and take 90% of what you create even though I had nothing to do with the production, would you work as hard? Do you really believe that irrational line of thinking will motivate businesses and individuals?

And I didn’t say that they would be disincentivized to succeed, but rather to invest their income in ways to that don’t necessarily lead to increased production and revenue since that will be confiscated. You are correct in your assessment that entrepreneurs are motivated by more than financial success, but that doesn’t mean financial motivations aren’t important. Also, there are also other factors, such as being in control of their own destiny/success that entrepreneurs often cite as motivators. By removing that control when you confiscate their earning you also remove those motivators.
lagoon
A lot of people here in the UK live entirely on Government assistance, a lot of whom (if you believe the Daily Mail) don't deserve it. It is a matter of high contention.
Bikerman
jmi256 wrote:
What part exactly do you have a problem with? Your proposal to tax people and businesses above a certain income (whatever that limit is) at 90% and then expect them to remain as motivated to increase their income is quite honestly idiotic and lacks any kind of commonsense. Exactly what do you expect taxing them at 90% will incentivize them to do? If I told you that you could decide to continue to work hard and generate income, but I would come in and take 90% of what you create even though I had nothing to do with the production, would you work as hard? Do you really believe that irrational line of thinking will motivate businesses and individuals?
The levels of pay at which the top rate would kick in would be high - much more than anyone could reasonably spend without being extremely profligate. It would not be a problem for re-investment because that would not be taxed in the same way as personal income.

If you look at the graph of historical rates you will notice that top tax rates were at very high levels during the 1950's and 1960's - a period when the US was growing rapidly and regarded by many as a 'golden era' in economic terms. People in that era seemed to have no problem generating growth...
Quote:
And I didn’t say that they would be disincentivized to succeed, but rather to invest their income in ways to that don’t necessarily lead to increased production and revenue since that will be confiscated.
That's part of the point - those investments could be in charities, for example. Or they could choose to take less pay and stick money back into the firm/corporation/enterprise to make it grow faster.
deanhills
Bikerman wrote:
money is just a way of 'keeping score'
I can't agree with this Chris. People who make money, make money because they watch their money and the last thing they want to do is give it away to the Government. Obviously money is not just a way of "keeping score" but the score does count. I think people who are wealthy would far rather give their money away to charity than donate it to Government for which they do not have much respect anyway as Government is notorious for mismanagement of their funds, it's like putting it into a "black hole".
ocalhoun
Bikerman wrote:
Here is a counter proposal to the main theme.
Why not tax excessive earnings at a massive rate - say 90%. Apply this to personal earnings above (say) $1,000,000 dollars per year. Interestingly the US have just apparently voted to apply this, in order to 'punish' the bankers who will be earning bonuses. Why not apply this more widely? Surely that amount of money is sufficient to live a very comfortable life and anything above that is simply 'hoarding' and profligacy? If people knew that their excess earnings would be taxed at a high rate then they would, surely, be more inclined to give them away in a philanthropic manner rather than pay the tax.

And you really don't think that taking 90% of their money away would entice people to take their business elsewhere? (Or give them even more incentive to avoid taxes?)

I know you really, really love the idea of taking from the rich and giving to the poor, but why must the rich be the only ones to support the poor? I think everybody should do their part to support the poor. Why can't the middle class, and the poor themselves do their part? As I said before, if paying an equal tax rate is too much of a burden to pay on minimum wage, the minimum wage should be raised.
Bikerman
ocalhoun wrote:
Bikerman wrote:
Here is a counter proposal to the main theme.
Why not tax excessive earnings at a massive rate - say 90%. Apply this to personal earnings above (say) $1,000,000 dollars per year. Interestingly the US have just apparently voted to apply this, in order to 'punish' the bankers who will be earning bonuses. Why not apply this more widely? Surely that amount of money is sufficient to live a very comfortable life and anything above that is simply 'hoarding' and profligacy? If people knew that their excess earnings would be taxed at a high rate then they would, surely, be more inclined to give them away in a philanthropic manner rather than pay the tax.

And you really don't think that taking 90% of their money away would entice people to take their business elsewhere? (Or give them even more incentive to avoid taxes?)
I repeat my previous point - look to history!
Quote:
I know you really, really love the idea of taking from the rich and giving to the poor, but why must the rich be the only ones to support the poor? I think everybody should do their part to support the poor. Why can't the middle class, and the poor themselves do their part? As I said before, if paying an equal tax rate is too much of a burden to pay on minimum wage, the minimum wage should be raised.
Everybody DOES do their part - each according to their ability to pay. Those that earn the most contribute the most. Raising the minimum wage is an idea that I support, but you then get small businesses saying that they will not be able to afford employees. Taxation is potentially the most 'progressive' way to distribute wealth since it can be directly targetted according to ability to pay. There is no other system (that I know of) that can do the same.
deanhills
True. There has to be a better way to sort out the imbalances between poor and rich. Along the lines of the rich receiving Government incentives to help the poor from earning income and empowering them to have opportunities to get rich. Rather than just giving them hand-outs from Government and/or the rich. Focus being on self-empowerment and more equal opportunities for education and helping hands for getting rich.
ocalhoun
Bikerman wrote:
Those that earn the most contribute the most. [...] according to ability to pay.

A flat percentage rate tax also does this.
jmi256
Bikerman wrote:
Taxation is potentially the most 'progressive' way to distribute wealth since it can be directly targetted according to ability to pay. There is no other system (that I know of) that can do the same.


I think this is the main problem with your argument. The government doesn't exist to redistibute wealth, but rather provide basic services. Wealth distribution for the sake of wealth distribution is a bad idea. I still like the quote I cited earlier: Distribute my work ethic, not my wealth.

What would have happened if Obama had spread his "wealth":
deanhills
jmi256 wrote:
I think this is the main problem with your argument. The government doesn't exist to redistibute wealth, but rather provide basic services. Wealth distribution for the sake of wealth distribution is a bad idea. I still like the quote I cited earlier: Distribute my work ethic, not my wealth.

Excellent argument and I liked the cartoon. Perfect illustration Laughing I did not think about this before, and it is so much on the number. Same with the bail-out packages. Government is in the business of providing services, not getting involved in financial bail-out packages and signing agreements that requires specialist input from finance people. They need to appoint people who are experts in finance and who stand outside Government but with the authority to make decisions.
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