Harper and the Economy: Setting the Record Straight

[nicky10013]

That can go the other way as well, in that society has done well because of the wealthy providing jobs and capital. What you get in essence is a circular argument with no end. A good example I can think of going on right now, is in the US with an extremely large voter backlash against the Democrats and their policies and the rise of the tea party movement.

The point I'm making is that wealthy people don't bury all their money in the ground or hoard it in a vault behind a painting. Wealthy people buy things, invest, and provide labour, and IMO shouldn't have to be hindered with a punishing 44+% tax bracket and/or double taxation if in the case they are business owners for providing with society with a multitude of non-tax benefits.

Society is taxed at a certain percentage in the long run anyway, so what does it matter if the wealthy people pay less tax, and their customers/investments pay more tax by having a larger bottom line?

Because the customers won't be buying anything because they'd be overburdened just by making ends meet.

Lest we forget, consumption taxes encourage saving. By implementing a flat tax consumption would go way down.

Edited November 17, 2010 by nicky10013

[Evening Star]

Don't confuse "wealth" with "income".

Explain? "Wealth" = income + assets - liabilities, right? I would that that would be even more unequally distributed.

[bush_cheney2004]

Explain? "Wealth" = income + assets - liabilities, right? I would that that would be even more unequally distributed.

No, wealth is the result of income and other acquired assets, however obtained. The important distinction to be made is their tax treatment, and those who want to go after previously taxed assets without regard to consumption are crossing the line into political quick sand.

[blueblood]

Maybe we have a progressive tax bracket because a flat tax would dramatically shift the weight of taxation onto the people that can't afford it, rather than the rich who can. Rich or poor alike, we all need food, clothes and services. The difference between middle and lower classes and the rich in terms of those services really isn't all that large. The only real differences are on luxury purchases such as cars, houses, boats etc. Really, how often do the rich make these purchases as opposed to people who will have to live day to day paying more tax?

So your advocating a free ride for those because they can't afford taxes? That experiment has been tried before and was a failure of biblical proportions.

A flat tax is the most fair way of taxation, everybody pays the same for the services and protection from the gov't they enjoy. Not only that, people like me would have more money to spend on stuff we want which improves the top line of companies which results in an increase of tax revenue, not to mention company growth which means jobs and less poor people.

Rich people don't only spend money on luxury purchases and if they're into making luxury purchases, they are constantly buying new and trading their old things because of affluence and ego. You have to remember, what's the point of making money if you aren't going to spend it.

In my case for example, I have to pay for expenses in cash. Which normally is not the best way of going about things, but my industry is risky and prone to disaster in a weather event/events, so I don't want to finance/lease a combine and then have a drought come along and put me in financial kaka. Yes, I can write off the tax on the expenses, but I still need the cash on hand to finance my operation. This strategy has been very safe for me, but at the expense of growth. So I think you can understand in my situation where a flat tax/lower income tax would be beneficial. That and every year I look at my books and see if I can afford to make a major investment in my operation, and since I do things only when I have enough cash on hand to pay for it, a lower tax would be very beneficial for me. I can't have gnomes work for me in the fall, and not be able to pay them. Also I have to make investments for hedging costs and retirement, and have cash on hand in case of a growth prospect or emergency.

By having wealthy people like me in a better financial situatiion with lower taxes, it allows us the freedom to make more purchases/be in better financial shape which results in the government getting their tax revenue anyway from other sources.

[ToadBrother]

By having wealthy people like me in a better financial situatiion with lower taxes, it allows us the freedom to make more purchases/be in better financial shape which results in the government getting their tax revenue anyway from other sources.

Just pay your taxes. You owe it to the society that permits you to accrue wealth.

[Evening Star]

No, wealth is the result of income and other acquired assets, however obtained. The important distinction to be made is their tax treatment, and those who want to go after previously taxed assets without regard to consumption are crossing the line into political quick sand.

You're losing me, admittedly. This is from Wild Bill's post 13, with which you agreed in post 14:

...

Here's a simple way to see what's really going on. Set up an Excel spreadsheet. Take a wild guess as to the number of working people in Canada making whatever you think is an average annual wage and enter it into a cell. Label the cell if you want to get fancy.

Set up another cell to total the income of working people available to be taxed.

Now set up another cell for the number of millionaires in Canada. Again, just plug in whatever you yourself feel is reasonable. I'll explain in a minute. Then go ahead and set up a cell to multiply this figure by a million dollars.

You will instantly see that the amount of money available from millionaires to be taxed is mice nuts compared to the amount from ordinary working people!...

Governments tax the working person 'cuz that's where the REAL money is! Period and end of story!

It seemed to me that he was talking about income distribution and income tax revenue. I was pointing out that income is in fact concentrated towards the top, not among the working class.

[Guest TrueMetis]

By having wealthy people like me in a better financial situatiion with lower taxes, it allows us the freedom to make more purchases/be in better financial shape which results in the government getting their tax revenue anyway from other sources.

That sounds nice in theory, in practice it's never what happens.

[bush_cheney2004]

.....It seemed to me that he was talking about income distribution and income tax revenue. I was pointing out that income is in fact concentrated towards the top, not among the working class.

OK...but you did not make a distinction for "wealth", which involves a lot of other variables and lifestyle choices/decisions. There isn't enough concentrated income "at the top" to tax for revenue, even at higher rates. "Rich" people can engage the services of "wealth management" professionals to avoid most onerous taxing schemes. Some even get the final laugh with life insurance policies.

[blueblood]

That sounds nice in theory, in practice it's never what happens.

Who am I going to believe market analysts and CEO's who make themselves and others money as a living or a University student?

It happens all the time. Rich people spend and invest. Rich people don't like sitting on a vast mountain of cash because that costs money in opportunity cost.

[dre]

So your advocating a free ride for those because they can't afford taxes? That experiment has been tried before and was a failure of biblical proportions.

A flat tax is the most fair way of taxation, everybody pays the same for the services and protection from the gov't they enjoy. Not only that, people like me would have more money to spend on stuff we want which improves the top line of companies which results in an increase of tax revenue, not to mention company growth which means jobs and less poor people.

Rich people don't only spend money on luxury purchases and if they're into making luxury purchases, they are constantly buying new and trading their old things because of affluence and ego. You have to remember, what's the point of making money if you aren't going to spend it.

In my case for example, I have to pay for expenses in cash. Which normally is not the best way of going about things, but my industry is risky and prone to disaster in a weather event/events, so I don't want to finance/lease a combine and then have a drought come along and put me in financial kaka. Yes, I can write off the tax on the expenses, but I still need the cash on hand to finance my operation. This strategy has been very safe for me, but at the expense of growth. So I think you can understand in my situation where a flat tax/lower income tax would be beneficial. That and every year I look at my books and see if I can afford to make a major investment in my operation, and since I do things only when I have enough cash on hand to pay for it, a lower tax would be very beneficial for me. I can't have gnomes work for me in the fall, and not be able to pay them. Also I have to make investments for hedging costs and retirement, and have cash on hand in case of a growth prospect or emergency.

By having wealthy people like me in a better financial situatiion with lower taxes, it allows us the freedom to make more purchases/be in better financial shape which results in the government getting their tax revenue anyway from other sources.

That experiment has been tried before and was a failure of biblical proportions.

Ummmmm. Progressive income tax is used used in every modern industrialized country on earth.

Edited November 17, 2010 by dre

[Evening Star]

OK...but you did not make a distinction for "wealth", which involves a lot of other variables and lifestyle choices/decisions. There isn't enough concentrated income "at the top" to tax for revenue, even at higher rates. "Rich" people can engage the services of "wealth management" professionals to avoid most onerous taxing schemes. Some even get the final laugh with life insurance policies.

Are you just saying that rich people can dodge income taxes with creative bookkeeping? I don't specialize in economics so I don't think I'm following you.

[Guest TrueMetis]

Who am I going to believe market analysts and CEO's who make themselves and others money as a living or a University student?

It happens all the time. Rich people spend and invest. Rich people don't like sitting on a vast mountain of cash because that costs money in opportunity cost.

No what happens all the time is rich people invest a fraction of what they save through tax-cuts and hoard the rest.

[M.Dancer]

No what happens all the time is rich people invest a fraction of what they save through tax-cuts and hoard the rest.

Is that an opinion or do you have some papaer that might back that up?

I have known a few millionaires...most were not liquid at all, their assets tied up in equities, bonds and real estate. One fellow I knew was auditted in the mid 80s and presented with a bill from Revenue Canada for over $18,000. This caused a fight between him and his wife, who wanted to pay ASAP (because of the shame) and the husband, who wanted to appeal. He was confident that he could reduce the amount to a few thousand (plus accounting and legal fees) His rational for appealing was in order to pay $18,000 he would need to sell $36,000 in equities (to cover capital gains tax)...the long and the short, which surprised the wife, was their liquid assets (savings) was only a few thousand dollars. At the time his net worth was over 18 million.

Whether this is true across the board or not I do not know, just that I have not heard of the wealthy being big users of savings accounts.

[blueblood]

That experiment has been tried before and was a failure of biblical proportions.

Ummmmm. Progressive income tax is used used in every modern industrialized country on earth.

I was referring to communism as in the poor getting a free ride and the failure because of it.

The Alberta provincial gov't has a flat tax, I like their situation better than in tax crazy Central Canada.

Once again I will go with the CEO's and analysts that suggest our tax system is in the stone age. Those same analysts who create wealth for others and for themselves.

[Guest TrueMetis]

Is that an opinion or do you have some papaer that might back that up?

It's my conclusion from tax cuts never paying for themselves.

[dre]

I was referring to communism as in the poor getting a free ride and the failure because of it.

The Alberta provincial gov't has a flat tax, I like their situation better than in tax crazy Central Canada.

Once again I will go with the CEO's and analysts that suggest our tax system is in the stone age. Those same analysts who create wealth for others and for themselves.

A flat tax will never replace progressive income taxes in any democracy. The majority of voters would come out on the losing end of such a regressive taxation scheme and they wont be stupid enought to vote for it.

[dre]

Is that an opinion or do you have some papaer that might back that up?

I have known a few millionaires...most were not liquid at all, their assets tied up in equities, bonds and real estate. One fellow I knew was auditted in the mid 80s and presented with a bill from Revenue Canada for over $18,000. This caused a fight between him and his wife, who wanted to pay ASAP (because of the shame) and the husband, who wanted to appeal. He was confident that he could reduce the amount to a few thousand (plus accounting and legal fees) His rational for appealing was in order to pay $18,000 he would need to sell $36,000 in equities (to cover capital gains tax)...the long and the short, which surprised the wife, was their liquid assets (savings) was only a few thousand dollars. At the time his net worth was over 18 million.

Whether this is true across the board or not I do not know, just that I have not heard of the wealthy being big users of savings accounts.

Theres no sure-fire formula to follow. If the rich get big tax cuts they will probably invest more, but that money could wind up anywhere in the world.

If you want to insure that the money goes into the economy best thing to do would be to cut taxes for the lower income brackets... they are virtually guaranteed spend that money consuming things, and the money will trickle UP from there to the wealthy (who own and invest in the supply side).

I think we already have a pretty good tax system. We need to over cheaters and remove loopholes but other than that I dont see much that should change. We get a great deal for what we pay.

Whether this is true across the board or not I do not know, just that I have not heard of the wealthy being big users of savings accounts.

[Saipan]

No what happens all the time is rich people invest a fraction of what they save through tax-cuts and hoard the rest.

OK, take the really rich say for example Gates and Buffet. Show me how much they hoard un-invested.

[bush_cheney2004]

Are you just saying that rich people can dodge income taxes with creative bookkeeping? I don't specialize in economics so I don't think I'm following you.

No, I am saying that "rich people" have the resources to buy professional wealth managers, who know tax law and how to minimize tax liability. Taxing annual income is one thing, but government going after post-tax wealth is vigorously avoided (e.g. estate (death) taxes). One such strategy uses high premium life insurance products to mitigate the impact of such estate taxes, as death benefits are not taxable in most cases.