Tories turning attacks toward Layton, NDP

[punked]

29% on income over $128800K a year......so if one is close to that, why would someone want to go over by 10-15k a year?

It is a 3% hike from $83,088 and $128,800 meaning that the income tax increase on 128,800 a year is 4000 dollars. That means if you are in that paying an extra 4000 dollar range you can put that 4 grand into an RRSP keep it for yourself and not be bumped into the next tax bracket. However if you are over that 4 grand you take more money home.

You don't understand how math works do you? The right in this country.

[Guest Derek L]

He is saying your argument is wrong. He is not agreeing with your crazy idea of a flat tax with no corporate income tax. Sorry you really don't get this do you?

No, I do get it. I don't like the government playing Robinhood with my money.

What is unfair about a flat tax of say 20%?

For the sake of argument, let's say my income last year was ~220000K. So with a flat tax of 20%, I'd be paying 44000K.

How's that unfair, compared to say the bus driver earning ~55000K a year, that under this 20% tax pays 11000K

Would that not only be a cut for me, but also the bus driver under our current tax system?

[punked]

No, I do get it. I don't like the government playing Robinhood with my money.

What is unfair about a flat tax of say 20%?

For the sake of argument, let's say my income last year was ~220000K. So with a flat tax of 20%, I'd be paying 44000K.

How's that unfair, compared to say the bus driver earning ~55000K a year, that under this 20% tax pays 11000K

Would that not only be a cut for me, but also the bus driver under our current tax system?

It would also be a cut for government revenues. Which might be what you are arguing for. I really can't tell. If you think you can make up for a 10% cut in taxes for the top, and a 6-4% cut for the middle up upping the lowest rate by 5% you know less math then I give you credit for. Sorry the money isn't there.

BTW I am not playing Robbin Hood with your money. The great Conservative Teddy Roosevelt said it best when he said:

As a matter of personal conviction, and without pretending to discuss the details or formulate the system, I feel that we shall ultimately have to consider the adoption of some such scheme as that of a progressive tax on all fortunes, beyond a certain amount, either given in life or devised or bequeathed upon death to any individual – a tax so framed as to put it out of the power of the owner of one of these enormous fortunes to hand on more than a certain amount to any one individual; the tax of course, to be imposed by the national and not the state government. Such taxation should, of course, be aimed merely at the inheritance or transmission in their entirety of those fortunes swollen beyond all healthy limits.

His argument was it was in this system that you got rich so it is in this system in which you will pay taxes. You got rich because of an educated, healthy, just society and will keep it that way.

Edited April 24, 2011 by punked

[TimG]

What is unfair about a flat tax of say 20%?

The flat tax argument is a red herring. No one is proposing a true flat tax. All they are talking about is reducing the number of tax brackets from 5 to 2.

A true flax tax would eliminate deductions which would treat $60K taken in by a hot dog street vendor the same as $60K taken in by a teacher. They are not comparable incomes since the street vendor has expenses to pay and needs deductions. That is why flat taxes make no sense.

Edited April 24, 2011 by TimG

[blueblood]

That isn't the point. The point is the paper says because as people earn more money they pay a higher percentage of taxes means they wont want to earn more money. That flies in the face of reality. You can think it is unfair and we can have that argument but the economic argument that somehow our tax system makes it so people don't want to earn more money is a dumb one. You agree with that? People still want to earn more in Canada regardless of the tax system or do you turn down your raise when offered one?

We can have a discussion about fairness in our tax system after we get past your idea that people don't want want to earn more. The paper and your belief is so far off base it isn't even funny.

The right in this country.

That works when there are no low tax jurisdictions around. People will put a little extra zip into their work when they are taxed less. When you are taxed less you get to keep more of what you make.

People will always want to earn more, but when its show time the low tax method often produces the best results. Why do the ndp in manitoba have a 0% tax rate on small businesses? If there are higher taxes, it provides incentive to incurr more expenses on the business. A lot of guys in sole proprietorships were faced with this dilemna. When it gets to the point where a person gets dinged 44% + at tax time, there's not much incentive to haul ass once the bills are paid.

[Guest Derek L]

It would also be a cut for government revenues. Which might be what you are arguing for. I really can't tell. If you think you can make up for a 10% cut in taxes for the top, and a 6-4% cut for the middle up upping the lowest rate by 5% you know less math then I give you credit for. Sorry the money isn't there.

BTW I am not playing Robbin Hood with your money. The great Conservative Teddy Roosevelt said it best when he said:

His argument was it was in this system that you got rich so it is in this system in which you will pay taxes. You got rich because of an educated, healthy, just society and will keep it that way.

As you illustrated above punked, there are currently legal ways to "hide" my income (RRSP etc), as I mentioned, I would like a flat tax without exemptions. Would that not be fair, for all Canadians? Thats also what I meant when I brought up the 30 billion a year industry for hiding income. All Canadians could do their taxes on a napkin, just think, no tax lawyers or accountents

The flat tax argument is a red herring. No one is proposing a true flat tax. All they are talking about is reducing the number of tax brackets from 5 to 2.

A true flax tax would eliminate deductions which would treat $60K taken in by a hot dog street vendor the same as $60K taken in by a teacher. They are not comparable incomes since the street vendor has expenses to pay and needs deductions. That is why flat taxes make no sense.

Tim, I agree. It would have to be two teirs.....those paying taxes and those that can not....you can't get blood from a stone

For example, the Australian Federal Liberals are(perhaps did) propose a flat tax recently that would be ~35% and would raise the personnal exemption for low income earners to ~25k a year.

[TimG]

Tim, I agree. It would have to be two teirs.....those paying taxes and those that can not....you can't get blood from a stone

There is a huge difference between a flat tax and a two tier system which your are proposing. A flat tax means no deductions which is unacceptable for the reasons I stated. Edited April 24, 2011 by TimG

[bloodyminded]

When it gets to the point where a person gets dinged 44% + at tax time, there's not much incentive to haul ass once the bills are paid.

And yet the people who make enough so that their rate is 44% tend to be quite successful, at least modestly ambitious, and continue apace. They don't throw up their hands and give up because of a relatively high tax rate. I think you're indulging theory over reality here.

[Guest Derek L]

There is a huge difference between a flat tax and a two tier system which your are proposing. A flat tax means no deductions which is unacceptable.

Tim, why is it a deal breaker?

I don't see it as my role to subsidize the hot dog vendor, Bombardier or the oil sands.

Edited April 24, 2011 by Derek L

[blueblood]

And yet the people who make enough so that their rate is 44% tend to be quite successful, at least modestly ambitious, and continue apace. They don't throw up their hands and give up because of a relatively high tax rate. I think you're indulging theory over reality here.

That's from the guys who are still in sole proprietorships. People also value their time off. If those guys have their bills paid, that time off is looking pretty good when there's a 44+% tax on doing extra work. When a persons incorporated, they can keep the business's money in retained earnings which is taxed lower. And lots of guys are going that route.

Its different if your a wage earner. Because your under contract and can show up for work and get paid. A wage earner at six figures gets his taxes deducted from his cheque and doesn't have a day long meeting with the accountant. Its a different game when we're talking about wage earners.

[TimG]

Tim, why is it a deal breaker?

Because many deductions are absolutely necessary for a fair tax system. Why should a hot dog vendor pay on tax all on the money they collect from customer? Shouldn't they be allowed to deduct input costs? If you make that exception then you will find that almost all deductions in this country have good justifications (except for the CPCs recent boutique tax cuts which are purely political). Edited April 24, 2011 by TimG

[Guest Derek L]

Because many deductions are absolutely necessary for a fair tax system. Why should a hot dog vendor pay on tax all on the money they collect from customer? Shouldn't they be allowed to deduct input costs? If you make that exception then you will find that almost all deductions in this country have good justifications (except for the CPCs recent boutique tax cuts which are purely political).

Perhaps the hot dog vendor should change buisness models and Incorporate his hot dog stand...

[RNG]

Have any of you taken a serious look at FairTax. I would move to a GST type implementation, but I love it in principle.

http://www.fairtax.org/site/PageServer

[Guest Derek L]

Have any of you taken a serious look at FairTax. I would move to a GST type implementation, but I love it in principle.

http://www.fairtax.org/site/PageServer

I like the idea of a national VAT, coupled with a low flat tax on income. The HST could be used as a foundation if all provinces jumped on board.

[TimG]

I like the idea of a national VAT, coupled with a low flat tax on income. The HST could be used as a foundation if all provinces jumped on board.

You forget that a key objective of an effective tax system is getting the payers to buy into the model (extracting the most feathers with the least hissing). The trouble with these plans is they are unsaleable to the general public.

[RNG]

You forget that a key objective of an effective tax system is getting the payers to buy into the model (extracting the most feathers with the least hissing). The trouble with these plans is they are unsaleable to the general public.

Which again brings me to advocating either term limits of one term, or longer terms. I know, I know, it would take major constitutional changes and probably effectively impossible to do. But most governments won't do something that is good for the country if it will cost them the next election under the system we have now. Just take a look at the US, where they have effectively a 2 years cycle. None are willing to take the steps necessary to get them out of their economic situation.

[cybercoma]

People will put a little extra zip into their work when they are taxed less.

That's not exactly true. Research shows there's an effect where people work less as they earn more. For instance, if they make enough to live comfortable, then all of a sudden find themselves making twice as much, many people will just work half as many hours. Take the same to be true with taxes. Decrease tax, people earn more and work less. So, it's not self-evident that people put extra zip into their work when they are taxed less, as you say.

[RNG]

That's not exactly true. Research shows there's an effect where people work less as they earn more. For instance, if they make enough to live comfortable, then all of a sudden find themselves making twice as much, many people will just work half as many hours. Take the same to be true with taxes. Decrease tax, people earn more and work less. So, it's not self-evident that people put extra zip into their work when they are taxed less, as you say.

Could you provide a link to any studies showing this?

[cybercoma]

Could you provide a link to any studies showing this?

It's a commonly-known economic theory. In fact, it's so common there's a wiki on it: http://en.wikipedia.org/wiki/Backward_bending_supply_curve_of_labour

I shouldn't have claimed definitively that this is what happens. However, there is debate about it. It's certainly not cut-and-dry.

Edited April 24, 2011 by cybercoma

[RNG]

It's a commonly-known economic theory. In fact, it's so common there's a wiki on it: http://en.wikipedia.org/wiki/Backward_bending_supply_curve_of_labour

I shouldn't have claimed definitively that this is what happens. However, there is debate about it. It's certainly not cut-and-dry.

Thank you, but I would love to see some type of quantification on the wages scale in the graph. If I was a government bureaucrat making 300,oo/yr, that's one thing. If I'm a labourer making $20/hr, I don't think I'd slow down if you got it up to $25/hr.

Edited April 24, 2011 by RNG

[cybercoma]

Thank you, but I would love to see some type of quantification on the wages scale in the graph. If I was a government bureaucrat making 300,oo/yr, that's one thing. If I'm a labourer making $20/hr, I don't think I'd slow down if you got it up to $25/hr.

That's the problem with theoretical propositions. It's not necessarily based on anything in reality. In particular, this idea is about individual choices, rather than aggregate supply of labour. It also relies on the idea of utility, which extends beyond strict material worth. I tend to believe in utility theory, but I'm somewhat of a socialist, if you haven't noticed, so it might be my bias.

Here's the idea: working earns you money, which obviously has economic value. Leisure-time, though, has utility, which gives it value as well. My example was extreme, where I said someone making twice as much would work half as much. That's not necessarily true. However, if you make a comfortable living, have enough money saved for retirement or whatever and you make more money (or are taxed less, causing you to keep more at the end of the day), you may exchange that additional wage for additional leisure time. The utility of the leisure time may have more value for you than the material value of the wage. In other words, the exact numbers are unimportant. The important concept is exchanging wage value for the utility value of leisure.

[Guest Derek L]

You forget that a key objective of an effective tax system is getting the payers to buy into the model (extracting the most feathers with the least hissing). The trouble with these plans is they are unsaleable to the general public.

I agree to an extent. All things considered, and it is apples to oranges, but in the States there is grassroots support growing amongest the Tea Party for fair tax. Even during the '08 GOP convention one of the question asked of the candidates was if such a billed passed, would they sign it into law.

Outside of Quebec, no party has really seriously brought up the idea of tax reform.

The "eat the rich mentality" and Big Buisness=evil stance of many parties up here, is really only hurting the average Canadian, in that we are being kept from a honest & open debate on the mater.

What are parties talking about here? Ipod taxes, "free daycare", who's wife is Canadian, 65 fighter jets and tin foil hat coalition and contempt conspiracy theories.

[bloodyminded]

Thank you, but I would love to see some type of quantification on the wages scale in the graph. If I was a government bureaucrat making 300,oo/yr, that's one thing. If I'm a labourer making $20/hr, I don't think I'd slow down if you got it up to $25/hr.

True, and as cybercoma said, it's not cut and dried. But this conversation seemed to be bringing up people making much more than that, with some asserting that high-income earners will work more if their taxes are lower.

That's just speculation, and I don't see any evidence for that.

[RNG]

True, and as cybercoma said, it's not cut and dried. But this conversation seemed to be bringing up people making much more than that, with some asserting that high-income earners will work more if their taxes are lower.

That's just speculation, and I don't see any evidence for that.

I agree it doesn't work for individuals, but I do think it does for corporations.

[Guest Derek L]

True, and as cybercoma said, it's not cut and dried. But this conversation seemed to be bringing up people making much more than that, with some asserting that high-income earners will work more if their taxes are lower.

That's just speculation, and I don't see any evidence for that.

Like you said, it's not cut and dry....If taxes were lower, I might not nessarly "work" more, but if I had access to an extra 10-20-30k a year of my money, I would be likley be inclined to invest more, spend more and save more.

This, through direct and indirect measures, will translate into more targeted cash flow in the economy. If I bought a new boat, someone else is going to build it. If I invest in new companies, and they succeed, others will also benifit. If I save more, banks have more leverage and capital to loan money.