So what would an NDP government do?

Keepitsimple · June 23, 2015

Which basically puts more money in the pockets of those already at the top anyways as they still don't pay taxes on their initial $24,000 either?

Not really - epends on how socialistic you want to be.......for example, there could be four tiers of flat tax. On the first $50K (over $24K) you pay 15%. On the next $50K you pay 20%. On the next $50K you pay 25%. On all additional income you pay 30%. You can juggle the figures all you want but the prime drivers are that the "income-challenged" pay no tax and everybody pays tax on all income no matter where it comes from. Add it all up - and pay your tax. No loopholes. The rich pay more - as a total - and as a percentage.

Evening Star · June 23, 2015

Not really - epends on how socialistic you want to be.......for example, there could be four tiers of flat tax. On the first $50K (over $24K) you pay 15%. On the next $50K you pay 20%. On the next $50K you pay 25%. On all additional income you pay 30%. You can juggle the figures all you want but the prime drivers are that the "income-challenged" pay no tax and everybody pays tax on all income no matter where it comes from. Add it all up - and pay your tax. No loopholes. The rich pay more - as a total - and as a percentage.

This isn't a flat tax at all. It is basically a textbook example of progressive income tax, and is more or less what I was advocating. It's closer to the status quo than it is to a flat tax, honestly.

Evening Star · June 23, 2015

I find this useful for clear, simple definitions of the terms "progressive tax", "regressive tax", and "flat/proportional tax":

http://apps.irs.gov/app/understandingTaxes/student/glossary.jsp

[Edited: explanation added]

Edited June 23, 2015 by Evening Star

Argus · June 23, 2015

Wow cyber. I like how you continue to refuse to provide an adequate definition of a progressive tax system.

Try reading more Lenin or Marx. I think you'll understand.

-1=e^ipi · June 23, 2015

Not really - epends on how socialistic you want to be.......for example, there could be four tiers of flat tax. On the first $50K (over $24K) you pay 15%. On the next $50K you pay 20%. On the next $50K you pay 25%. On all additional income you pay 30%. You can juggle the figures all you want but the prime drivers are that the "income-challenged" pay no tax and everybody pays tax on all income no matter where it comes from. Add it all up - and pay your tax. No loopholes. The rich pay more - as a total - and as a percentage.

... That's basically what we have right now...

Keepitsimple · June 23, 2015

This isn't a flat tax at all. It is basically a textbook example of progressive income tax, and is more or less what I was advocating. It's closer to the status quo than it is to a flat tax, honestly.

Then maybe we're on the same page? Tax on all income. No loopholes. No tax credits. The poor pay no tax. The rich pay more. But hey - too often, I've seen the Law of Unintended Circumstances come into play. So - other than putting thousands of tax accountants and CRA workers out of work, what is the downside to a "Progressive Flat Tax"?

eyeball · June 23, 2015

The rich pay more - as a total - and as a percentage.

The main issue is making the rich pay more.

Maybe after the income/wealth gap stops growing and a decent amount of time to allow the world to catch up we can start talking about giving the rich a little break.

Edited June 23, 2015 by eyeball

-1=e^ipi · June 23, 2015

So - other than putting thousands of tax accountants and CRA workers out of work, what is the downside to a "Progressive Flat Tax"?

I already gave some downsides. See posts 139 and 163. For example, it fails the fairness property that I was referring to with the fishermen example.

-1=e^ipi · June 23, 2015

Also, how does one derive a unique optimal progressive tax system based on accepted axioms and empirical data? It is possible to do this using a flat tax + lump sum transfer.

Argus · June 23, 2015

The main issue is making the rich pay more.

Maybe after the income/wealth gap stops growing

Income disparity is not really a Canadian problem, and given the top 20% already pay 75% of income taxes, just how much higher do you want to push it?

Keepitsimple · June 23, 2015

I already gave some downsides. See posts 139 and 163. For example, it fails the fairness property that I was referring to with the fishermen example.

The fishermen example is a poor one using the method I outlined - they come out pretty even because the one-year-earner will likely fall into a higher bracket for the extra $50K he earns. Anyway - it's so close it doesn't make a difference in fairness. Arguably, the guy who made all his money in one year worked harder. But it's nit-picking on the final tax bill.

As for married couples and splitting incomes - I don't know......I think it's best to have uncluttered, low tax rates and let people plan their family finances accordingly.

eyeball · June 23, 2015

Income disparity is not really a Canadian problem, and given the top 20% already pay 75% of income taxes, just how much higher do you want to push it?

It is a problem actually and probably mostly in terms of political influence. In any case I want taxes to be high enough on the rich that it pulls the income/wealth gap a lot closer together and until disparity trends have visibly gone into reverse for a decent amount of time.

And steep exit taxes on anyone who tries to flee. I want those too.

Edited June 23, 2015 by eyeball

PrimeNumber · June 23, 2015

You can imagine that they both retire after the 2 years if it helps. And the second fisherman didn't receive a promotion; he was just unlucky in the first year and lucky in the second year.

You can easily extend my fisherman scenario to a scenario of any finite length of time. Let's say the two fishermen earn the same amount of money over their entire lifetimes, but one fisherman has more variation in annual income than the other fisherman. The fisherman with more variation in annual income pays more tax in a 'progressive' tax system.

Except it can't... Do you want me to provide a mathematical proof?

Who is advocating charging the fishermen a lump sum?

Yes, but you can simultaneously increase the tax rate such that the end result is revenue neutral.

Sorry I meant a lump rate.

How can the end result be revenue netural if both are getting taxed different amounts with the same rate?

PrimeNumber · June 23, 2015

It is a problem actually and probably mostly in terms of political influence. In any case I want taxes to be high enough on the rich that it pulls the income/wealth gap a lot closer together and until disparity trends have visibly gone into reverse for a decent amount of time.

And steep exit taxes on anyone who tries to flee. I want those too.

Incredibly steep exit taxes. In fact we should have exit taxes on corporations too. You want to leave, pony up.

PrimeNumber · June 23, 2015

The fishermen example is a poor one using the method I outlined - they come out pretty even because the one-year-earner will likely fall into a higher bracket for the extra $50K he earns. Anyway - it's so close it doesn't make a difference in fairness. Arguably, the guy who made all his money in one year worked harder. But it's nit-picking on the final tax bill.

As for married couples and splitting incomes - I don't know......I think it's best to have uncluttered, low tax rates and let people plan their family finances accordingly.

You also can't arguably say he worked harder because he may have just gotten lucky. The fisherman that made less may well have worked far harder and caught nothing, while the fisherman that remained average worked very little and just managed to find one good spot. That's why flat taxes are dumb. Just because you make more money doesn't mean you work harder. It just means you have more money to throw around at other people that work harder.

overthere · June 23, 2015

Speaking of taxes, I'm thinking that Alberta will have a sales tax within 12 months.

David Dodge will come up with a long shopping list of capital projects that Alberta 'must have'. Notley 'acting responsibly' won't want to borrow all that loot.

Sales tax.

After all, Dodge was big on implementing the GST with Mulroney, and bemoaned the reduction of GST to 5%. He luuuurrrvves the sales taxes.

Tax (Dodge)and spend(Notley). It is an irresisitble lure for Notley, she wants to spend and arrived at the wrong time for that in AB. Fixed!

overthere · June 23, 2015

Incredibly steep exit taxes. In fact we should have exit taxes on corporations too. You want to leave, pony up.

Yeah, that will have investors flocking to our shores.

You guys sound like the English Department of Finance and Bad Ideas, circa 1963.

Edited June 23, 2015 by overthere

Keepitsimple · June 23, 2015

You also can't arguably say he worked harder because he may have just gotten lucky. The fisherman that made less may well have worked far harder and caught nothing, while the fisherman that remained average worked very little and just managed to find one good spot. That's why flat taxes are dumb. Just because you make more money doesn't mean you work harder. It just means you have more money to throw around at other people that work harder.

Sure I can - we're arguing right now! <_< ......and you're entitled to your somewhat bitter opinion.

PrimeNumber · June 23, 2015

Yeah, that will have investors flocking to our shores.

You guys sound like the English Department of Finance and Bad Ideas, circa 1963.

Coupled with some of the lowest corprate tax rates in the world, sure they would. You can come enjoy our low tax rates, especially for clean companies. But if you leave, you gonna pay. Maybe some of the auto manufacturers would have thought twice about leaving after Harper gave them all that bailout money that still hasnt been repaid.

PrimeNumber · June 23, 2015

Sure I can - we're arguing right now! ......and you're entitled to your somewhat bitter opinion.

Only sounds bitter to those at the top.

-1=e^ipi · June 23, 2015

The fishermen example is a poor one using the method I outlined - they come out pretty even because the one-year-earner will likely fall into a higher bracket for the extra $50K he earns. Anyway - it's so close it doesn't make a difference in fairness. Arguably, the guy who made all his money in one year worked harder. But it's nit-picking on the final tax bill.

So your counter argument is that our system is good enough, so it doesn't matter?

Why wouldn't you want the best tax system possible?

I listed a fairness property that all tiered tax systems violate, but which a flat tax + lump sum transfer does not. What advantage does the tiered tax system have over the flat tax + lump sum transfer?

-1=e^ipi · June 23, 2015

Sorry I meant a lump rate.

For the sake of clarity, could you please define what you mean by lump rate?

How can the end result be revenue netural if both are getting taxed different amounts with the same rate?

If you make people on the first $x of income, you can offset it by increasing the tax rate on income after the first $x.

PrimeNumber · June 23, 2015

For the sake of clarity, could you please define what you mean by lump rate?

If you make people on the first $x of income, you can offset it by increasing the tax rate on income after the first $x.

A single rate charged to everyone no matter their income.

But once you increase the tax rate on any other portion of income, does it not effectively become a progressive tax system?

-1=e^ipi · June 23, 2015

You also can't arguably say he worked harder because he may have just gotten lucky. The fisherman that made less may well have worked far harder and caught nothing, while the fisherman that remained average worked very little and just managed to find one good spot. That's why flat taxes are dumb.

I don't get this implication. How does lack of perfect information about the universe by governments imply that flat taxes are dumb? You may not know exactly why an individual made more money compared to another individual, but you can use empirical data and statistical techniques to test hypothesis as to why statistically people achieve certain outcomes. From there, you try to maximize expected social welfare.

Argus · June 23, 2015

It is a problem actually and probably mostly in terms of political influence.

It isn't wealth which buys political influence in Canada, it's power. When the CEO of a major corporation calls a politician the politician responds to him, not because he expects that CEO to direct money his way, but because the corporation represents jobs. More often it's the government bribing the corporation to get those jobs than the corporation bribing the government. So the personal wealth of the CEO is immaterial to his influence with the government.

In any case I want taxes to be high enough on the rich that it pulls the income/wealth gap a lot closer together and until disparity trends have visibly gone into reverse for a decent amount of time.

Like it or not this is a capitalist society. Aside from inherited wealth, people command what they receive due to the scarcity or perceived scarcity of their skillset. If you increase the taxon people who have worked hard to get that skillset to give that money to those who have not bothered to work as hard you are going to inevitably discourage people from working hard to better themselves. If you want people to earn more money they need to learn more skills. Put money into training.

Even with that, though, there will ALWAYS be those who are disinclined to bother getting this training, are socially inept and can't get along with co-workers, are arrogant or stupid or lazy or make excuses for why there's no point in putting in that effort. Are you just going to give them all money for free?

I have been poor. Now I'm not. The more content someone had made my lot in life by throwing money to me, the less likely I would have been to put in the endless hours and effort plugging away to improve my life.

And steep exit taxes on anyone who tries to flee. I want those too.

The first hint that such a law is being considered, and remember, it would have to be introduced in the House, and passed and then passed by the Senate and signed into law - money would flee the country by the tens and hundreds of billions. Foreign investment would not only halt overnight, but they'd be pulling every plugged nickel out they could before the law came into effect. The affect on the economy and jobs would be... sub optimal.