Should the Canadian rich pay more?

Topaz · December 21, 2011

I just read a article here that maybe the millionaires and billionaires in Canada should pay more, then the article says its not a good idea because if the government does that then the young rich will leave the country. I was told once, that to become rich in Canada, right after WW2, was the best time up until the mid 80's, because the economy was good and money was being make, now its a little harder, and investor have to be smarter. I think the rich will sometime in the future have to pay more because the middle-class is disappearing and the lower-income doesn't pay, so that only leaves the mega-rich to pay. Of course, the government can start cutting services, which may be the way Harper is going. I'm sure there are some of the mega-rich that do give, but the ones that don't. the Food Banks could use your help and would they miss a few thousand? It is write-off. http://www.cbc.ca/news/business/story/2011/12/09/canadian-millionaires-taxes.html

TimG · December 21, 2011

Of course you are all hot and bothered by the differential between the 'mega rich' and the average Canadian but you seem to forget that the average Canadian is 'mega rich' by the definition of someone if china, India or Africa yet I don't see you arguing that the average Canadian be taxed so their standard of living is more in line with that of the average African.

Your hypocrisy on this point illustrates how you are driven by greed and jealousy - not by any sense of social justice.

In any case: the article is correct to state that the mega rich can and will relocate (or at least move their wealth) because the mega rich often do not depend on Canada for their wealth. This was not true in the past when global trade was not such a dominant feature of the economy.

Edited December 21, 2011 by TimG

dre · December 22, 2011

In any case: the article is correct to state that the mega rich can and will relocate (or at least move their wealth) because the mega rich often do not depend on Canada for their wealth. This was not true in the past when global trade was not such a dominant feature of the economy.

That cuts both ways. They will flee the country if you drastically cut services, allow infrastructure to crumble, and fail to keep the nation modern as well.

This is one of the best places in the world to be/get rich, and one of the easiest places for a rich person to get richer, in large part because theres MASSIVE public investment in infrastructure, services, and because of all the things we do to help businesses. I dont see a lot of wealthy people fleeing to Somalia... even though they would pay no taxes at all if they did.

TimG · December 22, 2011

That cuts both ways. They will flee the country if you drastically cut services, allow infrastructure to crumble, and fail to keep the nation modern as well.

Obviously there has to be a balance. The only trouble I have is with people who think that all of the finacial problems would go away if we only taxed those filty rich people more. This is nothing but scape goating designed to avoid having a discussion about whether the current set of services that we expect are sustainable.

dre · December 22, 2011

Obviously there has to be a balance. The only trouble I have is with people who think that all of the finacial problems would go away if we only taxed those filty rich people more. This is nothing but scape goating designed to avoid having a discussion about whether the current set of services that we expect are sustainable.

I dont think its scapegoating. Government has to draw its revenue by harnessing a portion of the gross domestic product, so they have to tax that money where it is. If we run defecits clearly SOMEONE is not paying enough taxes.

Im just pointing out that making cuts to services instead of raising revenues is not necesssarily going to keep businesses or wealthy people here.

Tax rates are WAY less important than people think in terms of business and the economy, unless things get extreme in either direction.

Bonam · December 22, 2011

I dont think its scapegoating. Government has to draw its revenue by harnessing a portion of the gross domestic product, so they have to tax that money where it is.

What happened to your plan of the government creating the money it needs, bypassing the banking system, to pay for its expenditures, rather than using taxation?

If we run defecits clearly SOMEONE is not paying enough taxes.

I disagree. Let's say the budget is balanced one year. Everything is fine and dandy, everyone paying their "fair share", etc. Next year, none of the tax rates or spending rates change, but the economy goes into recession due to external factors. Does that suddenly mean someone isn't paying their fair share? Or maybe it's just the government rightfully borrowing during economic downturn to keep things going? Or just excessive spending?

dre · December 22, 2011

What happened to your plan of the government creating the money it needs, bypassing the banking system, to pay for its expenditures, rather than using taxation?

I disagree. Let's say the budget is balanced one year. Everything is fine and dandy, everyone paying their "fair share", etc. Next year, none of the tax rates or spending rates change, but the economy goes into recession due to external factors. Does that suddenly mean someone isn't paying their fair share? Or maybe it's just the government rightfully borrowing during economic downturn to keep things going? Or just excessive spending?

What happened to your plan of the government creating the money it needs, bypassing the banking system, to pay for its expenditures, rather than using taxation?

Eventually we are going to need a new monetary system, and thats one idea out there. But if you think the government should keep giving banks money for almost nothing, and then borrow it back at interest, then I guess we can keep doing that too... for a while.

I disagree. Let's say the budget is balanced one year. Everything is fine and dandy, everyone paying their "fair share", etc. Next year, none of the tax rates or spending rates change, but the economy goes into recession due to external factors. Does that suddenly mean someone isn't paying their fair share? Or maybe it's just the government rightfully borrowing during economic downturn to keep things going? Or just excessive spending?

Yeah thats fair enough. Its fine have short term imbalances in either direction.

TimG · December 22, 2011

I dont think its scapegoating. Government has to draw its revenue by harnessing a portion of the gross domestic product

The government currently spends about 40% of GDP. Do you really think that is too little? How much would be an appropriate percentage? 50%? 100%?

In my opinion 40% of GDP is too high. Spending needs to come down. It certainly should not go up.

Im just pointing out that making cuts to services instead of raising revenues is not necesssarily going to keep businesses or wealthy people here.

It depends on what services. Government funded healthcare is a huge benefit. So are public roads and police. Billions spent on green energy scams? That does no good to anyone other than a few corporate cronies who profit. Edited December 22, 2011 by TimG

Topaz · December 22, 2011

The government currently spends about 40% of GDP. Do you really think that is too little? How much would be an appropriate percentage? 50%? 100%?

In my opinion 40% of GDP is too high. Spending needs to come down. It certainly should not go up.

It depends on what services. Government funded healthcare is a huge benefit. So are public roads and police. Billions spent on green energy scams? That does no good to anyone other than a few corporate cronies who profit.

How do you know for sure its 40%?? Because that's the what finance minister says? This is a government that keeps secrets and this is a finance minister that was educated as a lawyer and I bet its more like 80%GDP and that's why they are cutting so deeply. In the futre, whatever the minister says, double it.

Topaz · December 22, 2011

Of course you are all hot and bothered by the differential between the 'mega rich' and the average Canadian but you seem to forget that the average Canadian is 'mega rich' by the definition of someone if china, India or Africa yet I don't see you arguing that the average Canadian be taxed so their standard of living is more in line with that of the average African.

Your hypocrisy on this point illustrates how you are driven by greed and jealousy - not by any sense of social justice.

In any case: the article is correct to state that the mega rich can and will relocate (or at least move their wealth) because the mega rich often do not depend on Canada for their wealth. This was not true in the past when global trade was not such a dominant feature of the economy.

It s not greed or jealousy...please! Its common sense that says if the lower income don't pay income tax and the middle income is drying up then WHO is going to bring in the revenue for the government? It not the corporates and the expenses are going to be higher with more people unemployed, and retired. So YOU tell me how do they get the tax revenues if they don't turn to the mega-rich????

TimG · December 22, 2011

How do you know for sure its 40%??

The numbers are collected and published by a number of sources. http://en.wikipedia.org/wiki/Government_spending

It s not greed or jealousy...please! Its common sense that says if the lower income don't pay income tax and the middle income is drying up then WHO is going to bring in the revenue for the government?

There are not enough "mega-rich" people to make much of a difference to government revenues. If taxes go up they must go up on the middle class in order to generate enough revenue. Singling out "mega-rich" people as the only people who need to pay more is pure greed/jelously driven scape goating.

cybercoma · December 22, 2011

Obviously there has to be a balance.

Obviously, but you keep ignoring the fact that the income gap is rapidly growing. It's not the fact that there is a gap, there needs to be one, but that it's growing and growing fast. That's not balance.

Edited December 22, 2011 by cybercoma

cybercoma · December 22, 2011

the lower income don't pay income tax

Income taxes are not the only tax.

TimG · December 22, 2011

Obviously, but you keep ignoring the fact that the income gap is rapidly growing. It's not the fact that there is a gap, there needs to be one, but that it's growing and growing fast. That's not balance.

And you have yet to provide any argument that shows the gap between rich and poor is a statistic we should care about (correlations don't mean anything without some evidence of causality). What matters is the absolute wealth of the middle. Poorer societies are worse off than richer societies even if the have smaller 'gaps'. This obsession with the "gap" is nothing but more scapegoating driven by greed and jealousy. Edited December 22, 2011 by TimG

dre · December 22, 2011

And you have yet to provide any argument that shows the gap between rich and poor is a statistic we should care about (correlations don't mean anything without some evidence of causality). What matters is the absolute wealth of the middle. Poorer societies are worse off than richer societies even if the have smaller 'gaps'. This obsession with the "gap" is nothing but more scapegoating driven by greed and jealousy.

Its pretty well documented why its dangerous for wealth to concenrate too much in a society. Its inherently undemocratic, and will eventually lead to political and social instability or worse. It can also lead to the erosion of private property rights, and kinds of extreme measures designed to redistribute wealth. Thats one of the major reasons why the west has been successful... we put systems in place to avoid extreme concentration (graduated taxation, estate taxation, property taxation, social programs, etc).

Shady · December 22, 2011

If we run defecits clearly SOMEONE is not paying enough taxes.

How so? Why is it never that the government is spending too much? :rolleyes:

TimG · December 22, 2011

Its pretty well documented why its dangerous for wealth to concentrate too much in a society.

Really? Where? I stand by my claim that the median (which is not skewed by mega rich) is the most important metric. If the disparity is so large that the median income is stagnant or dropping then that is a problem. If the median income is rising then then there is no problem. In either case the "gap" is irrelevant.

cybercoma · December 23, 2011

correlations don't mean anything without some evidence of causality

Causality is practically impossible to determine in complex systems. Correlation is the best you get and the fact of the matter is the correlation between income gap and the health/social indicators is incredibly high for the complexity of the system.

cybercoma · December 23, 2011

Really? Where? I stand by my claim that the median (which is not skewed by mega rich) is the most important metric. If the disparity is so large that the median income is stagnant or dropping then that is a problem. If the median income is rising then then there is no problem. In either case the "gap" is irrelevant.

The median as a metric for what you describe is meaningless. You can balance out a bunch of people evenly across the entire length of a teeter-totter or you can pile them at the furthest ends of it and the median will be the same. Meanwhile half the population is worse off than they were before, while the other half is better off. While the fulcrum may move, it's when the people move further away from each other that there is a breakdown of trust in society between people because they're further apart. The adverse effects of damaged social psychology creates the impetus for increased social and health problems. Likewise, if everyone was piled about the middle there would be no motivation for ingenuity and advancement, which would lead to other detrimental effects. It's about having a balance where people are spread out about the teeter-totter, but not so far that they're clustered at opposite ends.

TimG · December 23, 2011

You can balance out a bunch of people evenly across the entire length of a teeter-totter or you can pile them at the furthest ends of it and the median will be the same.

A highly improbable (if not impossible) scenario in any human society. Incomes tend to follow bell curves with a long upper tail.

The adverse effects of damaged social psychology creates the impetus for increased social and health problems.

Sorry, I don't buy this nonsense that people have "damaged psychology" because they can't buy as much crap as their neighbors. Even if it was true - then the problem lies with the immature fools that measure happiness by what others have rather than appreciating what they have.

If we want to identify problems that need to be addressed it is social mobility - i.e. make sure that people have educational opportunities that allow them to better their circumstances. These things need adequate tax funding but it is unrelated to the distribution of incomes in society. You can have a large income gap and a adequately funded public school system. Simply reducing the income gap will do nothing about social mobility unless it is spent on the right things.

dre · December 23, 2011

Really? Where? I stand by my claim that the median (which is not skewed by mega rich) is the most important metric. If the disparity is so large that the median income is stagnant or dropping then that is a problem. If the median income is rising then then there is no problem. In either case the "gap" is irrelevant.

Its documented in human history. When wealth concentrates beyond a certain point something will always be done about it. That wealth will be disolved back into the population its just a matter of how. Theres lots of examples of it:The French and Russian revolutions got pretty ugly. THe British aristocracy was broken up with heavy property taxes and by stripping the house of lords with its veto in the parliament. The robber barons and railroad tycoons were broken up mostly with taxation (property and estate taxation) as well.

Its pretty easy to understand why. The wealthy have as much right to their private property as the government wants to enforce. If wealth concentration reaches a certain level the political support for that system of property rights will start to erode. Thats why its actually such a dangerous thing for the wealthy that the middle class is threatened, because the middle class votes with the wealthy and also treats private property rights as a panacea.

Picture a tiny civilization of 10 humans interacting in nature where due to whatever circumstances 1 person has a gigantic pile of food, and furs, and "riches", and everyone else has to get by. His situation is inherently vulnerable because the other 9 guys can simply boot-phuck his ass and take his stuff. He needs help from the others, so he makes a deal with 4 of them... they get to split 1/2 of his stuff if they help him protect his property. These "nobles" or whatever you call them are the "middle class" in that situation. They get to have a little more stuff than the other 4, but nowhere near as much as the baron still has.

Baron smart! Hes achieved a balance that can last. 5 people are commited to the Baron getting to keep his stuff, and 5 are not.

Rich people who are trying to use every trick in the book to avoid paying taxes, drive down the tax rates on investment income, and abolish estate taxes, are not so smart.

Rich people in venezuela werent so smart either. They failed to honor this "social contract" and the underclass grew large and impoverished to the point that people were living in huge tent cities. And they voted for the first clown who campaigned on real redestribution, and he set about confiscating assets, naturalizing resources, and siezing property and companies.

Edited December 23, 2011 by dre

TimG · December 23, 2011

Its documented in human history. When wealth concentrates beyond a certain point something will always be done about it.

Give me one example where society broke down as long as the median income was rising. I suspect all of your cases are examples where the median income fell while the rich got richer. IOW - I am agreeing with you about the risk of social disfunction but you are looking at the wrong metric. What we care about is median income - not the gap between the rich and the poor. Edited December 23, 2011 by TimG

dre · December 23, 2011

Give me one example where society broke down as long as the median income was rising. I suspect all of your cases are examples where the median income fell while the rich got richer. IOW - I am agreeing with you about the risk of social disfunction but you are looking at the wrong metric. What we care about is median income - not the gap between the rich and the poor.

First of all I said society wont necessarily break down, what Im saying is concentration of wealth beyond a certain point is unsustainable and that wealth WILL be redistributed. Like I said, there might not be a revolution or a huge collapse, it could just be a political change.

Give me one example where society broke down as long as the median income was rising.

Sure... The British aristocracy was disolved late in the industrial revolution when peoples lives were rapidly improving. Same goes for the robber barons, and railroad tycoons. Peoples wages and lives were improving but that didnt mean wealth concentration didnt need to be addressed. It did and it was.

What we care about is median income - not the gap between the rich and the poor.

Im not the guy using the term "income gap". The danger is "extreme wealth concentration", and the formation of a new aristrocy, because wealth to some degree = political power. Once a monied aristocracy marshals enough of both it they become the rule makers, and it wont be long until society turns on them.

Some wealthy people today have forgotten this. But people that lived through the age of aristocracies, monarchies, and nobles understood pretty well.

We can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we can't have both.

Its not just median income that matters its concentration. Society cant be stable for long in the face of it

Edited December 23, 2011 by dre

TimG · December 23, 2011

Im not the guy using the term "income gap". The danger is "extreme wealth concentration", and the formation of a new aristrocy, because wealth to some degree = political power.

Ok - I can probably agree with you then. I was treating the terms as one in the same. Concentration of the wealth of society in the hands of the few is generally not a recipe for stability but I think a large or growing gap between the rich and poor is not a concern if the median income is rising.

cybercoma · December 23, 2011

A highly improbable (if not impossible) scenario in any human society. Incomes tend to follow bell curves with a long upper tail.

Then it's not a bell curve. Bell curves are symmetrical.

Sorry, I don't buy this nonsense that people have "damaged psychology"

Good. Because I wasn't saying that.

the problem lies with the immature fools that measure happiness by what others have rather than appreciating what they have.

That's odd. I didn't know anyone was arguing that either. Happiness isn't what was being measured, things like infant mortality, life expectancy, homicide rates, trust, and incarceration rate were.

You knew that, of course, because you understand what you're arguing against. So, I'm not really sure why you would mischaracterize the opposing position the way you have.

If we want to identify problems that need to be addressed it is social mobility - i.e. make sure that people have educational opportunities that allow them to better their circumstances.

You see... this is one of the things measured and it seems to be one of the things that is greatly reduced by an increasing income gap. One of the proposed solutions is what they do in Sweden. It works something like this:

These things need adequate tax funding

So those that can afford to pay taxes, must bear the burden of ensuring society can continue to foster their success. Societies like Sweden with much higher progressive taxation actually fair better.

On the other hand, Japan has similar metrics, but they don't have higher taxation and more social programs. They actually have less taxation and programs, but there's less of a disparity in wages from the beginning.

it is unrelated to the distribution of incomes in society.

The example of Sweden and Japan serve as different examples of greater income equality being achieved and those countries both faring much better than societies with greater income inequalities within them. So you're wrong. Completely wrong, in fact, and have done nothing to prove otherwise.