The Top 1% is Stalling the Economy

[cybercoma]

You run into other constraints. For example, a stable system requires that everyone expecting services contribute to the cost of maintaining these services. Democracy will produce perverse results if a majority of the people pay nothing for the services they demand. In the high tax European countries they achieve this goal with high VATs.

What does that look like exactly? Heavy taxation at the bottom and lighter as you go up? Have you considered what kind of effect that would have on the economy?

[TimG]

Heavy taxation at the bottom and lighter as you go up? Have you considered what kind of effect that would have on the economy?

I did not say heavy or even equal taxation on the middle. I said everyone has to pay some tax for a healthy democracy. VATs/GSTs are a good way to accomplish this goal but this limits the amount of taxation that can be imposed exclusively on the wealthy. In Canada the GST is too low is it is so further increases to income taxes don't make sense. Edited January 14, 2014 by TimG

[GostHacked]

How many companies do not pay taxes? How many of them are multi million, billion in profits?

And we have these kinds of issues.

http://www.cbc.ca/news/politics/jim-love-canadian-mint-chairman-helped-run-offshore-tax-avoidance-scheme-for-clients-1.2441347

The chair of the Royal Canadian Mint, who also served as an adviser on international taxation to the federal Finance Department, helped engineer the transfer of millions of dollars of a prominent Canadian family through offshore tax havens in what others involved characterized as a "tax avoidance scheme," documents obtained by CBC News show.

People in power helping others with the money to save it from the taxman.

But moving assets to offshore trusts, while not inherently illegal, was being targeted to some degree by Canadian tax authorities for decades before that. The federal government brought in its first legislation in the 1970s to tax offshore trusts, enacted further measures in the 80s and 90s, and as recently as June overhauled the applicable Income Tax Act sections.

Edited January 14, 2014 by GostHacked

[Michael Hardner]

How many companies do not pay taxes? How many of them are multi million, billion in profits? People in power helping others with the money to save it from the taxman.

Wait - aren't you against taxation ? Didn't you call it slavery ?

[GostHacked]

Wait - aren't you against taxation ? Didn't you call it slavery ?

Regardless of what I think about taxation, you have people in power gaming the system for others with power or lots of money. That kind of 'service' would not be extended to the likes of you or me.

Don't focus on me, that will lead you down a wrong path.

[Michael Hardner]

Regardless of what I think about taxation, you have people in power gaming the system for others with power or lots of money. That kind of 'service' would not be extended to the likes of you or me.

Right. So you want them (and the rest of us) to pay no taxes.

Don't focus on me, that will lead you down a wrong path.

Don't be so self-critical.

[GostHacked]

Right. So you want them (and the rest of us) to pay no taxes.

I would not rather pay taxes to a government that has no idea how to spend it properly. All while there are some in the system game if for their advantage. Funding stupid projects, subsidizing industries, selling off companies to foreign investors (who wont pay the same taxes)

I may not be opposed to taxes if they were used to their maximum potential. But as we see the maximum potential is really exclusive to a small few who have their hands in the financial system.

I'll tell you what I want, I can't tell you what you want. You make up your own mind.

[Moonlight Graham]

You run into other constraints. For example, a stable system requires that everyone expecting services contribute to the cost of maintaining these services. Democracy will produce perverse results if a majority of the people pay nothing for the services they demand. In the high tax European countries they achieve this goal with high VATs.

It's probably a good idea to have the large majority of adults paying some kind of taxes. But I never said it would be a good idea to have the "majority of the people pay nothing". What I said is that an option is for the majority to pay less in taxes (and the poor, ie: 20k or under incomes, to pay even less), and the rich to pay more, but leave total tax revenue where it is now.

Edited January 15, 2014 by Moonlight Graham

[TimG]

But I never said it would be a good idea to have the "majority of the people pay nothing". What I said is that an option is for the majority to pay less in taxes (and the poor, ie: 20k or under incomes, to pay even less), and the rich to pay more, but leave total tax revenue where it is now.

It would help to look at what is happening now:

The top 10.3% of Canadians, by income – meaning people making $80,000 and up – paid 56.9% of all income tax in 2009. This group earned 36.7% of all income claimed on tax returns but paid 56.9% of all tax.

See table in link:

http://blogs.canoe.ca/lilleyspad/politics/the-rich-already-pay-their-fair-share-of-income-tax-in-canada/

75% of the population pays less than 18% of the income tax.

We are already close to the situation where the majority pays no income tax.

There is no room to increase incomes taxes further without breaking the link between voters and taxpayers.

Edited January 15, 2014 by TimG

[cybercoma]

If programs and benefits for the poor lead to the majority if people not paying taxes then the majority are impoverished and there's a much bigger problem on our hands. In fact, IF that were the case, then a massive and radical revolution and redistribution of wealth would be inevitable.

[Moonlight Graham]

There is no room to increase incomes taxes further without breaking the link between voters and taxpayers.

People of moderate incomes still pay a lot of taxes. If it's reduced by say 30% and picked up by the wealthy the fabric of our democracy isn't going to become undone. Maybe democracy would even improve since wealth can buy power, and access to power, and more equal wealth makes for a more equal democracy.

[TimG]

People of moderate incomes still pay a lot of taxes. If it's reduced by say 30% and picked up by the wealthy the fabric of our democracy isn't going to become undone. Maybe democracy would even improve since wealth can buy power, and access to power, and more equal wealth makes for a more equal democracy.

That would increase the % of people who pay no tax to well over 50% - sorry I disagree. Democratic governments become completely dysfunctional if a majority of voters do not pay tax because the people demanding the spending are not responsible for paying the cost (this is one of the reasons why native reservations are such a mess). The principle of "no representation without taxation" trumps any concerns about social equity. Edited January 15, 2014 by TimG

[Moonlight Graham]

That would increase the % of people who pay no tax to well over 50% - sorry I disagree.

I'm saying you could decrease taxes, I'm not saying to eliminate them. Where do you get "pay no tax" from "reduce taxes by 30% for those of moderate income"??? Reduce each person of moderate means' taxes by ie: 30% from what it is now, not reduce it by 100%.

[TimG]

I'm saying you could decrease taxes, I'm not saying to eliminate them.

Depends on how you do the reduction. If you simply added a 30% discount to every middle income tax bill then it could work that way. But if you lower marginal rates by 30% and this would eliminate taxes payable by many people because of other deductions. The latter is the normal way to do it.

[ReeferMadness]

If programs and benefits for the poor lead to the majority if people not paying taxes then the majority are impoverished and there's a much bigger problem on our hands. In fact, IF that were the case, then a massive and radical revolution and redistribution of wealth would be inevitable.

The tax split is not the root of the problem and changing it is not the solution. The problem is the artificially skewed distribution of income. Fix that and you don't need to mess with tax rates.

[cybercoma]

I came across another graphical representation of these problems today. Labour's share of total income has fallen dramatically.

[TimG]

I came across another graphical representation of these problems today. Labour's share of total income has fallen dramatically.

It is not clear to me why this is of any more interest than stats showing that the percentage of people working in the agricultural sector has dropped. This is the trend that one would expect to see as the population ages and retirees make up larger percentage of the population. Edited January 17, 2014 by TimG

[bush_cheney2004]

I came across another graphical representation of these problems today. Labour's share of total income has fallen dramatically.

Not so dramatic....post WW2 production as base...American (U.S. BLS) data....not universally relevant....typical.

[cybercoma]

Not so dramatic....post WW2 production as base...American (U.S. BLS) data....not universally relevant....typical.

No one said US data was universally relevant. If you go back to the OP, you'll see I was talking about the US from the first post. In fact, this thread was in the US forum until Charles moved it.

[bush_cheney2004]

No one said US data was universally relevant. If you go back to the OP, you'll see I was talking about the US from the first post. In fact, this thread was in the US forum until Charles moved it.

Do you think the alleged 1% "scourge" would only apply to the U.S. ? The mods moved it for a reason.

[cybercoma]

GDP measures mainly market transactions. It ignores social costs, environmental impacts and income inequality . . . The successor to GDP should be a new set of metrics that integrates current knowledge of how ecology, economics, psychology and sociology collectively contribute to establishing and measuring sustainable well-being.

A recent article discussing the problems with GDP and a potential way to move towards better measures

http://www.nature.com/news/development-time-to-leave-gdp-behind-1.14499?WT.mc_id=FBK_NPG_1401_NatureNews

[TimG]

A recent article discussing the problems with GDP and a potential way to move towards better measures

A measure filled with subjective assessments and valuations that can be manipulated to suit a political agenda is not an improvement.

[bush_cheney2004]

Yeah..that's what we need...true "quality of life" and "sustainability" metrics because that is what really matters. Who cares about real economic growth when the world's "inequalities" are what really matters. GDP is the measure of the bankster oppressors !

[cybercoma]

Why measure quality if life and sustainability, eh? Who gives a crap if people are miserable and we're driving off a cliff. Spoken like the true "me" generation.

[TimG]

Why measure quality if life and sustainability, eh? Who gives a crap if people are miserable and we're driving off a cliff.

The problem is quality of life and sustainability is purely subjective which means any attempt at quantification will depend entirely on the biases of the people creating the measures. That makes it a useless measurement.