Why do my colleague and I pay as much in taxes?

[Pliny]

It gets ridiculous to consider your tax and your benefits should be equal to everyone elses tax and benefits when you yourself know that taxes will benefit a collective group over another collective group. If you want it to be equal then why bother taxing for social benefit at all, especially at the federal level where equality becomes entirely impossible.

I don't quite understand what you are saying here.

The federal government does not tax or pay benefits to the individual. He taxes those who have money to tax and pays benefits to those who do not have money. It's done in the collective. The federal government, quite frankly, doesn't care that it's decisions mean you pay more for a benefit than someone else or you don't even get a benefit. It deals with classes of people or special interests. If you are a member of a certain class or special interest then you pay a certain amount and receive a certain amount. Women are a special interest group the benefits you receive from the government in respect to women's benefit's is zero. The benefit a family gets in child tax credits and child care subsidies do not benefit the childless class. Bailoits of corporations may not benefit you at all directly but it is your tax dollars going to fund that. Should you pay out of your taxes for the Olympics? What will be your benefit and it seems that BC will benefit more than any other province.

Basically, it isn't about you. If you feel slighted so what. If you think the guy who drives to work is benefitted more than yourself then turn into being another guy that drives to work. The government is only trying to level the playing field. If you think you are getting the short end of the stick then figure out a way to even it out yourself. If you can't then form a special interest group and lobby to make the changes.

As for user fees, that's the private capitalist way of dividing up things, why not keep it that way and forget the tax. We could let charity take care of those who are unable to pay for the benefits they want.

Edited January 4, 2010 by Pliny

[Machjo]

I'm not refering to just food but everything you consume. Why don't you move closer to the things you consume instead of expecting someone else to bring them to you.

Agreed. But how can I know this when our current taxation policy distorts prices. Looking at food as an example:

If I go to a supermarket, sure oranges, pineapples and such might be a little more expensive owing to the extra gas used in transporting them here. However, this still does not reflect their real cost to society since it's our income taxes that pay for the airport and highway maintenance for these fruits. Now if our income tax were lowered and a gas tax introduced, then while the cost of all fruits would go up, that of more exotic fruits would go up much more owing to the more gas they consume along with more tax as a result. However, the cost of local fruits would likely go up less my the drop in my income tax, so it would be a benefit to me. If I prefer exotic fruits though, then I'm likely to pay more in tax overall, since my neighbour's income tax would no longer be subsidizing my increased use of highways and airports. It would be more fair that way. If I'm clogging up airports and highways while my neighbour buys locally and so just uses local roads, it's natural I should pay more than him. Since then I'd know the real cost of these fruits to society (since my neighbour would not longer be subsidizing my food), I'd react accordingly and either buy local or move to Brazil.

The same applies to cars, furniture, etc. Once a gas tax is introduced and income taxes reduced, then the real cost of a product to society would be more obvious, and so people would tend to buy more locally or alternatively to move closer to industrial and agricultural areas. But what incentive is there to do that when I know you will subsidize my bad purchasing habits anyway with your income taxes?

[Machjo]

Wilber, you hit the nail on the head there. With a gas tax, people would naturally want to move closer to the things they consume precisely to avoid the gas tax. This would automaticlaly reduce traffic on our highways and at our airports, thus resulting in an overall tax reduction in the end. Sure it might mean less government revenue. But then again, with less need for highways and airports, it woud also reduce government expenditures too. So they'd balance out in the end.

[Machjo]

The federal government does not tax or pay benefits to the individual. He taxes those who have money to tax and pays benefits to those who do not have money. It's done in the collective. The federal government, quite frankly, doesn't care that it's decisions mean you pay more for a benefit than someone else or you don't even get a benefit. It deals with classes of people or special interests. If you are a member of a certain class or special interest then you pay a certain amount and receive a certain amount. Women are a special interest group the benefits you receive from the government in respect to women's benefit's is zero. The benefit a family gets in child tax credits and child care subsidies do not benefit the childless class. Bailoits of corporations may not benefit you at all directly but it is your tax dollars going to fund that. Should you pay out of your taxes for the Olympics? What will be your benefit and it seems that BC will benefit more than any other province.

OK, this I agree with.

Basically, it isn't about you. If you feel slighted so what. If you think the guy who drives to work is benefitted more than yourself then turn into being another guy that drives to work.

And this is part of the problem. Since I'm paying as much whether I use the highways or not, I might as well drive to work, buy bananas from Ecuador, figs from California, and oranges from Florida. Suddenly, traffic increases at our airports and highways, so the government increases our income tax to build more roads and airports. Well, since I'm paying more income tax now, I might as well make even more use of the highways and airports and import even more exotic foods and buy a hummer while I'm at it. I'm payng for it no matter how much I use it so I might as well use it to its full. I'm sure you see what kind of vicious cycle this creates. Because there is no obvious correlation between income tax and highway use, we are pushing our own taxes up by our behaviour without even being aware of it. Meanwhile, the government can't figure out why traffic just keeps increasing.

Now if we ensured that taxes actually related to use to a certain degree at least, then people would think twice about using the roads when not necessary. Suddenly, people's behaviour would change when they realize that he who uses the roads pays for the roads. Then people would act more responsibly, traffic would drop, government would save money, and we'd see our overall taxes drop as we find ways to reduce the gas tax we pay.

The government is only trying to level the playing field.

Hey, if you're starving to death, I have no issue with helping you get back on your feet and get an education. That's a far cry from my subsidizing your driving and exotic eating habits.

If you think you are getting the short end of the stick then figure out a way to even it out yourself.

That's precisely the problem. The only way I can see myself leveling the playing field is to contribute just as much as the others to traffic. So in other words, the only way ot benefit myself in such a system is to screw you over. And the only way you can benefit yourself is to screw me over. So in the end, we're all busy screwing each other over and nobody wins, traffic keeps increasing, and so government has o build more airports and highways.

If you can't then form a special interest group and lobby to make the changes.

So you want me to screw you over even more?

As for user fees, that's the private capitalist way of dividing up things, why not keep it that way and forget the tax.

So do we privatize the roads? And what about monopolies? If there is only one road to a place,for example, the owner of that road will be laughing. Roads are too intertwined to be privatized overall, and that's why a gas tax might be preferable.Once people see how costly our roads really are, they'd start using them more responsibly.

We could let charity take care of those who are unable to pay for the benefits they want.

I could agree with that. Once we start paying less in taxes because we're not hogging the roads and airports anymore, we'd have more money to give to charity in the first place.

[Wilber]

Wilber, you hit the nail on the head there. With a gas tax, people would naturally want to move closer to the things they consume precisely to avoid the gas tax. This would automaticlaly reduce traffic on our highways and at our airports, thus resulting in an overall tax reduction in the end. Sure it might mean less government revenue. But then again, with less need for highways and airports, it woud also reduce government expenditures too. So they'd balance out in the end.

High property prices and property taxes do that now. People move to the burbs because they can afford to live there.

Your idea may sound wonderful in theory but first you will have to have to explain why countries which have much higher fuel taxes than us (Japan, Europe etc) also have much larger cities which millions commute in and out of on a daily basis.

I think the bottom line here is that you just want to pay less tax.

[Machjo]

Sorry for the delayed response; I've been busy. Now here's my response:

High property prices and property taxes do that now. People move to the burbs because they can afford to live there.

They can afford to live there because urbanites and country folk are subsidizing them whether they're aware of it or not. City dwellers can walk to work or, at worst, cycle to work. Townsfolk often work at the farm right behind their house or can likewise walk or cycle to work seeing that the town is so small everything is nearby. Suburbanites are generally those who are most dependent on roads and are the ones who contribute the most to traffic and the need for further transportation infrastructure spending, yet on an income tax basis pay no more than their urban and rural counterparts of equal income for road construction. So of course suburban living is affordable for them; it's subsidized by those who don't live there!

Your idea may sound wonderful in theory but first you will have to have to explain why countries which have much higher fuel taxes than us (Japan, Europe etc) also have much larger cities which millions commute in and out of on a daily basis.

I've lived abroad myself and can say that geographically speaking, Hong Kong is not much bigger than Ottawa, yet has a much higher population. Personally, I found life there to be much more convenient than Ottawa owing to urban planning. Ottawa appears to have grown in a very unplanned, ad hoc, and so quite unmanageable manner, and subsidies to suburbanites through income tax certainly does not encourage more efficient urban development. A gas tax would more accurately reflect the real market cost of suburban life. The drop in income tax would lead to a more affordable lifestyle for urbanites and townsfolk who tend to live closer to work, while making the suburbs more expensive as they more accurately reflect the real market cost of living there as opposed to the artificially low cost of living resulting from government subsidies to their transportation infrastructure. This would likely result either in more suburbanites moving to the city centre or to smaller towns, or alternatively more businesses moving to the suburbs. Either way would lead to a more efficient urban infrastructure. The natural attraction this would cause between businesses and residential areas would likely encourage a higher population density too as people try to move near work and businesses try to establish themselves where their workers live. Artificial subsidies to suburbs does nothing of the sort but merely encourages even more suburban sprawl which only pushes spending on transportation infrastructure up even higher with no one understanding why every time we build a new highway it just fills up again with cars. That's precisely because the cost of suburban life is kept artificially low owing to unfair subsidies.

I think the bottom line here is that you just want to pay less tax.

If you're sincere in this statement I take it you support scrapping taxes on cigarettes and alcohol and have us pay more income tax for lung cancer and liver disease treatments? If you're sincere, you'll answer yes. Nice attempt at a cheap shot when you're out of arguments. But this is not at all the case; you clearly totally misunderstood my intent. I don't care whether my taxes go up or down, but I do care if they're being spent in an unwise fashion. If you want me to pay more tax, fine, raise my income tax. But make sure that money goes towards projects that benefit everyone such as improving elementary or secondary school education for all, not on just building ever more roads so you can live out your suburban dream at my expense. Again, if you think it's about how much tax I pay, then you've totally misunderstood my intent. Now if you do stand up and defend eliminating cigarette and alcohol taxes in favour of higher income taxes, then my apologies for questioning your sincerity.

[bloodyminded]

So in other words, the income taxes farmers pay are subsidizing the food of inner-city dwellers so they can live near shopping, theatres, etc.? How fair is that?

On the contrary, "farmers" (and I use the word loosely) such as big AgriBusiness, notably sugar, corn, soy, are heavily subsidized. It's one of the reasons junk food is so cheap...which goes back to your remarks about healthy eating.

We are effectively socially-engineered to eating unhealthily, a problem which affects the urban and suburban poor most of all.

They're not screwing farmers over. Big Food Business (with its monumental and absurd political clout) is screwing everyone over, including the farmers who have been financially compelled to work for them.

It's not the citydwellers (ie the majority of North Americans) who are to blame for this.

Edited January 31, 2010 by bloodyminded

[Machjo]

On the contrary, "farmers" (and I use the word loosely) such as big AgriBusiness, notably sugar, corn, soy, are heavily subsidized. It's one of the reasons junk food is so cheap...which goes back to your remarks about healthy eating.

OK, point taken. I fully agree that junk food should not be subsidized, full stop. And I admit to being a little loose in my categorization. Obviously a farmer living right on the outskirts of town is not the same as one living out in the middle of nowhere. If a farmer chooses to live so far from urban centres where the food is needed, I fully agree that he should be paying more for road construction than the farmer living on the outskirts of town. Income tax does not do that, but a gas tax sure would.

We are effectively socially-engineered to eating unhealthily, a problem which affects the urban and suburban poor most of all.

Again, I can certainly agree that we need to cut any subsidies to the junk food industry, whether direct or indirect.

They're not screwing farmers over. Big Food Business (with its monumental and absurd political clout) is screwing everyone over, including the farmers who have been financially compelled to work for them.

It's not the citydwellers (ie the majority of North Americans) who are to blame for this.

To some degree I agree with you. If our tax system subsidizes those who live farther from work, it's natural that they'll be willing to move farther away if real estate is cheaper. That's not their fault since they're just reacting to what they think is a natural market trend, unaware that everyone else is unfairly subsidizing suburban transportation infrastructure. Thi does not change the fact though that this subsidy needs to end so that the real market costs can be made more obvious so that peope can make more responsible real estate decisions.

[bloodyminded]

OK, point taken. I fully agree that junk food should not be subsidized, full stop. And I admit to being a little loose in my categorization. Obviously a farmer living right on the outskirts of town is not the same as one living out in the middle of nowhere. If a farmer chooses to live so far from urban centres where the food is needed, I fully agree that he should be paying more for road construction than the farmer living on the outskirts of town. Income tax does not do that, but a gas tax sure would.

Again, I can certainly agree that we need to cut any subsidies to the junk food industry, whether direct or indirect.

They're not screwing farmers over. Big Food Business (with its monumental and absurd political clout) is screwing everyone over, including the farmers who have been financially compelled to work for them.

It's not the citydwellers (ie the majority of North Americans) who are to blame for this.

To some degree I agree with you. If our tax system subsidizes those who live farther from work, it's natural that they'll be willing to move farther away if real estate is cheaper. That's not their fault since they're just reacting to what they think is a natural market trend, unaware that everyone else is unfairly subsidizing suburban transportation infrastructure. Thi does not change the fact though that this subsidy needs to end so that the real market costs can be made more obvious so that peope can make more responsible real estate decisions.

Yes, and I wasn't attempting to argue against this. I think it's a really good point.

[whowhere]

Let's take a hypothetical situation here, and I'd like to read your thoughts on this:

My colleague and I earn the same income and so pay as much in income taxes. However, my colleague drives to work every day whereas I walk to work, so he's using the roads much more than I am, yet I'm still paying just as much in income tax, essentially subsidizing his lifestyle!

Have you looked at the price of litre versus the American Gallon? Canadians pay 40 percent more for the same gas. For a commuter that's about 10 dollars more a week, over a year, 500 dollars. The money he is paying in Gas taxes is more than covering Road maintenance. Because you are using the roads and not paying taxes you should be subject to a pedestrian tax for wearing out the roads and sidewalks. You are fortunate to be close to your work as you save time and gas. If anything you are be insulting with your belief you should receive lower income taxes when someone who is buying gas is already paying plenty towards the maintainance of roads. Perhaps you could argue for lower property taxes as he is using Roads you are paying for with your property taxes. Think about that one.

[DFCaper]

Have you looked at the price of litre versus the American Gallon? Canadians pay 40 percent more for the same gas. For a commuter that's about 10 dollars more a week, over a year, 500 dollars. The money he is paying in Gas taxes is more than covering Road maintenance. Because you are using the roads and not paying taxes you should be subject to a pedestrian tax for wearing out the roads and sidewalks. You are fortunate to be close to your work as you save time and gas. If anything you are be insulting with your belief you should receive lower income taxes when someone who is buying gas is already paying plenty towards the maintainance of roads. Perhaps you could argue for lower property taxes as he is using Roads you are paying for with your property taxes. Think about that one.

I've read before that 1 transport truck is the equivalent to 10,000 cars in the term of damaged cause to the road. Since I am paying a gas tax already (Above and beyond GST & PST) drivers of car's gas tax is used to subsidize trucking goods to and from the cities... I have no problem with an increase in gas taxes, as long as trucking companies start paying there fair share…

I think Trans fats should have a sin tax as well.

[Pliny]

I've read before that 1 transport truck is the equivalent to 10,000 cars in the term of damaged cause to the road. Since I am paying a gas tax already (Above and beyond GST & PST) drivers of car's gas tax is used to subsidize trucking goods to and from the cities... I have no problem with an increase in gas taxes, as long as trucking companies start paying there fair share…

I think Trans fats should have a sin tax as well.

Transport trucks are what bring you your commodities. Your subsidy of trucking goods keeps the cost of things down. Costs are always based upon what the consumer will pay. If you want the price of your groceries to go up start heavily taxing transport.

Trans fats have disappeared to a large extent from a lot of foods. Will they completely disappear - maybe the best way to ensure they do is to put a tax on them. Governemnts really have a problem with disappearing revenue bases.

[Machjo]

Transport trucks are what bring you your commodities. Your subsidy of trucking goods keeps the cost of things down. Costs are always based upon what the consumer will pay. If you want the price of your groceries to go up start heavily taxing transport.

Trans fats have disappeared to a large extent from a lot of foods. Will they completely disappear - maybe the best way to ensure they do is to put a tax on them. Governemnts really have a problem with disappearing revenue bases.

If truckers must pay more tax, you're right that the cost of their goods will go up proportionately to the distance they must travel. However, your income taxes would go down too. Overall, they'd balance out. More specifically however, it could vary from person to person. You'd find locally produced goods go up in price, but only by a little, with your drop in income taxes more than compensating for it. On the other hand, the price of products from farther afield would go up much more than the drop in your income taxes. So if you play your cards right and buy more locally or at least regionally, you could get out on top. If on the other hand you have a flair for the exotic, then you'll pay the price, as you ought to. If you contribute more to the damage done to roads, then you pay more too. fair is fair.

Also, I think any kind of resource tax is something both the right and the left could get behind, and here's why. If people make an effort to drive less, or buy more locally, then naturally there will be less need for road construction and maintenance, but that will go hand in hand with less revenue, obviously. On the other hand, if people want to drive more, or buy from farther afield, government revenue naturually increases and along with its spending on road construction. In that sense, it becomes a kind of natural system giving the consumer a choice. If he he uses more government resources like roads, etc., then such a tax will naturally hit him harder and so increase the revenue necessary. If he drives less the two go down naturally. So essentially, people have more of a say in how much government they want. Use more government services, and your taxes go up along with the services. Use fewer services, and the opposite. It woudl become like a form of natural shift between big government and small government according to social behaviours and needs.

[Machjo]

It would also be more user pay too, which should be more attractive to the right than the current income tax.

[Oleg Bach]

Those of us with additions to nicotine are becoming a rare breed..we pay billions in taxes on product that is cheap to produce yet we do not get a tax break.

[Topaz]

High property prices and property taxes do that now. People move to the burbs because they can afford to live there.

Your idea may sound wonderful in theory but first you will have to have to explain why countries which have much higher fuel taxes than us (Japan, Europe etc) also have much larger cities which millions commute in and out of on a daily basis.

I think the bottom line here is that you just want to pay less tax.

Perhaps the bottom line should be that all canadians should get EVERYTHING the politicans get OR the politicans should get what we, the taxppayer get, which is very little. They put us into debt and we have to pay to get the country out. I like to see their salaries and pensions of the seating government cut back, if they do run up a debt, let them pay for THEIR mistakes!!

[William Ashley]

Just replying to the topic question is -- you don't know how to spend your money the way the government wants you to.

First. Calculate what your max deductibles are and use them.

Second hire people, such as myself to act as a monetary sink, or perhaps not like me, but things like

corps that are created to move funds into other areas, or into devalued assets.

Take capital loss deductions to the max by insuring the losses are not real but instead transfered assets which will have future valued beyond the capital loss write off.

Loose money to the right people, such as your friends, if they still have write offs.

Invest your money into non taxed costs that will generate income stream.

trade in stocks and share capital to balance things out among your business partners..

http://www.taxtips.ca/smallbusiness/capitalgainsdeduction.htm

etc..

there are MANY MANY ways to reduce your income dramatically and write off or underwrite all taxes.

Having a network of associates can help with this.

I have a farm property how about you?

Edited February 19, 2010 by William Ashley

[Bonam]

Let's take a hypothetical situation here, and I'd like to read your thoughts on this:

My colleague and I earn the same income and so pay as much in income taxes. However, my colleague drives to work every day whereas I walk to work, so he's using the roads much more than I am, yet I'm still paying just as much in income tax, essentially subsidizing his lifestyle!

Would it not be more fair to lower our income taxes and introduce a gas tax instead so that he will pay proportionately more for the roads he uses?

This same colleague is on a Mc-diet, eating McDonald's and KFC, etc. on a regular basis, while I eat healthy. Why should I pay as much to wards public health care as he does? By doing so, am I not essentially subsidizing his unhealthy lifestyle at my expense? Would it not be more fair to tax unhealthy foods and lower income taxes to counterbalance that tax increase, so that he will pay proportionately more for healthcare in consideration of the fact that he's willingly increasing the chances of burdening the system via his unhealthy habits?

I don't see why this should be such a strange concept. After all, the same principle is applied to taxes on tobacco and alcohol products, whereby those who drink, smoke, etc. pay more taxes towards healthcare than the rest of us, as it ought to be. Why is this concept not extended to other vices? What incentive does the government provide me to use roads less or to care for my health if I know that no matter what I do, I'll still have to pay as much tax anyway?

I'm not against income taxes per se, and am certainly willing to pay some tax to help the less fortunate members of society. However, I still believe that some kind of incentive must be built into the tax system to promote more personal responsibility. To rely excessively on income tax to the exclusion of other taxes removes this incentive by ensuring that responsible taxpayers will pay just as much in taxes as less responsible ones earning the same income. How fair is that that one person could be hogging the roads and healthcare while the more socially conscious colleague is subsidizing it? It's only natural that the less socially aware colleague will simply think, 'hey, the government is paying for the roads and healthcare anyway, so might as well use those roads and enjoy my KFC', with little thought for the fact that his actions are burdening my income taxes.

Where is the justice in that, and how should we restructure the tax system to more accurately reflect how much one benefits from government services? And why is the right, in general at least, so opposed to such 'user-pay' tax systems, and are more in favour of everyone paying the same?

That's why services like healthcare can and should be privatized. Then you are not subsidizing anyone else. You can pay for the healthcare you need, when you need it. Oh and by the way, good health is its own reward. Even if you have access to the world's best medical facilities, you'd still rather be doing something else than having surgeries or other health procedures all the time.

As for roads, they are part of the national infrastructure. There are certain things that even the most rabid libertarian will admit that the government should provide, things like defense, police, protection of property rights, etc. I would put an adequate road system into this category. Having all parts of a nation accessible through a consistent and functional road system is hugely advantageous for the operation and growth of an advanced economy.

Edited February 19, 2010 by Bonam

[Machjo]

As for roads, they are part of the national infrastructure. There are certain things that even the most rabid libertarian will admit that the government should provide, things like defense, police, protection of property rights, etc. I would put an adequate road system into this category. Having all parts of a nation accessible through a consistent and functional road system is hugely advantageous for the operation and growth of an advanced economy.

I don't know about rabid libertarians, but I certainly agree that moderate libertarians would agree. However, the question is not whether the government ought to build infrastructure or not, but rather whether incentives ought to be built into the taxation system to make taxpayers more aware of the cost of the roads and use them wisely and not contribute unnecessarily to traffic when not necessary. If the taxation system has no bearing on your road use for example, then you're not aware of the actual cost of using them and so end up using them even just for joy rides all the time, contributing to wearing of the roads, traffic, pollution, etc. If taxes were more directly related to your use of that resource, you'd use it more responsibly, would you not? And that in turn would help reduce the cost of road construction and maintenance.

[Bonam]

It is not practical for the government to monitor and collect taxes based on individual's use of general roads. In situations where it is practical, user pay systems already exist. For example, tolled bridges and highways seem to be the norm for new projects in BC.

[Machjo]

It is not practical for the government to monitor and collect taxes based on individual's use of general roads. In situations where it is practical, user pay systems already exist. For example, tolled bridges and highways seem to be the norm for new projects in BC.

I'm not suggesting that government monitor our road use. I realise that would be expensive, inefficient, highly bureaucrcatic, impractical, etc. However, simple solutions like shifting taxes from income to gas for example, we'd end up with an at least approximate correlation. I think it's reasonable to suppose that the more you use the roads, the more gas you need to buy.

[Machjo]

An income tax has little to no bearing on road use.

I'm not against income tax per se, but as much as possible ttaxes ought to be rationally distributed to ensure natural incentives for peopel to make less use of resources.

[Bonam]

I'm not suggesting that government monitor our road use. I realise that would be expensive, inefficient, highly bureaucrcatic, impractical, etc. However, simple solutions like shifting taxes from income to gas for example, we'd end up with an at least approximate correlation. I think it's reasonable to suppose that the more you use the roads, the more gas you need to buy.

Gas is already very heavily taxed.

[Wilber]

"They can afford to live there because urbanites and country folk are subsidizing them whether they're aware of it or not. City dwellers can walk to work or, at worst, cycle to work. Townsfolk often work at the farm right behind their house or can likewise walk or cycle to work seeing that the town is so small everything is nearby. Suburbanites are generally those who are most dependent on roads and are the ones who contribute the most to traffic and the need for further transportation infrastructure spending, yet on an income tax basis pay no more than their urban and rural counterparts of equal income for road construction. So of course suburban living is affordable for them; it's subsidized by those who don't live there!"

People don't move to the burbs cause they like driving. I think most people would like to walk to work so lets put the whole country in cities. Then what?

Edited February 19, 2010 by Wilber

[Machjo]

Gas is already very heavily taxed.

Enough to ensure that all funding for road construction come exclusively from the gas tax and not income tax?