[spmarshall]

I was just doing my taxes. I know for a fact that the income tax rate is set up so the first part of the income is taxed at one rate, and so on. The calculations are pre-set for those with taxes abouve the first and second bracket limit.

 

[sdoody]

Exactly...and I agree with eliminating loopholes, but it's not always easy to tell what a loophole is. I would assume most write-offs exist for some good reason or another (other than just to line the pockets of rich people), and that some people are just more creative in applying them than others.

There should be some way to at least come up with the most easily misused write-offs, and to change them so they actually do what they're supposed to do. Probably easier to say than to do, but still...

 

[unimaginative2]

The argument that flat tax "simplifies" the tax code is ridiculous. The difficult part about filing taxes is not doing the basic arithmetic of determining what rate should be paid based on levels of income. The complexity comes from the innumerable deductions and other allowances. The flat tax has traditionally been promised as being good for everybody since it would be at the existing lowest marginal rate. That's obviously a huge tax cut for the rich, coupled with no tax cut for the poorest people.

 

[roch5220]

^ Right. Tax cut for the rich eh? There are too many loopholes for the rich with the setting up of trusts etc., that protect them from paying their fair share of taxes. A flat tax rate that I would propose would eliminate all forms of tax avoidance like setting up of trusts, and force a flat tax on anything. If you have a CDN passport, you have to pay a flat tax on all income (except for foreign tax credits which would be allowed) - I would be affected by the CDN passport myself as I live in a tax free area (I'm non-resident).

 

[ganjavih]

"If you have a CDN passport, you have to pay a flat tax on all income."

We could still do that without the flat tax.

I think the argument could be made that wealthier Canadians pay too much income tax but a flat tax is just too drastic.

 

[roch5220]

If rich people paid tax, then yes, progressive tax rates are nice in theory. But a flat tax, rich people do get hurt as they pay more tax as they make more income. With no loopholes (as I would eliminate all but RRSPs), the rich would have to pay tax. I would maybe support a lower flat rate for say, the first $15K or so earned, or a tax credit based refunding some tax depending on your earnings and the city that you live in.

But why shouldn't the poor pay their fair share? Its not like they use less public services. Some of the poor I do feel sorry for as the situations are far beyond their control, but for some as well, I don't take any pitty on. For the ones that had opportunities and either wasted them, or couldn't be bother at the time, why should society come to the rescue? Screw it, maybe its cause I'm bitter as I had to finance my education myself through huge bank loans (non -government) as my parents were too rich (supposive) to get OSAP, but in actuality had no money to give me. I got the, so if I did it myself, why can't others (that is, in similar situations).

 

[afransen TO]

Why should the rich pay more? They are rich off the backs of the poor. Without the relatively poor, you cannot have the relatively rich......

 

[unimaginative2]

Okay...so why is it that you have to take the progressivity out of the tax system in order to get rid of loopholes or enforce the tax law with respect to the tax-dodging rich.

 

[sdoody]

rich off the backs of the poor

Wow...that kind of comment just astounds me. Like the only way to get rich is to stick it to a whole bunch of poor people along the way. I guess people who work hard and get a well paying job have done that 'off the backs of the poor'. And the larger percentage of taxes they pay are just their way of repaying society for their crime of being rich.

While I'm sure there are tax loopholes that can be closed, everyone takes it as gospel that 'rich people don't pay taxes' because of all these evil loopholes, and I have yet to see any actual evidence to back this up. I personally think that the vast majority of 'rich' people pay their fair share of taxes, and I also think that bashing the rich is just a cop out.

I read a study in the paper recently that compared the various income brackets between the US and Canada, and it found that Canada's much more agressive wealth-redistribution system (through income taxes, etc) resulted in poor people that were 25% (or so) better off in Canada when compared to the US, and rich people that were about the same 25% worse off. I see this as a plus, but I mention it to show that this mentality that rich people are getting a free ride isn't accurate.

If someone wants to show any statistics they have to the effect that rich people are a bunch of tax dodgers then I'm more than willing to listen, but until then I think I'd rather keep an open mind.

 

[afransen TO]

sdoody, why quibble? You aren't trying to deny the fact that the rich are rich because the poor are poor? Relative wealth is a zero sum game. For someone to get relatively more wealthy, someone else has to get relatively poorer.

 

[roch5220]

Sdoody - I don't think there are any stats. And it all depends on how you define rich. The ultra rich, ie., chartered families, avoid paying all of their income at marginal rates due to the setup of trusts, and income within those trusts get taxed again at progressive rates, ie., they are making good use of tax credits & lower rates based upon income being taxed seperately.

AlfredsonTO - Thats a whola lotta crap. Thats just like if I were to say that ALL poor are lazy and deserve what they get. For some people, the decisions we make when we are younger have lasting affects. While some make poor decisions, others make good decisions which can be the difference is a lot of cases. The difference between Canada and those in impoverished nations (where their could be a case for your argument) is the fact that we have choice.

 

[roch5220]

Your theory of zero wealth is not correct. For instance, before the tech bubble in the capital markets, people had bloated net worths, especially the rich. When it crashed, and a lot of weath was lost, its not like that wealth flowed to the poor (as the wealthy lost worth). That wealth was lost.

OBW - The rich do pay more in a flat tax system. Hence, if a the tax rate was $30%, A rich person on $1 million would pay $300K, and a poor person making $1 would pay $0.30. Big understatement asking why the rich should pay more, when they no doubltly would pay more.

 

[afransen TO]

The poor are relatively less poor in comparison to the wealthy than they were during the tech bubble.... it's not a complicated idea.

Year 1:

Mr. X has $100
Mr. Y has $200

Mr. x is half as wealthy as Mr. Y

Year 2:

Mr. X has $100
Mr. Y has $150

Mr X is 66% as wealthy as Mr Y

Mr X is relatively wealthier in Year 2, if not in absolute terms.

 

[roch5220]

^ You were implying previously that wealth netted out to be ZERO. That is definatley not the case, especially given our past relieance on precious metals. When someone dug $1000 bucks out of gold out of the ground, he had $1000, no one had -$1000 as a result of his diggup. It was this basis that eventually paved the way for the gold standard, which was then subsequent less relied upon.

Your example didn't get my point. Based upon your net ZERO wealth theory:

Year 1 - Net Worth

Mr X $100
Mr Y $200
Mr Z $-300 (assuming at the begining your thoery is correct)
Net $0

Year 2 (techs go down 50%, Mr Y was Bill Gates)

Mr X $100
Mr Y $100
Mr Z $-300
Net $-100

Thats my example

 

[afransen TO]

But Gates' fortune didn't really exist, anyway. What good is x billion in stock holdings if you can't liquidate them? The moment he tried, they'd be worthless.

About precious metals, if someone increases the supply of gold, without a matching increase in demand, the unit value of gold declines.


Imagine a world in which ever person has $1 billion. Is everyone fabulously wealthy?

Now imagine a world in which some people have $1 billion, but others have $1 trillion. All those trillionaires are "wealthy" in terms of/on the backs of the billionaires.