Hundreds of rich pay no tax: Study ?

[jennie]

I can't find the Star link for this, but the article isn't too long, and interesting possibilities. My goodness. I had no idea. If it is as it seems. I am aware, though that EI is high among people in family businesses, presumably they take turns working enough to qualify perhaps?

Hundreds of rich pay no tax: Study Wealthy also collecting EI, welfare payments

Dean Beeby

CANADIAN PRESS

HALIFAX — Hundreds of Canada's richest residents pay no income tax — and some of them collect welfare, says a new federal study.

And the number of rich Canadians who pay no income tax is growing rapidly, almost doubling between 1997 and 1999.

The findings appear in a Canada Customs and Revenue Agency portrait of Canada's wealthiest income-earners, based on data from 1997-99 tax returns and released under the Access to Information Act.

The study identified 78,230 people in Canada who reported annual incomes in excess of $250,000 in 1999, up about a third from 1997 as the burgeoning economy made more Canadians rich.

The agency chose the $250,000 threshold because it's the same cut-off used by Statistics Canada when studying the country's wealthy elite.

Of those high-income earners, 579 paid no income taxes in 1999 — a big jump from the 318 high-income earners who paid no taxes in 1997.

That increase — 82 per cent over three years — was far larger than the 35 per cent over-all rise in high-income earners in the same period.

The findings suggest wealthy Canadians are becoming more adept at finding ways to avoid income taxes.

The report, heavily censored in parts, was written to help tax auditors by listing the likely characteristics of tax cheats, based on such factors as geography, sex and marital status.

Information about the high-risk groups has been carefully deleted.

The study, dated March, 2001 and marked "draft," also found more than 600 of Canada's wealthiest collected employment insurance, welfare or workers' compensation payments in 1999. That's half again as many as those who collected such payments in 1997.

Forty-five people listed welfare payments as part of their income on their 1999 tax returns, though the study does not indicate their provinces or cities.

Another 308 collected workers' compensation payments, while 290 received employment insurance.

Federal officials noted that workers' compensation and employment insurance benefits are paid without regard to the recipients' income.

Welfare payments administered by the provinces and municipalities, on the other hand, are normally restricted to those with low incomes.

However, an agency official said information from individual returns is treated as confidential and is not shared with police or other authorities even if fraud is suspected.

"It's a confidential matter between us and the client," said Collette Gentes-Hawn, though tax auditors do have access.

She also said business and investment losses can sometimes be high enough that no income tax need be paid even for high earners.

"You might have earned $250,000 worth of salary but you may also have had a business that had a loss of $250,000 or more," she said from Ottawa. The business loss can then be deducted from income.

Word of the wealthy tax-avoiders comes as the Federal Court of Canada hears a challenge in Winnipeg of a federal tax loophole that allowed a $2.2 billion family trust to leave Canada tax free in 1991.

The hearing continues today.

The wealthy family benefiting from the loophole has never been officially identified, though speculation has pointed to the Bronfmans of Montreal. They have refused to comment on the case.

...................

Those who pay no taxes, would think, would be those who live off investments and shelter all of it.

Workers' comp and EI are not income dependent, but the welfare is hard to account for, unless it was also paid back in some cases. If the kids left home, how could it show up in their parents income tax?

It's not clear.

A bit overstated by the Star, so I added the ?? to the thread title.

I have concerns about the "no taxes" but not the public money.

Edited October 2, 2007 by jennie

[geoffrey]

Those that don't understand are often quick to criticise.

I'm not a high income earner, but I do ok. I'd still take EI if I was laid off. I'd take WCB payments if I was hurt at work (paper cuts and related accounting injuries).

You see, I pay into these things for a reason. As do these wealthy people. People expect them to foot the bill for EI and the like and never collect when they fall on hard times.

Income taxes are another story. We are victims of an overly complex tax system that allows people to manipulate earnings. That said, you will get caught if you cheat. Read the CRA rep's talk about business investment losses. I help out a few people with tax returns, a couple are higher income (I drink free in a Calgary bar in exchange for tax services, the life). I've never falisify documents or records. I most definitely minimize the amount they pay.

Why wouldn't I?

I'm still stunned on how people get so upset about something they don't understand. It must be the "they have money so they should pay for me" complex? Get off your asses and earn your living yourself.

[jennie]

Those that don't understand are often quick to criticise.

I'm not a high income earner, but I do ok. I'd still take EI if I was laid off. I'd take WCB payments if I was hurt at work (paper cuts and related accounting injuries).

You see, I pay into these things for a reason. As do these wealthy people. People expect them to foot the bill for EI and the like and never collect when they fall on hard times.

Income taxes are another story. We are victims of an overly complex tax system that allows people to manipulate earnings. That said, you will get caught if you cheat. Read the CRA rep's talk about business investment losses. I help out a few people with tax returns, a couple are higher income (I drink free in a Calgary bar in exchange for tax services, the life). I've never falisify documents or records. I most definitely minimize the amount they pay.

Why wouldn't I?

I'm still stunned on how people get so upset about something they don't understand. It must be the "they have money so they should pay for me" complex? Get off your asses and earn your living yourself.

I don't disagree at all that we all pay so we all deserve ... we all have times of need ... but if you are wealthy and taking out way more than you are putting in ... chronically ... I would have a problem with that.

And of course you minimize your clients' tax bill.

I guess it might suggest there is a need for tax reform if too much is escaping scrutiny.

[Visionseeker]

paper cuts and related accounting injuries).

Ahhh, the goggles, they do nothing!

[ScottSA]

This is ridiculous drummed up hype. Even the author can't avoid including completely nullifying caveats hidden in the body of the article, like: "She also said business and investment losses can sometimes be high enough that no income tax need be paid even for high earners." This is totally irresponsible class bashing. I may pay no income tax this year either, even though I'll make more than most, but it has to do with a huge RSP allowance, and nothin at all to do with tax cheating. Mind you if I could withold beer money from "Native warriors," I'd cheat my face off.

[xul]

I guess it might suggest there is a need for tax reform if too much is escaping scrutiny.

I think sometimes law makers had to consider some extreme circumstance. We would suppose there was a guy, he found a job of $25,000/month in January and was laid off in October and was unemployed in November and December. So he annual income was $250,000. But if he lived in luxury and spent out every penny he gained every month and had not any saving, he would starve in November and December without EI or other welfare to support him. So law had to allow him to get some welfare.

Edited October 2, 2007 by xul

[old_bold&cold]

I do not think anyone who pays into the EI or any work plan, should ever forgo having benifits of such, even if they are multi-millionaires. They paid for it, so they should benifit from it. It seems that there are some who feel that poeple who have enough, should no longer try to get more. While that maybe a quaint way to think, it is not the way I would like to see things go. It is a shame that someone even saw fit to post such triffling garbage as this. But seeing where it comes from does in my mind answer a lot of things. It seems they never can see that those who think the world owes them are alway mad at those who worked and got their fair share of what the world has offered them. I do not see things changing any time soon though.

[BornAlbertan]

Don't hate the player, hate the game!

[August1991]

I'm going to defend jennie, here.

Those that don't understand are often quick to criticise.

Sorry, Geoff, it's you and so many others that don't understand. The pat on the head and the "There, there. Don't confuse yourself with these complex matters" is both condescending and misleading.

You admit yourself that our tax system is complex - and it leads to atrocious anomalies and tremendous injustice.

Someone earning $250,000/year should not be collecting welfare or EI and they should be paying taxes.

It is noteworthy that the people who fall into these categories is small: a few hundred out of some 70,000 individuals. In that sense, I'd be far more concerned about the people the CRA knows nothing about. How many people receive various benefits and officially, have no other income?

-----

Lastly, Geoff, you suggest that people should "get off your asses and earn a living". In the grand scheme of things, what kind of job is it for humanity that involves finding arcane exceptions to arcane rules for no other purpose but to avoid taxes? IOW, if our tax regime were simpler, many accountants would be out of a job. Which is also to say, I'm not expecting tax accountants to favour a simplified tax regime anytime soon.

[Borg]

Hundreds of rich pay no tax: Study ?, Wealthy also collecting EI, welfare payments ??

Jenny,

If a person is wealthy it is likely because they took some risks, created jobs and wealth for others. Is it a crime to have money?

If there are benefits out there that apply TO CANADIANS, why should they not benefit as well?

Money will come and money will go.

Those who step up and find ways to create wealth - for themselves and for others (as a by-product) should not be sniped at by the crass, lazy, foolish and cowardly who failed to see an opportunity and make something out of it.

Thanks heavens we have the wealthy in this country. They are the people who make our economy as it is today.

They have paid far more in tax than most people any of us would know.

Borg

[Renegade]

Someone earning $250,000/year should not be collecting welfare or EI and they should be paying taxes.

If someone earning $250,000/year should nt be collecting EI, they should also not be paying EI premiums.

BTW, why do you stop at EI and welfare, why not make the rich ineligible for publicly funded schools, medicare, and other programs?

Edited October 2, 2007 by Renegade

[Keepitsimple]

I agree that the overall report is misleading and verges on "class bashing" as someone else said. What surprises me most is that the number of rich people who pay no taxes is only in the hundreds. There are many reasons why taxes can be reduced - the best example is when you take a bath in the stock market. Many people who are "rich" take more risks in the stock market - they tend to win big and lose big. They pay a lot of tax when they win and get the tax benefit when they lose. Let's not hold it against them - ultimately they are investing their money in companies that create jobs, more often than not. I'll bet that in 2000/2001 when technology stocks melted down, a lot of people ended up not paying tax - and lost a lot of money to boot. Those that got out in time made a bundle - and paid a bunch of capital gains tax too.

[jennie]

Hundreds of rich pay no tax: Study ?, Wealthy also collecting EI, welfare payments ??

Jenny,

If a person is wealthy it is likely because they took some risks, created jobs and wealth for others. Is it a crime to have money?

If there are benefits out there that apply TO CANADIANS, why should they not benefit as well?

Money will come and money will go.

Those who step up and find ways to create wealth - for themselves and for others (as a by-product) should not be sniped at by the crass, lazy, foolish and cowardly who failed to see an opportunity and make something out of it.

Thanks heavens we have the wealthy in this country. They are the people who make our economy as it is today.

They have paid far more in tax than most people any of us would know.

Borg

We are talking about the filthy rich who likely inherited their wealth. I have nothing against those who work hard for it.

[Renegade]

We are talking about the filthy rich who likely inherited their wealth. I have nothing against those who work hard for it.

Why does the source of the weath matter to you? If someone gets rich buying stock at the right time or by winning the lottery is that any better or worse than someone who has "worked" for the money?

[Wilber]

Flat tax anyone?

[old_bold&cold]

We are talking about the filthy rich who likely inherited their wealth. I have nothing against those who work hard for it.

Who are you to say that just because some have inherited money they do not deserve the benefits. You hold yourself pretty high when as most of the people here have figured just who and what you are long ago. Shitdisturber comes to mind, lazy and not really with the standards that most people use to guage their lots in life. Go wait for another government cheque and tell us more about how bad we are for earning success. Just because you and your main cause never will achieve anything, you should not cry foul at all those who have earned their wealth, or even left that same wealth for their children etc..

And here is a fact for you about the RCA of the government. They loose 95% of all cases that go to court. So if you use any data given out by them, remember they are wrong 95% of the time.

Edited October 2, 2007 by old_bold&cold

[jennie]

Who are you to say that just because some have inherited money they do not deserve the benefits. You hold yourself pretty high when as most of the people here have figured just who and what you are long ago. Shitdisturber comes to mind, lazy and not really with the standards that most people use to guage their lots in life. Go wait for another government cheque and tell us more about how bad we are for earning success. Just because you and your main cause never will achieve anything, you should not cry foul at all those who have earned their wealth, or even left that same wealth for their children etc..

And here is a fact for you about the RCA of the government. They loose 95% of all cases that go to court. So if you use any data given out by them, remember they are wrong 95% of the time.

Most of the non-taxpaying high income Canadians are in the top 1/10th of a percent of earners, and so is the largest chunk of the wealth.

[geoffrey]

I'm going to defend jennie, here.

God help you.

Sorry, Geoff, it's you and so many others that don't understand. The pat on the head and the "There, there. Don't confuse yourself with these complex matters" is both condescending and misleading.

I disagree. It's a criticism of the tax system, not of jennie's intelligence. The OP is deliberatly misleading and an absolute class bash.

You admit yourself that our tax system is complex - and it leads to atrocious anomalies and tremendous injustice.

Too complex, too administratively heavy. It gives too many targetted breaks (transfers). Generally it works pretty good though at collecting what is owed.

Someone earning $250,000/year should not be collecting welfare or EI and they should be paying taxes.

Sure. If all they have is T4 income of 250,000 then yes, they are paying taxes. If they are unemployed at any time in that year, they should collect full EI. Why not? They've surely paid into it their whole life. I'm not going to be saddled with a huge burden like EI to never be allowed to use it because I cross some arbitrary income line where welfare becomes immoral (it should always be immoral).

The article points out investment losses. That's a rather valid deduction. Why not? Do you not think losses should be deductable?

It is noteworthy that the people who fall into these categories is small: a few hundred out of some 70,000 individuals. In that sense, I'd be far more concerned about the people the CRA knows nothing about. How many people receive various benefits and officially, have no other income?

Tons, thousands.

Lastly, Geoff, you suggest that people should "get off your asses and earn a living". In the grand scheme of things, what kind of job is it for humanity that involves finding arcane exceptions to arcane rules for no other purpose but to avoid taxes?

It would be boring. That's why I don't do tax accounting. It's the voters that create jobs for such people though, by demanding ridiculous concessions and breaks and credits. Let me let you in on a little secret. It's not the rich that are holding up a simplified flat tax (or lesser progressive tax). It's the poor and middle class that continue to demand more and more targetted breaks. The issue isn't with the high income earners, it's with the others that create the system that disadvantages them in the end.

IOW, if our tax regime were simpler, many accountants would be out of a job. Which is also to say, I'm not expecting tax accountants to favour a simplified tax regime anytime soon.

Probably not. Fortunately I deal with capital projects and financial systems so tax isn't really key to my employment future. I've always been profoundly in favour of a flat tax, super simplified system. A simplified tax structure would actually make my job eaiser in alot of ways.

Ideally, the system should be as such so that one of my friends, a local bar owner, wouldn't need to get me to prepare his returns.

In fact, I have no problem saying Alberta has the best tax system in Canada... why? Because it's simple (well, if your not paying royalties). And I think we see that result. It can and should be even more simplified thoguh.

Plus, getting rid of tax accountants would give the profession a break in being preceived as ultra-conservative and snoody.

[xul]

I do not think anyone who pays into the EI or any work plan, should ever forgo having benifits of such, even if they are multi-millionaires. They paid for it, so they should benifit from it. It seems that there are some who feel that poeple who have enough, should no longer try to get more. While that maybe a quaint way to think, it is not the way I would like to see things go. It is a shame that someone even saw fit to post such triffling garbage as this. But seeing where it comes from does in my mind answer a lot of things. It seems they never can see that those who think the world owes them are alway mad at those who worked and got their fair share of what the world has offered them. I do not see things changing any time soon though.

I just said it is not easy to change the law because someone may easily defeat jennie's proposal in commons by using such instance of trifling garbage.

I also used the same way to query the theory that the poor pay less tax to government so they have less function to a country.The contribution of the poor That don't mean I support poor or act against the rich. Just as if one of my fellow engineers claimed he made a luxury "safe car" for worldwide multi-millionaires, I would try to use different car hit his car by different angles with different speeds, or suppose an object either as trifling as a gravel raised by other cars or as big as an ice block falled from Toronto TV tower hit the windscreen of his car and to observe what would happend. That don't mean I disagree him to make a safe car, my job is only to help him to perfect his design.

[August1991]

If someone earning $250,000/year should nt be collecting EI, they should also not be paying EI premiums.

BTW, why do you stop at EI and welfare, why not make the rich ineligible for publicly funded schools, medicare, and other programs?

As to EI, it's not an insurance scheme and you don't pay premiums - despite what it says on the forms. I honestly don't know what EI is.

Mulroney tried to reform it and then ran away in horror. As it stands now, the federal government can put any EI surplus into general revenues and the chances that anyone in Calgary earning $250,000/year will receive EI are slim to non-existent unless the person is pregnant. Go figure.

As to medicare, it has the makings of an insurance scheme. Even someone making $250,000/year would want health insurance in case of catastrophic illness. State health insurance makes sense.

Public education? I can see why someone with a high income would want to send their kids to a state school.

My point Renegade (and Jennie's point, I think) is that welfare and EI are (or should be) Robin Hood transfer schemes. We take from the rich and give to the poor. If we're not doing that, then something is seriously wrong with the system in place.

Flat tax anyone?

Simplistic panacea that appears to solve a problem but in fact doesn't.

The article points out investment losses. That's a rather valid deduction. Why not? Do you not think losses should be deductable?

What should be the tax base? Dunno. Should we have wealth taxes? Dunno.

Let me let you in on a little secret. It's not the rich that are holding up a simplified flat tax (or lesser progressive tax). It's the poor and middle class that continue to demand more and more targetted breaks. The issue isn't with the high income earners, it's with the others that create the system that disadvantages them in the end.

I wouldn't blame the middle class for the weird exemptions in our tax system.

Taxes exist in a political world and if you look at the historical record, you'll find alot of random factors that determined whether a tax or exemption exists or not. I'm almost inclined to believe that it will take a revolution - you know, French, Russian, American, Chinese type revolution - to change our tax system. Governments can only tinker, until an earthquake happens. (Markets cope with change much better. For example, the world price of oil has gone from about $10 a barrel to $80 a barrel in the past 10 years. Imagine if we relied on a government committee to decide such changes.)

Nevertheless, this is an Internet forum where posters can imagine an ideal world. Given the OP, it just seems to me that rich people shouldn't be getting free government money. If they do, something is seriously wrong with the way our system works.

Edited October 3, 2007 by August1991

[godzilla]

read the fine print...

THE RICH ARE GETTING RICHER AND EVERYONE ELSES BUYING POWER REMAINED THE SAME FOR THE LAST DECADE.

the reason that that fact is not spread over the first page in every news paper in canada can only be attributed to the fact that the wealthy own those news papers. the fact that the average canadian has not seen an increase in the buying power of their dollar while equity has seen triple digit growth for the same time period is truly criminal.

what i'm curious about is

1. is the increase in population of this tax bracket respective of the increase in population over the same period (i suspect it is and the fact its not reported shows bias in the opposite direction than conservative freaks accuse)

2. how many of these people obtain their main income from a corporation for which they are shareholders (another bias, don't want to let any cats out of any bags, do we!)

this year i grossed just over 200k and paid a combined (personal and corporate) effective tax rate of just under 10%. all one needs is a good accountant. i'm not in the upper 5% of wage earners as my reported income is only 55k this year. i suspect one would have to have a similar situation as mine and making $300k to make it to the top 5%.

losses for incorporated upper income earners are a joke. next year i plan to sink more money into my company by borrowing personally and then lending to the company. any money i get paid back will be non-taxable. any money made by the company gets the usual write offs (oh yeah, my whole life is a write off) and lower corporate tax rate. if my company decides to stiff me for the money... hey, thats a huge loss! i can just imagine what kind of 'losses' some of canadas billionaires can come up with! hilarious! most of them own nothing... their corporations own everything.

as you can imagine, every time government talks about a reduction in personal tax that will save the average tax payer a few hundred bucks then i have a GOOD LAUGH.

and conservative governments will NEVER raise corporate tax rates! need i repeat myself yet again?... IF YOU ARE A T4'D INCOME EARNER AND YOU SUPPORT ANY KNOWN CONSERVATIVE PARTY, THAT I KNOW OF, THEN YOU ARE THE BIGGEST SUCKER THERE IS!

so, please keep pushing... so i can retire early!

[mikedavid00]

The agency chose the $250,000 threshold because it's the same cut-off used by Statistics Canada when studying the country's wealthy elite.

Lol!

You consider $250,000 wealthy elite?? an American would laugh at you.

That is the salary of the typical small business tax evader, not that of the wealthy elite. The wealthy DO pay more tax than anyone else. Especially in the US.

[guyser]

Lol!

You consider $250,000 wealthy elite?? an American would laugh at you.

Only 1% would laugh , the other 99% would go ..ok, pay me that.

But I just re-read your post and must apologize to you as you are in fact correct.

AN American would laugh .

So one would, but not many else considering 200+ million people

[godzilla]

"The wealthy DO pay more tax than anyone else"

in actual dollars, probably... but in percentage of income, not a chance!

in fact, lets imagine a wonderland where the less one makes, the more one pays in tax as a percentage of income... so if i make $100 million then i pay .00001 percent and if i make $10k then i pay 10%.

would you vote for such a scheme?

hang on! its the fabulous flat tax scheme! the poll tax! the head tax! regressive taxation! HILARIOUS!

[jennie]

"The wealthy DO pay more tax than anyone else"

in actual dollars, probably... but in percentage of income, not a chance!

in fact, lets imagine a wonderland where the less one makes, the more one pays in tax as a percentage of income... so if i make $100 million then i pay .00001 percent and if i make $10k then i pay 10%.

would you vote for such a scheme?

hang on! its the fabulous flat tax scheme! the poll tax! the head tax! regressive taxation! HILARIOUS!

flat tax is for flat earth people

The thread started due to the article about the high high high income people who pay NO income tax ... and we're pretty divided on that. However, I doubt they are losing any sleep in concern about the high taxes of the rest of us: It's the way the game is played, the world goes round, in the current ... model.