Flat tax.

[PIK]

Is that not the answer to everything,pay what you can aford and take the burdon off the poor and middle class. Why won't politicions touch that issue, can it not be discussed?

[Michael Hardner]

Is that not the answer to everything,pay what you can aford and take the burdon off the poor and middle class. Why won't politicions touch that issue, can it not be discussed?

How does it take the burden off the poor & middle class?

[MiddleClassCentrist]

How does it take the burden off the poor & middle class?

It doesn't.

In fact, much like the HST, transfers burden of tax from the wealthy and corporations to the poor and middle class.

[CPCFTW]

I'd be fine with our tax system the way it is if the tax revenue didn't disproportionately go towards those who pay the least. The rich and successful don't only pay more taxes by virtue of being more successful, they also have to deal with progressive taxes which discourages them from pursuing more success. At the top income bracket people barely get $0.50 for every $1.00 they earn. How much incentive do the wealthy in our society have to start a business on the side and create jobs when they will barely get 50% of the income they generate? Other than military and other national interests, our tax revenue should go towards creating jobs and encouraging entrepreneurship and small business development, rather than paying for bus drivers, token collectors, and government secrataries to live the good life or be a "strong middle class".

When we have small businesses and other PRIVATE employers competing for employees to work for them, rather than employees competing for scarce jobs, then we will finally have created the ideal capitalist society. The society we currently live in is a pathetic excuse for capitalism.

Anyway, one good thing about flat tax is how easy it is to manage. It would remove a lot of the bloat in our system. I think it hasn't been mentioned because most of Canada is still very centrist/socialist. I'd say it's something like 20% con, 60% centrist, 20% socialist (in Canadian terms.. In US terms this would be 80% Dem and 20% Repub). The cons need to capture more of the centrists than the NDP/Libs to retain power, and flat tax is an idea that would probably alienate 80% of the electorate.

[CANADIEN]

The rich and successful don't only pay more taxes by virtue of being more successful, they also have to deal with progressive taxes which discourages them from pursuing more success. At the top income bracket people barely get $0.50 for every $1.00 they earn. How much incentive do the wealthy in our society have to start a business on the side and create jobs when they will barely get 50% of the income they generate?

As Warren Buffett says, this has never preventing him from investing.

[CPCFTW]

As Warren Buffett says, this has never preventing him from investing.

1. I'm talking about people making 100-150k who can choose between relaxing while living a comfortable, moderately wealthy life, or risking some capital to try starting a business on the side to get to the next level of wealth. All the red tape and barely being able to earn $0.50 of the next marginal dollar earned severely discourages this. There is very little incentive for Canadians to try to start the next google or facebook or apple, etc. I'm not talking about billionaires.

2. Buffet was delivering papers when he was barely out of diapers and investing in stock markets by the time he was in high school.. He's not exactly a normal case.

3. For all his wealth, Buffet hasn't done much innovating to create more jobs. He simply finds the best innovators and provides capital to them so that they can generate jobs.

[CANADIEN]

1. I'm talking about people making 100-150k who can choose between relaxing while living a comfortable, moderately wealthy life, or risking some capital to try starting a business on the side to get to the next level of wealth. All the red tape and barely being able to earn $0.50 of the next marginal dollar earned severely discourages this. There is very little incentive for Canadians to try to start the next google or facebook or apple, etc. I'm not talking about billionaires.

2. Buffet was delivering papers when he was barely out of diapers and investing in stock markets by the time he was in high school.. He's not exactly a normal case.

3. For all his wealth, Buffet hasn't done much innovating to create more jobs. He simply finds the best innovators and provides capital to them so that they can generate jobs.

Don't like the message, shoot the messenger (Buffett).

Interesting you talk about Apple. Steve Jobs was not earning that much money when he started Apple. And tax rates were higher. It didn't stop him.

You might, and I say might, have a point about red tape. But seriously, only a fool would say "I won't try to make more money because I'll be paying more taxes". Of course, feel free to make a foul of yourself by arguing that I am calling for sky-rocketting tax rates.

[CPCFTW]

Don't like the message, shoot the messenger (Buffett).

Interesting you talk about Apple. Steve Jobs was not earning that much money when he started Apple. And tax rates were higher. It didn't stop him.

You might, and I say might, have a point about red tape. But seriously, only a fool would say "I won't try to make more money because I'll be paying more taxes". Of course, feel free to make a foul of yourself by arguing that I am calling for sky-rocketting tax rates.

So is your argument only going to be more anecdotal evidence? Saddam Hussein made a lot of money under Iraq's form of government, why don't we imitate that too?

You don't need to worry about pre-emptively preparing defenses against a strawman argument when you haven't even presented a coherent argument for me to bother using a strawman in the first place.

[CANADIEN]

So is your argument only going to be more anecdotal evidence?

Well... still beats your "people don't invest because they might paying more taxes if they become richer" statement... which you will noit back up with examples.

Saddam Hussein made a lot of money under Iraq's form of government, why don't we imitate that too?

He didn't pay much taxes, now did he? Looks closer to something YOU would encourage than a model I want us to follow.

[CPCFTW]

Well... still beats your "people don't invest because they might paying more taxes if they become richer" statement... which you will noit back up with examples.

He didn't pay much taxes, now did he? Looks closer to something YOU would encourage than a model I want us to follow.

Do I really have to back up the fact that people will have more incentive to work for $1 of each dollar earned than $0.50? That people will work harder if they're entitled to more of the fruits of their labour? Does the Soviet Union ring a bell? If you need me to prove that statement, then I think we're done here.

[Bonam]

Do I really have to back up the fact that people will have more incentive to work for $1 of each dollar earned than $0.50? That people will work harder if they're entitled to more of the fruits of their labour? Does the Soviet Union ring a bell? If you need me to prove that statement, then I think we're done here.

I think it would be interesting to see a quantitative study measuring the likelihood of people to do extra work vs the marginal tax rate that they will see on the income from that work. Obviously, a very difficult study to carry out. My guess, though, would be that someone who is considering getting a second job or starting a business would be almost as likely to do so at 50% tax as at 0%. Obviously, as the tax rate reached 100%, the likelihood would approach 0, you wouldn't do any extra work if the tax rate was 100%. I think the curve would look like this:

http://www.wolframalpha.com/input/?i=graph+%2820-e^%28x%2F33%29%29*5.2+from+x+%3D+0+to+100

(edit: stupid link doesn't wanna show up as a link)

x axis is % marginal tax

y axis is (% chance to do extra work) / (% chance to do extra work if the tax rate was 0)

Anyway, I'd tend to agree that a 50% tax, while providing some disincentive, is not a very strong disincentive to generating extra money. If I could get a 2nd job at say $50/hour, having to pay $25/hour in tax on it wouldn't stop me.

Edited August 27, 2011 by Bonam

[bush_cheney2004]

...Anyway, I'd tend to agree that a 50% tax, while providing some disincentive, is not a very strong disincentive to generating extra money. If I could get a 2nd job at say $50/hour, having to pay $25/hour in tax on it wouldn't stop me.

But it's not just the marginal rate that can act as a disincentive...tax credits and deductions can also be impacted once a high enough adjusted gross income level is reached. So as a sample size of one, I purposely limit my employment hours by year's end to keep income below that threshold.

[Bonam]

But it's not just the marginal rate that can act as a disincentive...tax credits and deductions can also be impacted once a high enough adjusted gross income level is reached. So as a sample size of one, I purposely limit my employment hours by year's end to keep income below that threshold.

If earning more money actually causes you to end up with less after tax due to deductions/credits disappearing, that means the effective marginal tax rate is actually greater than 100%. Obviously, if people can end up with more money by working less, they will do so. Anyway, a tax system which has credits that disappear suddenly at specific values of income sounds ill-designed, since imposing > 100% effective marginal tax rates at any income level is very counterproductive.

[bush_cheney2004]

....Anyway, a tax system which has credits that disappear suddenly at specific values of income sounds ill-designed, since imposing > 100% effective marginal tax rates at any income level is very counterproductive.

I agree....and specifically strive to preserve education tax credits because we are paying for a student's college education completely out of pocket (we were already penalized for having saved that money in the first palce, making us ineligible for financial aid).

[Bonam]

I agree....and specifically strive to preserve education tax credits because we are paying for a student's college education completely out of pocket (we were already penalized for having saved that money in the first palce, making us ineligible for financial aid).

Honestly I think students are actually a lot better served by paying for their own education. Student loans are easily available, and they'll be able to save up the tuition payments as tax credits, which they can use to completely negate any taxes they have to pay for years or sometimes even decades after graduating. It also teaches them finances and money management throughout their time in college. I, for one, disagree with the American fixation on saving for their kid's college education, when it is 1) not necessary and 2) counterproductive (especially when you take into account their loss of eligibility for financial aid).

[bush_cheney2004]

Honestly I think students are actually a lot better served by paying for their own education. Student loans are easily available, and they'll be able to save up the tuition payments as tax credits, which they can use to completely negate any taxes they have to pay for years or sometimes even decades after graduating.

Graduating with tons of debt, even at lower government subsidized interest rates is not the preferred option, plus the loans-only route can limit university choices. Grants and loans are under severe budget pressure and higher demand these days

It also teaches them finances and money management throughout their time in college. I, for one, disagree with the American fixation on saving for their kid's college education, when it is 1) not necessary and 2) counterproductive (especially when you take into account their loss of eligibility for financial aid).

Financial aid is not guaranteed anymore, and rarely covers the total cost involved. My sister went to Yale on a Pell grant, and since my undergraduate and graduate education was completely paid for through scholarships and other programs, I don't mine giving back!

[CANADIEN]

Do I really have to back up the fact that people will have more incentive to work for $1 of each dollar earned than $0.50?

Do I really have to back up the fact that 50 cents is more than zero? Do I really have to point out the fact that someone who invests time and money and ends up making a ofrtune is still doing more money, even with a 50% tax rate than if he/she had sat down and done nothing?

And do I really need to point out we are not talking about Iraq and the Soviet Union here, no matter how much you insist on aking yourself into a laughingstock with those non-sensical comparisons?

Edited August 27, 2011 by CANADIEN

[William Ashley]

Honestly I think students are actually a lot better served by paying for their own education. Student loans are easily available, and they'll be able to save up the tuition payments as tax credits, which they can use to completely negate any taxes they have to pay for years or sometimes even decades after graduating. It also teaches them finances and money management throughout their time in college. I, for one, disagree with the American fixation on saving for their kid's college education, when it is 1) not necessary and 2) counterproductive (especially when you take into account their loss of eligibility for financial aid).

Personally I like grants, not only do I not pay for them (directly) but they pay for my education.

Grants, does a body good.

Free post secondary is the way to go. Once everyone who wants to learn is provided for, all that is left is things to do. You know productive stuff.

That is why I support a graduated Free Education system where, year after year things cost the public less, and education is free via, investiture, and a one time grant down payment.

Students who take part in "free education" just pay money back in for the next blocks students.

Rather than worrying about loans they become "donations" to free education. This means the ongoing cost of education is reduced from a tax standpoint.. and "loans from lenders" at interest is removed.

This way the educated pay for education, rather than people who really don't get it. It also eliminates the "rich don't get money for education from anyone but their parents issue."

You may say "work while in school" this is problematic because you are already expected to put in 40 hours of classes and study each week.

Colleges should definately be free from the get go.. first off because they cost so little compared to university, and are trade schools. But only for in demand occupations. Or a quota based on assessed future need for skills training. Those outright should be free - even with coop or direct apprenticship - business sponsership for litter picking etc..

Co-Op programs are awsome for those it exists in.. there should definately be at trend to enhance co-op programs so as to "pay for tuition" outright.

These two measures would hope to reduce the overall student loans situation...

More co-op programs is really where it is at, if only the work force /government was willing to take "Service" for free tuition such as occurred in Guyana, but it working. You know National Service - co-op for free education.

There are already cash back offerings for military service.

There are plenty of examples:

http://www.israelnationalnews.com/News/News.aspx/139609#.TlqVueZh23c

http://www.aucc.ca/can_uni/our_universities/rmc_e.html

http://www.suite101.com/content/free-tuition-for-veterans-a59833

this exists for minorities such as the elderly etc.. also in some locals.. I could post hundreds of examples.

The problem is there is too much of a disconnect between the program and "actual occurence" they need to bring things together and take out the administrative hastles.

My general idea is a plethora of enhancement on indirect and direct investment into the education system that has little or no cost to the student via private/public partnership to utilize students ---- and leveraging productive inputs from students so as to offset monetary loss in offering free tuition but offering many options for "free tuition, and putting it upfront so they can see it.

IMO money becomes less significant the older you are (maybe it is just me), removing monetary stresses and time wastage such as student loan dispersal line ups and paperwork is a good first go at improving the system.

Just a point about the carry forward.. regardless of the source of funds.. the student is still paying for the tuition so it would still be tax deductable whether they are "paying for it out of pocket, or from a third party." The money still gets transfered to them at some point before they transfer it for tuition or textbook purposes. Grants still count as income, however the tax ability of this amount becomes somewhat negated. Sure my $5000 tuition is going to give me a write off but that $5000 grant for tuition is taxable... where is that carry forward?

Edited August 28, 2011 by William Ashley

[William Ashley]

Do I really have to back up the fact that people will have more incentive to work for $1 of each dollar earned than $0.50? That people will work harder if they're entitled to more of the fruits of their labour? Does the Soviet Union ring a bell? If you need me to prove that statement, then I think we're done here.

The Soviets accomplished a LOT they were great workers.

Their population was 1/2 of the US with them lined up against half of Europe and the US, and they still managed to compete.

There technology is still among the best in the world, and their resource sectors the largest.

Your example is a false dichotomy.

They were more productive than the west.

They just fell behind in computer techs.

Traditionally productivity increases when people work for a goal, or survival rather than 'simply' monetary gain.

Of course the less you earn more the reality of that goal can be seen.

Professionalism denotes a certain amount of ho hum as far as I can tell.

Productivity is a strange beast that depends more on the system of production than the people producing, except perhaps children.

It was a baseless knock at socialism with no basis in reality.

http://www.youtube.com/watch?v=aIwCmkPEfS0

The whole "meltdown" in Ukraine likely played a role in the downfall, it was incredibly resource taxing.. but there is more to it most people don't get to see.

Just look at Japan for an idea of what a meltdown can do economically.

Edited August 28, 2011 by William Ashley

[bush_cheney2004]

Just look at Japan for an idea of what a meltdown can do economically.

The US had a "meltdown" too....didn't make Americans want to drive Trabants or Ladas.

[bloodyminded]

The rich and successful don't only pay more taxes by virtue of being more successful, they also have to deal with progressive taxes which discourages them from pursuing more success.

This is--by definition, mind you--false.

Read it again.

Other than military and other national interests, our tax revenue should go towards creating jobs and encouraging entrepreneurship and small business development, rather than paying for bus drivers, token collectors, and government secrataries to live the good life or be a "strong middle class".

Check the part I bolded. That's kind of the crux, isn't it? We don't all agree on what, exactly, constitutes the "national interest" and what doesn't.

When we have small businesses and other PRIVATE employers competing for employees to work for them, rather than employees competing for scarce jobs, then we will finally have created the ideal capitalist society. The society we currently live in is a pathetic excuse for capitalism.

I'm inclined to agree, at least maybe. But there are many reasons why it isn't the case...and I doubt your reasons ("The Left!", presumably) are the only ones.

Edited August 28, 2011 by bloodyminded

[Hydraboss]

Do I really have to back up the fact that 50 cents is more than zero? Do I really have to point out the fact that someone who invests time and money and ends up making a ofrtune is still doing more money, even with a 50% tax rate than if he/she had sat down and done nothing?

This all sounds very convincing, but you're missing one teeny, tiny detail.

Risk.

The only statistic I can provide is "of the two people surveyed, zero saw benefit in starting a new business venture in Canada". That would be me and my tax accountant. I had intentions of financing my own start-up (to maybe employ a staff of 10-15), but after the financial analysis I was going to lose even more deductions and THEN THERE WAS THE RISK OF THE BUSINESS GOING TITS UP. The "reward" versus the risk of loss + loss of tax deductions = no way in hell. The math said I make somewhat less working for a paycheck for a multinational, but there is zero risk to my credit facilities, my savings, my tax credits or my credit rating.

Why would I "risk it all" for an extra $70-90k, of which I would only take home $40-50k? The hours involved, the financial handcuffing I'd endure, not to mention the staff-associated taxes (CPP/WCB/benefits anyone?). If I had the chance to bring home close to an additional six figures, I would have gone for it.

[William Ashley]

The US had a "meltdown" too....didn't make Americans want to drive Trabants or Ladas.

Canadians apparently did... the Niva actually looks "bigger" than the hummer. (looks..)

Although now you have Asian cars in that are much the same, small size.. high fuel economy.

True Canadian/American built cars like GM have offered fuller Sedan and Sport models.

The Niva is great, I'm tall, so smaller cars are issued.

By the way I'm not humorless but they drive alright.

check this out

http://en.wikipedia.org/wiki/BAV_485

It seems Chevy makes the Niva now..

http://en.wikipedia.org/wiki/Lada_Niva

Made with GM and AutoVaz joint.

http://motorld.com/17340/lada-niva--vs-hummer-h2

Edited August 30, 2011 by William Ashley

[CPCFTW]

This all sounds very convincing, but you're missing one teeny, tiny detail.

Risk.

The only statistic I can provide is "of the two people surveyed, zero saw benefit in starting a new business venture in Canada". That would be me and my tax accountant. I had intentions of financing my own start-up (to maybe employ a staff of 10-15), but after the financial analysis I was going to lose even more deductions and THEN THERE WAS THE RISK OF THE BUSINESS GOING TITS UP. The "reward" versus the risk of loss + loss of tax deductions = no way in hell. The math said I make somewhat less working for a paycheck for a multinational, but there is zero risk to my credit facilities, my savings, my tax credits or my credit rating.

Why would I "risk it all" for an extra $70-90k, of which I would only take home $40-50k? The hours involved, the financial handcuffing I'd endure, not to mention the staff-associated taxes (CPP/WCB/benefits anyone?). If I had the chance to bring home close to an additional six figures, I would have gone for it.

Thank you for providing a perfect example to my argument. I don't know why people keep bringing up part time jobs and investing as counterpoints. I was clearly talking about starting a business. If people in strong financial situations like yourself were more encouraged to start up businesses employing 10-15 people then our economy would be in a much better situation. But who's gonna take on that kind of risk when each dollar they earn is taxed close to 50%?

Instead, the wealthy are encouraged to keep the best corporate jobs and horde/invest their money in corporate stocks and bonds (in rrsps and tfsas). Result: less jobs and lower job mobility. Progressive taxation does a great job of keeping the lower/middle class down.

Like I said at the start, I'm not against progressive taxation, but I think that anyone who creates jobs should be getting massive tax credits. Their employees pay taxes for them anyway (or at least are not consuming tax revenue via EI, welfare, etc.) The combination of progressive taxation and massive tax credits for job creation would be a huge incentive for the upper class to pursue business ventures to create jobs/competition.

Edited August 30, 2011 by CPCFTW

[Smallc]

But who's gonna take on that kind of risk when each dollar they earn is taxed close to 50%?

Except that it isn't. Only about 30 - 33% of the Canadian economy is taken up by taxes at all levels. 50% is very inaccurate.

Edited August 30, 2011 by Smallc