# Flat Tax



## a_majoor (19 Jan 2008)

There has been lots of discussion about the various tax reductions the Conservative Government has introduced since being elected, most left wing pundits are opposed to selective "Botique" tax cuts, GST cuts and broad based tax cuts (notice the only commonality?)

Perhaps it is time to cut the knot and apply really comprehensive tax reforms:

http://myconservativedreamworld.blogspot.com/2008/01/flat-tax-now.html



> *Flat tax NOW*
> 
> The Canadian Taxpayers Federation calls for a flat tax. It is nice to see somebody keeping this issue going. The reasons supporting this proposal by John Williamson and Mark Milke are given as: reduction in administrative complexity; a lower overall rate; a more progressive system because of the elimination of deductions for the wealthy; reduced tax avoidance; and greater incentives to work, save and invest.
> 
> ...


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## Reccesoldier (19 Jan 2008)

Taxes in 15 minutes

Too bad that the ideal behind progressive taxation (wealth distribution) is so widely accepted.


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## a_majoor (20 Jan 2008)

Now that a representative pool of nations have actually enacted flat tax schemes and operated them for a period of years, there will be more real world data to counter the usual "sky will fall" naysayers:

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



> Countries that have flat tax systems
> 
> These are countries, as well as minor jurisdictions with the autonomous power to tax, that have adopted tax systems that are commonly described in the media and the professional economics literature as a flat tax.
> 
> ...


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## Infanteer (20 Jan 2008)

Seems that a flat tax definately fits into the model of "egalitarian citizenship".  I always found it odd that while 1 person put his 1 share in as a citizen, other people were forced to put 2 shares or more into the kitty for the same rights as a citizen.  Considering that the current model drives people to live in Monaco where none of their money is taxed by the Canadian government, perhaps a more simple tax system would make tax evasion less profitable....


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## geo (20 Jan 2008)

Thucydides  
From the list of countries you have provided, it would appear that, excluding "modern" Russia, most of them are "don't have much" places.


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## a_majoor (20 Jan 2008)

On the other hand, based on various parameters, they are moving into "getting some" status fairly quickly. While I would never state that having a flat tax is the only reason these nations have such rapidly growing economies (free speech and property rights have a lot to do with it), flat taxes simply makes it easier to do the accounting and overall reduces reasons to spend inordinate amounts of time on tax evasion and tax avoidance.

When you consider doing taxes is estimated to cost the Canadian economy on the order of $30 billion dollars a year, anything which would release that administrative burden would also unshackle the Canadian economy, and put far more back into the productive economy than any sort of stimulus package ever proposed.


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## Bane (20 Jan 2008)

Doesn't the expense of income tax collection deal more with tax loophole's and write off's than a progressive tax structure?  As to the very expensive to collect GST, it should just be taken out of a harmonized PST- GST combo.  Have the province collect both in one shot and the fed's would just take a percentage from the province, rather than a separate collection structure for each.  Brilliant idea, but have fun trying to sell that one to the premiers!  I'm all for simplification of the tax system, but moving to a 'flat tax' to do that is throwing the very useful baby (progressive tax structure) out with the bath water (Byzantine codes of exceptions and loopholes).

my $0.02*

(* Minus applicable taxes)


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## Reccesoldier (20 Jan 2008)

What is so useful about progressive taxation Bane?  If the government is getting the same amount of revinue and it is much simpler for citizens to calculate and KNOW exactly how much tax they are paying on $1.00 of wages and the government doesn't need to create maintain and run a huge and innefficient taxation bureaucracy what is "useful" about the old way?


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## Bane (20 Jan 2008)

Reccesoldier said:
			
		

> What is so useful about progressive taxation Bane?


It puts a lesser burden on low income earners. It's a socially progressive tax system. 



			
				Reccesoldier said:
			
		

> ... the government doesn't need to create maintain and run a huge and innefficient taxation bureaucracy what is "useful" about the old way?


If you are to get rid of tax exemptions, isn't that where most of the ineffieciency's lie?  I argure that the GST is expensive to collect, that needs to be fixed.  But income tax, I'd imagine that dropping the base rate and eliminating exemptions would produce the majority the benifits that would result from a totally flat system.


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## Infanteer (20 Jan 2008)

Bane said:
			
		

> It puts a lesser burden on low income earners. It's a socially progressive tax system.



Why is it that if someone makes more than an arbitrary number of dollars that they are obligated to pay more then their fair share as a citizen?  How is that socially progressive?  Or is socially progressive just a cover-word for "rich people suck and poor people deserve more even though opportunity to advance is out there".

In my opinion, consumption taxes are the better social tax - those who live an extravagant lifestyle can pay for it.


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## I_am_John_Galt (20 Jan 2008)

Bane said:
			
		

> It puts a lesser burden on low income earners. It's a socially progressive tax system.


And puts a greater burden on those who work hard, save, invest and engage in entrepreneurial activities.  It's a counter-productive system.




> If you are to get rid of tax exemptions, isn't that where most of the ineffieciency's lie?  I argure that the GST is expensive to collect, that needs to be fixed.  But income tax, I'd imagine that dropping the base rate and eliminating exemptions would produce the majority the benifits that would result from a totally flat system.


 Yeah sure, what's your plan to "get rid of tax exemptions"?


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## Bane (20 Jan 2008)

Aden_Gatling said:
			
		

> Yeah sure, what's your plan to "get rid of tax exemptions"?


That's what the Frasier report proposed too.  How is my idea any different. 



			
				Aden_Gatling said:
			
		

> And puts a greater burden on those who work hard, save, invest and engage in entrepreneurial activities.  It's a counter-productive system.


     I believe the logic of the progresive system also based on econmic utility; in giving breathing space to low-income earners, they are able to make investments in themselves and skills to become higher earners, tax payers, than they would otherwise be if they were highly taxed from the start.  Yes this does not always work out perfectly, but it is sound logic and one could argure that a progressive system has allowed many people the opportunity to work their way into higher tax brackets and improve their life, their families life, and padded government coffers.


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## Reccesoldier (20 Jan 2008)

Bane said:
			
		

> It puts a lesser burden on low income earners. It's a socially progressive tax system.



I think you need to do a little bit of reading.  The modern flat taxes like the one being proposed by the Fraser institute has rather generous basic exemptions as well as certain other exemptions for RESP, RRSP etc.



> If you are to get rid of tax exemptions, isn't that where most of the ineffieciency's lie?  I argure that the GST is expensive to collect, that needs to be fixed.  But income tax, I'd imagine that dropping the base rate and eliminating exemptions would produce the majority the benifits that would result from a totally flat system.



You're probably right about exemptions except that it is the inequality of progressive taxation systems that make people want to "cheat" or "evade" the system.  Think about it.  I've never heard anyone complain that they weren't eligible for deductions but I've often heard people complain about going into another tax bracket and loosing money because of it. This often affects the poor worst of all.

The other thing is why should we as a society tailor our policies to the sector of our population least able to contribute to building wealth and prosperity?  

I can almost hear the gasps of horror, but hear me out.  

If we as a nation focussed our efforts on the earning potential of the middle and upper classes those classes would be enabled to become even more productive.  As a result the quality of life for all would increase, more jobs would be created more opportunities would exist for all, including (possibly especially) for the poor.  But no, we penalize sucess with "progressive taxation", we shovel good money after bad with special education for marginal students and largely ignore the truly gifted children, (hell we've gone so far as to co-opt the phrase "Gifted Children" to mean those with mental problems or retardation) and we handout money to failing business' all of this with little chance of any return for any of it.   Before you say that the ideal of profit or return has no business because we are dealing with human concerns I would ask you who is it that enables our society to function?

I am not advocating the marginalization of any group but rather a refocusing of the wealth and power of the state to reinforce sucess, not to support failure.

Let the flaming begin... :evil:


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## Bane (20 Jan 2008)

Reccesoldier said:
			
		

> You're probably right about exemptions except that it is the inequality of progressive taxation systems that make people want to "cheat" or "evade" the system.  Think about it.  I've never heard anyone complain that they weren't eligible for deductions but I've often heard people complain about going into another tax bracket and loosing money because of it. This often affects the poor worst of all.


But if there are no exemptions you can't have them no matter how bad you want them, removing exemptions removes the ability to have exemptions. It's a manouver warfare solution to the problem of tax dodgers  




			
				Reccesoldier said:
			
		

> I think you need to do a little bit of reading.  The modern flat taxes like the one being proposed by the Fraser institute has rather generous basic exemptions as well as certain other exemptions for RESP, RRSP etc.


RRSP - Please explain to me why I would put money in a tax deferment tool if there is a flat rate.


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## Reccesoldier (20 Jan 2008)

Bane said:
			
		

> RRSP - Please explain to me, why I would put money in a tax deferment tool if there is a flat rate.



Because an RRSP/RESP would effectively reduce your taxable income.  This is acceptable to the government because in the end you (by providing for your own financial security) after retirement would lessen the possibility of you being a drain on the government.  An RESP would help ensure that your children are able to earn and become productive members of society.


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## Bane (20 Jan 2008)

Reccesoldier said:
			
		

> Because an RRSP/RESP would effectively reduce your taxable income.  This is acceptable to the government because in the end you (by providing for your own financial security) after retirement would lessen the possibility of you being a drain on the government.  An RESP would help ensure that your children are able to earn and become productive members of society.


You put money in an RRSP to defer income tax. That is the whole point. It only works if you have progressive tax brackets.  Unless you have an age over which you would pay less, or no, income tax. Then you could save your pre-tax dollars and remove them at the lower rate once you hit that age.  Sounds a little bit hippie/communist for my liking though.


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## I_am_John_Galt (20 Jan 2008)

Bane said:
			
		

> That's what the Frasier report proposed too.  How is my idea any different.


They are proposing a flat tax rate: unless I am missing something, you are proposing the opposite!



> I believe the logic of the progresive system also based on econmic utility;


Huh?  It doesn't sound like you know what economic utility is.



> in giving breathing space to low-income earners, they are able to make investments in themselves and skills to become higher earners, tax payers, than they would otherwise be if they were highly taxed from the start.  Yes this does not always work out perfectly, but it is sound logic and one could argure that a progressive system has allowed many people the opportunity to work their way into higher tax brackets and improve their life, their families life, and padded government coffers.



Actually it is not sound logic at all: the opposite is true.  The high income / low wealth individual is punished for trying to 'catch up', conversely, the low income / high wealth individual receives more favourable tax treatment.  The system does not encourage 'social climbing', it _discourages _it.

Socially 'progressive' policy is typically not well-thought-out and generally have consequences that are the opposite of what was intended.


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## Reccesoldier (20 Jan 2008)

Bane said:
			
		

> You put money in an RRSP to defer income tax. That is the whole point. It only works if you have progressive tax brackets.  Unless you have an age over which you would pay less, or no, income tax. Then you could save your pre-tax dollars and remove them at the lower rate once you hit that age.  Sounds a little bit hippie/communist for my liking though.



Um, no.  I put money in my RRSP so that when I want to retire I can live my life in the manner I want to.


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## I_am_John_Galt (20 Jan 2008)

Bane said:
			
		

> You put money in an RRSP to defer income tax. That is the whole point. It only works if you have progressive tax brackets.  Unless you have an age over which you would pay less, or no, income tax. Then you could save your pre-tax dollars and remove them at the lower rate once you hit that age.  Sounds a little bit hippie/communist for my liking though.



No; one puts money in an RRSP to defer tax _in order to enjoy the benefit of tax-free compounding_ (which has nothing to with progressive taxation).  Sheesh!  :


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## Bane (20 Jan 2008)

Aden_Gatling said:
			
		

> No; one puts money in an RRSP to defer tax _in order to enjoy the benefit of tax-free compounding_ (which has nothing to with progressive taxation).  Sheesh!  :



Avoiding capital gains tax year over year is one benefit to RRSP's.  But income tax deferal is also a very significant reason. :

http://en.wikipedia.org/wiki/Registered_Retirement_Savings_Plan
*1.Contributions to RRSPs, up to permitted limits described below, may be deducted from one's income before calculating income tax due.* 
2.Income earned within the account (interest, corporate dividends, trust distributions, capital gains) is not taxed until money is withdrawn from the plan, allowing the plan to grow faster than the same investments would grow if they were held outside the plan and thus subject to tax. 
*3.Money may be withdrawn from an RRSP in tax years when one is in a lower income-tax bracket because of lower income (due to retirement, unemployment, etc.) than tax years when one makes contributions. *


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## a_majoor (20 Jan 2008)

Most modern flat tax schemes have fairly generous earnings exemptions which effectively remove poor people from taxation.

As for RRSP and RESP's, allowing savings to compound so people have resources to gain educations or retire without being a burden on the community are socially responsible. It seems odd that "Progressives" only see the generosity of the State as being the only means for people to make progress, the remark by the Liberals that people would spend their child care money on "beer and popcorn" exemplifies this attitude.

Consider the amount of time and effort that most people have to spend to do their income tax, the fact that a fairly sophisticated accounting industry exists to cater to poor and middle class people who are overwhelmed by the complexity of their tax forms (H&R Block etc.)you can see where a large portion of the estimated $30 billion dollars of compliance costs is going, and the contortions that more sophisticated people have to go through to minimize their taxes through deductions, tax planning and so on is another big cost. The vast mechanism of the Canada Revenue Agency absorbs much of the rest (and I suppose there is a fraction that is lost due to "friction").

Will we ever see a flat tax? Inertia and the huge benefits that favored groups can gain by manipulating the tax code make me think this will be a very long term battle, and may even need an external push like an economic meltdown or the realization that we are engaged in WW IV to shake the old system down.


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## niceasdrhuxtable (20 Jan 2008)

Reccesoldier said:
			
		

> You're probably right about exemptions except that it is the inequality of progressive taxation systems that make people want to "cheat" or "evade" the system.  Think about it.  I've never heard anyone complain that they weren't eligible for deductions but I've often heard people complain about going into another tax bracket and loosing money because of it. This often affects the poor worst of all.



This doesn't actually happen although a lot of people seem to think it does. Tax brackets only apply to their individual ranges of income above the threshold from one bracket to another. That is to say, when you cross from one bracket to another, you're only taxed at the higher rate for the amount of income you make over the threshold. You never actually lose money while going from a lower bracket to a higher one.


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## I_am_John_Galt (20 Jan 2008)

Bane said:
			
		

> Avoiding capital gains tax year over year is one benefit to RRSP's.  But income tax deferal is also a very significant reason. :


You don't know what you are talking about: capital gains and income are two examples of the types of taxes that are deferred under an RRSP.  How is this a benefit of (or related to) progressive taxation?

And by the way, the only Capital Gains benefit _IS _the deferral: RRSP/RRIF withdrawls are treated as Income, which receives less favourable tax treatment than Capital Gains (by far).



> http://en.wikipedia.org/wiki/Registered_Retirement_Savings_Plan
> *1.Contributions to RRSPs, up to permitted limits described below, may be deducted from one's income before calculating income tax due.*
> 2.Income earned within the account (interest, corporate dividends, trust distributions, capital gains) is not taxed until money is withdrawn from the plan, allowing the plan to grow faster than the same investments would grow if they were held outside the plan and thus subject to tax.
> *3.Money may be withdrawn from an RRSP in tax years when one is in a lower income-tax bracket because of lower income (due to retirement, unemployment, etc.) than tax years when one makes contributions. *



I have a graduate degree in finance and several years work experience in the FIRE sector: you have a quote from wikipedia.  Anyway:

1. I don't know why you *boldfaced* this.  It sure as hell is nothing specific to progressive taxation;
2. Is what I have been trying to tell you (and rather confusingly, the subject of your second sentence, which I quoted at the top);
3. Can be a relatively minor benefit under progressive taxation, but pales in significance to #2, particularly as the time horizon increases.  It would be akin to saying a 9mm sidearm makes a hornet pilot more lethal: technically true, but only trivially so.  It is generally not even considered in calculations (e.g.: http://www.efficientmarket.ca/article/RRSP_vs_NON_REGISTERED )


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## Infanteer (21 Jan 2008)

Aden_Gatling said:
			
		

> I have a graduate degree in finance and several years work experience in the FIRE sector: you have a quote from wikipedia.



ZING!


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## DBA (21 Jan 2008)

Aden_Gatling said:
			
		

> You don't know what you are talking about: capital gains and income are two examples of the types of taxes that are deferred under an RRSP.  How is this a benefit of (or related to) progressive taxation?



You seem to have missed the flow of the discussion. A statement was made that an RRSP would be pointless under a flat tax. A response listed the advantages of an RRSP and some comments on which of them would still hold true under a flat tax.


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## DBA (21 Jan 2008)

Bane said:
			
		

> You put money in an RRSP to defer income tax. That is the whole point. It only works if you have progressive tax brackets.  Unless you have an age over which you would pay less, or no, income tax. Then you could save your pre-tax dollars and remove them at the lower rate once you hit that age.  Sounds a little bit hippie/communist for my liking though.



There is the concept of the time value of money. Even if you pay out the exact same $ in tax 30 years from now as you would have paid today just having that money for 30 years is valuable. For example you save $300 in tax this year by making RRSP contributions, invested at 4%/year it will be $1296.58 in 30 years, after paying the $300 in tax your left with an extra $996.58.


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## Bane (21 Jan 2008)

"...I've stepped in it again mom." 
I admit that I had forgotten about tax free invesment gains that one gets from an RRSP, but I was correct to point out that one of it's benefits is to lower a persons level of taxable income, bringing them into a lower bracket.  And yes,  “the most powerful force in the universe is compound interest”. Albert Einstein



			
				Aden_Gatling said:
			
		

> I have a graduate degree in finance and several years work experience in the FIRE sector: you have a quote from wikipedia.


ZING indeed! Very fancy!

Now lets get back to talking about the evils of a flat tax! :argument:


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## I_am_John_Galt (21 Jan 2008)

Bane said:
			
		

> was correct to point out that one of it's benefits is to lower a persons level of taxable income, bringing them into a lower bracket.


 It _can _be, but there are plenty of other vehicles to effect the same thing.  It defers the taxes you would have paid right now and allows you to invest at a tax-free rate: this is the principal benefit.  The fact that you might eventually pay at a nominally lower rate is of little consequence.  For example, a person who invests regularly through RRSPs from the time of their early 20's will probably pay taxes at a higher rate when they eventually withdraw it from their RRIF (i.e., their RRIF income is more than what they got paid flipping burgers); the 'progressive' tax system is working against them, however it still makes sense to invest in the RRSPs. 



> Now lets get back to talking about the evils of a flat tax!



I'm not a huge fan myself; while fairer and certainly more 'progressive' (insofar as it *doesn't* serve to reinforce social stratification) than what we have now, there would still be plenty of loopholes & complexities (think of single-owner businesses, for example).  It was suggested below that a pure consumption tax would be fairer and more efficient, and that makes a lot of sense to me.  Unfortunately, it is still ultimately destructive (though arguably less so that the others): there are no good taxes.



			
				DBA said:
			
		

> You seem to have missed the flow of the discussion. A statement was made that an RRSP would be pointless under a flat tax. A response listed the advantages of an RRSP and some comments on which of them would still hold true under a flat tax.


 *?*


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## Reccesoldier (29 Jan 2008)

More from the Fraser Institute...

http://www.fraserinstitute.org/commerce.web/newsrelease.aspx?nID=5137


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## geo (29 Jan 2008)

> Basham and Mitchell show how Canada could benefit from a flat tax by looking at the history of flat taxes in other nations and the impact on their economies. Hong Kong has had a flat tax since 1947 and remains the administrator of the world’s most efficient tax system. While the U.S. income tax system generates 66,000 pages of code and regulations, Hong Kong’s entire tax code is no more than 200 pages.
> 
> “Nowhere is the flat tax more prominent than in Hong Kong, which built itself into an economic giant using the flat tax as a fiscal anchor. The system is so successful, it even survived Hong Kong’s handover to China,” Mitchell said.



A tax act in 200 pages?  I like it!
Also, if I were to pay flat taxes, I can tell you I certainly wouldn't bother wasting my time with RRSPs and tax sheltering.... it wouldn't be worth the trouble - 15% now or 15% later... same thing & fewer limitations on how I can invest it.

Mind you - no more capital gains tax AND tax exemptions on the disposition of your principal residence.


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## Bane (29 Jan 2008)

You can have a very simple tax code with a progressive tax system. You don't need a flat tax to elminate much of the red tape and garble in the tax code. (For those of you that are pro-flat tax, simplifiying the code in this manner would be a good first step to a flat system. Not my cup of tea but a good idea either way I think)  Also, I'd be cautious about drawing too many lessons from a place so vastly different from Canada as Hong Kong.  Aside from the Hong Kong example, pretty much every place listed has lower social mobility than exists in Canada, this is a critical indicator of how easy it is for an individual to hop on and climb the 'financial ladder'.  I'd argue for a more simplified tax system and lower rates, but stop short of a flat system.


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## Reccesoldier (29 Jan 2008)

As stated in the article it is interesting to note that not a single Country that has changed to a flat tax system has gone back to a "progressive' system


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## geo (29 Jan 2008)

Hey... if the Gov't was satisfied taking 15% and ONLY 15% of my earnings each & every year, I'd "go for it"!

I jsut have serious doubts taht they'd be satisfied with that....


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## a_majoor (30 Jan 2008)

geo said:
			
		

> A tax act in 200 pages?  I like it!
> Also, if I were to pay flat taxes, I can tell you I certainly wouldn't bother wasting my time with RRSPs and tax sheltering.... it wouldn't be worth the trouble - 15% now or 15% later... same thing & fewer limitations on how I can invest it.



The compound interest equations might change your mind; sheltered money compounding tax free for a period of 20+ years will provide a vastly greater ROI than the same investment where the earnings are subject to tax.


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## geo (30 Jan 2008)

I would be paying 15% regardless.... Past, present, future... there is no difference.

Sheltering income for later use is only necessary if you expect to pay taxes at a lesser rate in the future.
If it is always going to be 15% then Sheltered ROI bedamned - I end up with exactly the same amount in the end.


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## Flip (30 Jan 2008)

Discussion of a "flat tax" system in parliment would be worth it if only to see Jack Layton's head explode.   >

The only problems with a flat tax regime are how to deal with those at the lower end ( of whom there are many ) and loss of revenue from taxing the rich less ( of whom there are few).

I am absolutely in favor of a simpler tax code.
I am absolutely in favor of a flat(er) tax.
But the best thing they could do without much fuss is to get rid of the "bracket" system.
Yes, the equation becomes more complex, but many people use their computers anyway.

The GST is an interesting analogy though, it's 5% for everyone.
The cost to large businesses is reduced by economy of scale per dollar of revenue
and small businesses like mine do find it a burden.
So, in this case I could say I like the idea of a tax on consumption
but in practice - really really hate it.  :rage: I suspect that's where we might end up with flat tax.
Nice to talk about it though!  ;D


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## a_majoor (30 Jan 2008)

geo said:
			
		

> I would be paying 15% regardless.... Past, present, future... there is no difference.
> 
> Sheltering income for later use is only necessary if you expect to pay taxes at a lesser rate in the future.
> If it is always going to be 15% then Sheltered ROI bedamned - I end up with exactly the same amount in the end.



Um, no. The end result of sheltered investment would be (at a minimum) tens of thousands of dollars greater. Since I have heard no proposals to make RRSP owners dump their investments at an arbitrary time, you can can controll the outflow (i.e. taxable income) knowing you have a much larger investment nest egg than otherwise.


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## Inch (30 Jan 2008)

geo said:
			
		

> I would be paying 15% regardless.... Past, present, future... there is no difference.
> 
> Sheltering income for later use is only necessary if you expect to pay taxes at a lesser rate in the future.
> If it is always going to be 15% then Sheltered ROI bedamned - I end up with exactly the same amount in the end.



Doesn't exactly work that way. Think of it this way, 100% of your money is allowed to grow if you contribute to RRSPs, if you had to pay tax on the money you invested, only 85% (in the 15% flat tax scenario) would be compounded. You don't need to be an economist to figure out that 100% compounded for 20 years will yield a higher amount than 85% compounded for 20 years. 

Yes you will be paying 15% percent later too, but you'll have more of a return to draw from.


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## Inch (30 Jan 2008)

I just did a quick calculation using ING Direct's calculator.

Here's how it breaks down...

100 dollars invested every month for 20 years at a 3.65% interest rate will yield $35,376.85, minus 15% and you're left with $30,070.32
85 dollars invested every month for 20 years at 3.65% will yield $30,070.32 ($9,670.32 in interest), subtract the tax on the interest and you're left with $28,619.78

So, even paying the exact same income tax on the same money later instead of now, you come out ahead by $1,450.54 by putting your money into an RRSP where it grows tax free.


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## a_majoor (14 Feb 2008)

Alternative routes to the same end:

http://choiceforchildcare.blogspot.com/2008/02/single-rate-tax.html



> *Single rate tax...*
> 
> Taxpayers need a Valentine, Mr. Flaherty
> 
> ...


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## geo (14 Feb 2008)

Thuc...
Mr Flaherty pulled a boner when he reduced the GST / HST by 1%.
Per a "MARKETPLACE" survey done between Dec & Jan, merchants & Municipal govt's simply plowed the 1% into their profit margin.
So the little guy, who was supposed to benefit from the GST reduction gets it in the neck once again... Wonderful!


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## a_majoor (14 Feb 2008)

It is not the responsibility of the Government to determine what the tax cut goes to. You could make the argument that the extra profit margin keeps some business afloat and allows others to expand, increasing employment.

As for consumers, it is _your_ responsibility to shop around for the best deal. If you don't like what a vendor is doing, find another. In the Internet age there are no excuses for not being able to do so.


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## geo (14 Feb 2008)

Ummm....  for the most part, we're talking pennies per transaction - and no one will bother to do much work to find another supplier 
but it's the principle of the thing.

Government services have also gouged the consumer.... 
Marketplace figures that the city of Toronto would gather an additional 1-2 million $ from parking meters over the 1st year...

If Mr Flaherty wanted the individual consumer to get the $$ he should have applied it to generalized reductions to the Income tax - both personal & corporate.

Do you truly believe employers will expand their workforce with the additional ?


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## Reccesoldier (14 Feb 2008)

geo said:
			
		

> Ummm....  for the most part, we're talking pennies per transaction - and no one will bother to do much work to find another supplier
> but it's the principle of the thing.
> 
> Government services have also gouged the consumer....
> ...



Sounds selective to me.  Taking the parking meter "gouge' how much money do you think it would cost a City the size of Toronto to change the price on each and every parking meter?  How many other examples of services like this were considered for the poll?

As for the average business the tax is added at the register and to gouge that 1% would mean the repricing of each and every product sold.  So hopw many business' would spend that time and money?

I think I'm hearing an axe being ground.


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## geo (14 Feb 2008)

What axe
Mr Flaherty said I was entitled to having my consumption tax reduced by 1%
I figure I am entitled to receive the benefit Mr Flaherty claims I am entitled to get... 

By plowing the 1% back into corporate profits, the Gov't will bring it back into it's coffers all over again....

SO, If they want to give me back some $$$ - do it at the source and don't take so much money outa my pay.


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## Reccesoldier (14 Feb 2008)

geo said:
			
		

> What axe
> Mr Flaherty said I was entitled to having my consumption tax reduced by 1%
> I figure I am entitled to receive the benefit Mr Flaherty claims I am entitled to get...
> 
> ...



I didn't mean you Geo, I meant that the poll was scewed by including things that would be excessively cost prohibitive/manpower intensive to reprice to take off a hidden 1% of GST (like the parking meters)


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## a_majoor (16 Feb 2008)

Geo, the two % reduction in GST is not going to show remarkable results in an instant, but you can't have cake and eat it as well either. If the GST reduction will not appreciably increase investment or employment, then it will not make a drastic change in your lifestyle either. (Actually, your individual circumstances might not change, but the cumulative effect of the tax cut will be noticeable on the supply side).

For people in very low income brackets, the GST cut will provide a small measure of relief (since they probably do not pay income taxes anyway). You are entirely correct in supporting a broad based income tax cut (*welcome to the club!*), but given the political climate of Canada and the constraints of operating a minority government, I suspect the GST cut and a small income tax reduction or streamlining is all we can expect for the foreseeable future. Even if the government falls on the budget, the best we could hope for is another conservative minority, with equally limited room to move.


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## geo (16 Feb 2008)

... a larger "small income tax reduction" instead of a GST reduction woulda fit the ticket to the majority of the electorate.


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## Edward Campbell (16 Feb 2008)

The 2% GST reduction is a very good thing, not for its effects on either people or the economy (significant cuts to individual income and a complete elimination of the silly 'corporate' income tax (an inefficient sales tax) would have done much more for both), but for its effects on the _size_ of government. Less revenue means less capacity to spend. Cutting inflexible taxes like the GST is always good because politicians, being gutless, are afraid to reimpose previously cut taxes (watch our American neighbours try to wrestle with Bush's _temporary_ tax cuts!) and now, in Canada, they are (temporarily, at least) afraid to run deficits so all that is left is to cut spending.

Now, being politicians, they will try to cut essential spending, like defence, education and infrastructure, and retain wasteful social spending but, eventually, they will have their noses rubbed into the error of their ways - albeit only after all of us have suffered for their bad decisions.


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## geo (16 Feb 2008)

> The 2% GST reduction is a very good thing, not for its effects on either people or the economy, but for its effects on the size of government.



Huh ???


> A reduction in income tax - individual income tax / corporate' income tax would have done much more for both .



my point exactly!

Translating the intended "budget surplus $$" transfer back to the people into an income tax reduction woulda made sure the taxpayers of Canada would have gotten their "due" - the one Mr Flaherty promissed us.  As it is, it's pert much being plowed back into the corporate coffers.


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## Edward Campbell (16 Feb 2008)

geo said:
			
		

> > The 2% GST reduction is a very good thing, not for its effects on either people or the economy, but for its effects on the size of government.
> 
> 
> 
> Huh  ???



Any time we can _constrain_ government spending, by denying government the _right_ to tax us, we have made things better. Less money = less government = *better* government (always, without fail, even in wartime).


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## geo (16 Feb 2008)

... I agree with you 100%
but, by reducing Income taxes - you do it more efficiently than by slashing GST.

As the GST reduction is not being passed back to the consumer, the corporations are adding it to their bottom line - their profit line... which is being taxed... which returns same said $$$ right back to the Revenue people....


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## Edward Campbell (16 Feb 2008)

C'mon geo; we both lived through the Trudeau, Mulroney and Chrétien eras. We *know* that smarmy, conniving politicians can manipulate the hideously complex income tax system to impose all manner of hidden and not so hidden surtaxes and ‘targeted’ exemptions which have the effect of raising more and more tax revenue even as tax cuts are implemented.

The genius of the GST is its inflexibility. With a handful of unnecessary exceptions it’s a case of: if you use your money you pay a tax. Cutting inflexible taxes works; cutting flexible (complex) taxes always leaves room for _improvisation_ and fiscal slight of hand.

In a perfect world we would have only a very few, totally inflexible taxes – focused, primarily on taxing consumption rather than saving and investment, but ... that brings us back to the topic of a flat tax.


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## a_majoor (17 Feb 2008)

This should also go under the Media and CBC bias thread as well......

http://www.officiallyscrewed.com/blog/?p=904



> *CBC Bias Rears It’s Ugly Head … Again*
> Filed under: Politics-Federal, Business, MSM Bias, News and Media, CBC Cowchips, Numbers Don't Lie — TrustOnlyMulder @ 12:43 pm
> 
> I just finished watching Marketplace on CBC this Sunday afternoon. That’s what happens when CTV cancels this weeks edition of Question Period.
> ...


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## Reccesoldier (17 Feb 2008)

Thucydides said:
			
		

> This should also go under the Media and CBC bias thread as well......
> 
> http://www.officiallyscrewed.com/blog/?p=904



I knew it! 



> Sounds selective to me.  Taking the parking meter "gouge' how much money do you think it would cost a City the size of Toronto to change the price on each and every parking meter?  How many other examples of services like this were considered for the poll?
> 
> As for the average business the tax is added at the register and to gouge that 1% would mean the repricing of each and every product sold.  So hopw many business' would spend that time and money?
> 
> I think I'm hearing an axe being ground.


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## a_majoor (27 Feb 2008)

Canadians now seem comfortable with classical economic ideas like "supply side" economics and the Laffer Curve, according to this poll:

http://unambig.blogspot.com/2008/02/ipsos-reid-poll-confirms-need-for-tax.html



> Tuesday, February 26, 2008
> *Ipsos Reid Poll Confirms Need For Tax Cuts*
> 
> I originally caught the news line from National Newswatch that the National Post was reporting that Canadians want taxes cut, even if it means running a federal deficit. I wrote about this need yesterday, backed up by economists and the Canadian Taxpayers Federation. Unfortunately the National Post, and most mass media, have a terrible job of documenting their sources. They simply quoted some numbers, unsubstantiated by any linkage to the source article. But I think I've nailed it down to be the Ipsos Reid Poll released yesterday, despite the fact the National Post makes no mention of the polling company they used. It's interesting, because the poll rather contradicts itself at one point, with 45% saying they think tax cuts have been "enough", but then in a later question 37% saying they should cut more taxes. Of course, poll contradictions like this are quite common, and would suggest that while Canadians are satisfied with the current level of tax cuts, they would be in favour of more cuts under certain conditions. Let's glance at the actual poll:
> ...



_modified to add link_


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## a_majoor (2 Mar 2008)

As was once said: When America sneezes, Canada catches a cold. Should the Democrats win the White House, perhaps we should pre emptively cut taxes in order to attract American investment and job creation:

http://www.anamericanfrontporch.com/2008/02/capital-gains.html



> Friday, February 29, 2008
> *Capital Gains*
> 
> Politicians don't scare me. The reality of our democracy is that very few of the real fringe ideas ever come close to legislation. This is why Dennis Kucinich will never do anything on a national scale. He's a kook. But, Wednesday, for the first time in a few years, I heard something from the mouth of a mainstream candidate that actually frightened me. I'm not sure of the location or even the question that prompted her response but Mrs. Clinton hinted at her intent to raise capital gains tax rates once in the White House. I contend that this is a terrible, terrible, terrible idea but even her shrill voice could sell it as "making the rich pay their fair share in taxes".
> ...


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## a_majoor (4 Mar 2008)

Well we are moving a bit beyond "Flat Tax", but it seems the CPC have transformed the Canadian tax system without too many people noticing it!:

http://www.canada.com/montrealgazette/news/editorial/story.html?id=056a196e-051a-41a6-80fb-57b5f542cc35&p=2



> *Flaherty budget transforms the way Ottawa taxes*
> The decision to exempt savings from tax represents a sea change for Canada
> 
> WILLIAM WATSON
> ...


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## a_majoor (7 Mar 2008)

The Tax Free Savings Account is a sly and very broad based way to stimulate the economy, monies can be taken out and used for any purpose whatsoever (*you* pick the economic winners and losers, not some bureaucrat in Ottawa). Since different plans work better according to your circumstances, here is some more details to help plan:

http://www.nationalpost.com/news/story.html?id=344610



> *RRSPs versus TFSAs: The math*
> 
> Jamie Golombek,  Financial Post  Published: Monday, March 03, 2008
> 
> ...


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## a_majoor (25 Mar 2008)

A different view on income splitting. I am not entirely sure I agree with this, but will have to read the report and see what it says:

http://www.nationalpost.com/opinion/columnists/story.html?id=edaa0073-8723-4568-8928-6e82cf140db3&k=51171



> *A scholar writes on income splitting*
> 
> Arthur Drache,  Financial Post  Published: Tuesday, March 25, 2008
> 
> ...


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## a_majoor (25 Mar 2008)

Perhaps the repetition of Bob Rae's experiment in Socialist Economics in Ontario by the McGuinty government will settle some arguments here. Since I am currently stuck in Ontario, (and a veteran of Rae Days etc.) I am examining my options very closely indeed. (One rather unpalatable but possible option is to parlay an idea I'm working on into a spot at the trough. Perhaps a better one is to appeal to my wifes family to get Green cards. Or maybe I'll lower my expectations yet again and muddle through)

http://voterick.com/wordpress/?p=91



> *The Great (Taxcuts vs Bribes) Debate*
> 
> Boil the McGuinty-Flaherty feud to its essence and what remains is the divide between governance styles. While Flaherty is making most of the noise the Liberals have much at stake because under no economic circumstances are they ever ready to alter their tried and true, bribe and conquer approach.
> 
> ...


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## Reccesoldier (26 Mar 2008)

Thucydides said:
			
		

> Perhaps the repetition of Bob Rae's experiment in Socialist Economics in Ontario by the McGuinty government will settle some arguments here. Since I am currently stuck in Ontario, (and a veteran of Rae Days etc.) I am examining my options very closely indeed. (One rather unpalatable but possible option is to parlay an idea I'm working on into a spot at the trough. Perhaps a better one is to appeal to my wifes family to get Green cards. Or maybe I'll lower my expectations yet again and muddle through)
> 
> http://voterick.com/wordpress/?p=91



McGuinty is indeed playing with shades of Rae.  :  It's a horrible time for Ontario to have turned to Liberal Tax and spend ideology.


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## a_majoor (31 Mar 2008)

E.R Campbell has made this point before, but it is worth emphasizing again:

http://marcandremongeon.blogspot.com/2008/03/brilliance-of-gst-cut.html



> *The brilliance of the GST cut*
> 
> Almost every single economists and members of the opposition described at the time the Harper government's cut of the GST as bad for the economy. I would argue that these critiques missed the more significant point of this cut. Other than fiscal populism, *it wasn't based on economics but rather on the need to radically -yet subtly- transform the nature of federal-provincial relations*. The effects of this may not seem obvious at first, but by reducing its surpluses, the federal government has less room to spend and is forced to be disciplined and focused on its own responsibilities rather than venture into provincial and municipal concerns.
> 
> ...


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## Kilo_302 (4 Apr 2008)

> Now that a representative pool of nations have actually enacted flat tax schemes and operated them for a period of years, there will be more real world data to counter the usual "sky will fall" naysayers:
> 
> http://en.wikipedia.org/wiki/Flat_tax
> 
> ...





This list is  a "representative pool of nations?!" Correct me if I'm wrong, but most of those nations are essentially developing, or undeveloped, with the exception of the Eastern European nations, which have basically opened their doors to all manner of foreign investment in a desperate bid to join the EU. Iraq only has a flat tax system because its essentially an experiment in neo-conservative economics. As for the rest, I don't think we in Canada should be trying to mimic their political-economic systems. Look who's NOT on that list...pretty much everyone else in the world.


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## a_majoor (4 Apr 2008)

Asked and answered: http://forums.army.ca/forums/threads/69927/post-663766.html#msg663766


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## Reccesoldier (22 Apr 2008)

Another call for a flat tax.

http://www.torontosun.com/Comment/2008/04/22/5353481-sun.html

I wish this was a sign of momentum...  :-\


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## a_majoor (30 Apr 2008)

From the Montreal Gazette:

http://www.canada.com/montrealgazette/news/editorial/story.html?id=07e0e0aa-3978-4c3c-b823-f9037d1c4ba0



> *Flat tax would make today a lot easier*
> 
> The Gazette
> 
> ...


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## a_majoor (13 May 2008)

An interesting analysis of how the proposed "Carbon Tax" Mr Dion is musing about will go down. Note how it compares to sales taxes like the GST:

http://stevejanke.com/archives/262257.php?utm_medium=RSS



> *A 1993 analysis of consumption taxes done for the Liberal Party*
> Ever wonder why a consumption tax (like a carbon tax) is politically unpopular compared to a sales tax (like the GST)?
> 
> The Liberals under Jean Chretien wondered that in 1993 when they took over from the Progressive Conservatives.  Jean Chretien had promised to eliminate the GST, but of course, he didn't.  Different alternatives to the GST are discussed in this report.  It is very interesting to note what the researcher had to say about consumption taxes, and it helps understand why we still have the GST.
> ...


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## adaminc (21 May 2008)

I somewhat recall a political party talking about the idea of getting rid of property taxes so people can actually own their property outright, and replacing it with a sales tax premium based on the needs of the municipality its levied in. So if Toronto needs 5%, then they tack on 5%, but the Durham Region might only need 1%, and every x number of years you could reevaluate and change the tax premium.

It might've been the Freedom Party of Canada. I can't really remember now. But what do you people think of this idea for taxes?


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## SeaKingTacco (22 May 2008)

> But what do you people think of this idea for taxes?



Whoa-hey for that to work, you would actually have to have property rights in Canada, which we don't, so....


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## KJK (22 May 2008)

Very true thanks to Ed Broadbent and the NDP!  :rage: :rage:

KJK


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## Zell_Dietrich (22 May 2008)

A flat tax could mean many things,  but I think you guys are referring to the opposite of a progressive tax.  A progressive tax taxes higher levels of income more than lower income amounts.

An example most of us know:    http://www.cra-arc.gc.ca/tax/individuals/faq/taxrates-e.html

15% on the first $37,885 of taxable income, + 
22% on the next $37,884 of taxable income (on the portion of taxable income between $37,885 and $75,769), + 
26% on the next $47,415 of taxable income (on the portion of taxable income between $75,769 and $123,184), + 
29% of taxable income over $123,184. 

Most people think this is to get more money - punishing the rich and hardworking.  People do also argue that this reduces the motivation to try and attain higher levels of income.  

There are many really good arguments against a flat tax - a traditional one is that progressive tax rates act like automatic stabilizers for the economy.  

Keynesian economics says that if an economy is slowing down, the government should stimulate it, similarly it should slow the economy down to stop it from over heating when it is expanding to quickly.  (Yes over heated economies are just as bad as recessions, even if you like 25%+ inflation) 

As most of us can understand, bureaucrats are slow to recognise time for action and to act.  That is why having a built in system is better.  A sure way to take less money when the economy needs more money and take more from time the economy is over stimulated.  

A progressive tax rate does that.

http://www.amosweb.com/cgi-bin/awb_nav.pl?s=wpd&c=dsp&k=automatic+stabilizers
"Automatic stabilizers are a form of nondiscretionary fiscal policy that do not require explicit action by the government sector to address the ups and downs of the business cycle and the problems of unemployment and inflation. "


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## Zell_Dietrich (22 May 2008)

geo said:
			
		

> I would be paying 15% regardless.... Past, present, future... there is no difference.
> 
> Sheltering income for later use is only necessary if you expect to pay taxes at a lesser rate in the future.
> If it is always going to be 15% then Sheltered ROI bedamned - I end up with exactly the same amount in the end.



But if you are able to defer paying the taxes,  you'd be able to use the money you'd pay in taxes to earn more money.  Then with that money use that money to make more money etc.  

Lets say you're getting 10% return and you've invested $14,400 (which is around what Canadians owe on National debt) And we're only looking at 15% tax

Years         	5                	10             	15             	20
10% (no tax)     $23,191.34	$37,349.89	$60,152.37	$96,876.00
10% (15%tax)   $21,652.66	$32,558.16	$48,956.30	$73,613.46
Difference           $1,538.69   $4,791.73     $11,196.08      $23,262.54

So by simply allowing one to invest what one would otherwise have paid in tax in 5 years you'll have an extra thousand and a half.

Additionally there are considerations for total tax paid. In fact you'll pay less tax if you don't differ the payment of tax.


Year	Staring	                 Return	Tax	Ending				
 1	$14,400.00	$1,440.00	$216.00	$15,624.00				
 2	$15,624.00	$1,562.40	$234.36	$16,952.04				
 3	$16,952.04	$1,695.20	$254.28	$18,392.96				
 4	$18,392.96	$1,839.30	$275.89	$19,956.37				
 5	$19,956.37	$1,995.64	$299.35	$21,652.66		5 year total tax		$1,279.88
 6	$21,652.66	$2,165.27	$324.79	$23,493.13				
 7	$23,493.13	$2,349.31	$352.40	$25,490.05				
 8	$25,490.05	$2,549.00	$382.35	$27,656.70				
 9	$27,656.70	$2,765.67	$414.85	$30,007.52				
10	$30,007.52	$3,000.75	$450.11	$32,558.16		10 Year total tax		$3,204.38
11	$32,558.16	$3,255.82	$488.37	$35,325.61				
12	$35,325.61	$3,532.56	$529.88	$38,328.28				
13	$38,328.28	$3,832.83	$574.92	$41,586.19				
14	$41,586.19	$4,158.62	$623.79	$45,121.01				
15	$45,121.01	$4,512.10	$676.82	$48,956.30		15 Year total tax		$6,098.17
16	$48,956.30	$4,895.63	$734.34	$53,117.58				
17	$53,117.58	$5,311.76	$796.76	$57,632.58				
18	$57,632.58	$5,763.26	$864.49	$62,531.35				
19	$62,531.35	$6,253.13	$937.97	$67,846.51				
20	$67,846.51	$6,784.65	$1,017.70	$73,613.46		20 year total tax		$10,449.43

Years                            	      5             	10           	15            	20
Total tax paid if differed              $1,318.70	$3,442.48	$6,862.86	$12,371.40
Total Tax Paid if paid as earned	$1,279.88	$3,204.38	$6,098.17	$10,449.43
Difference	                                $38.82    	   $238.10	   $764.69	   $1,921.97

So you can save almost 2 thousand dollars in tax by not differing your payment of tax. (Lets ignore you're also giving up 23 thousand dollars)


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## a_majoor (22 May 2008)

Zell_Dietrich said:
			
		

> (Lets ignore you're also giving up 23 thousand dollars)



And that, my friend, is the true power of most flat tax proposals. *It allows the citizen to save and accumulate wealth for their own wants and needs.* Consider also that it takes @ $50,000 invested to create a full time job. More citizens with more disposable income under a flat tax system will contribute directly and indirectly to the creation of new jobs and new wealth in a virtuous circle. (Naturally a flat tax is only part of the solution. Individual liberty, property rights and the Rule of Law must be in place as well, features which are weak or lacking in some of the new nations which have instituted a flat tax).

Assuming it is possible to get to full employment, the continuing flow of investment funds will then promote wage increases as employers attempt to attract or retain their employees (look at Alberta right now; a job application is slid into your car through the Tim Horton's drive through window when you order a coffee, and starting wages are far above entry level wages in Ontario).


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## Zell_Dietrich (22 May 2008)

Could you please explain how a flat tax would allow one to save money?  

If you're talking about how higher income earners would have to pay much less in taxes, and therefor would be able to invest more and create jobs.  That is a version of "trickle down theory" (  http://www.investorwords.com/5075/trickle_down_theory.html )

If you are thinking that this flat tax would take less from the economy, then that can be done through the current proportional system.  And that way we wont loose the automatic stabilizers. 

http://www.wisegeek.com/what-is-keynesian-economics.htm

An overheated economy is just as bad as a depressed economy.  What good is getting paid twice  as much when everything costs three times as much.  An over heated economy will have full employment, yes, but it will also have massive inflation.  Inflation isn't just bad for people who live on fixed incomes - it is really really bad for lenders (like your bank who have to add what they think inflation will be into the interest rate that they charge for mortgages) 

With the cost of mortgages going sky high, new home sales would drop, construction would decrees and layoffs ... (the same could be said for many many industries)


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## a_majoor (23 May 2008)

The problem with Keynsian economics in general and explanations of "overheated" economies is they are precicely backwards. Economic disruptions occurr when governments intervene in the economies. Inflation is a result of governmental monetary policies, and in general, every attempt to "fix" blunders the government made are a combination of evading the fact the inflation, recession, deflation etc. are results of regulatory failure and a way to make a power grab at the expense of the shell shocked citizens. (The cause of the "Great Depression" is the US Federal Reserve's manipulation of interest rates, coupled with predatory government regulations imposed by both Hoover and Roosevelt in the aftermath)

In the Keynsian universe, you are supposed to be able to "trade" inflation for job creation. I spent many a day working out IS/LM diagrams and interpreting the Phillips curve (to name two examples) in high school, while outside the window the _real_ economy was struggling with "Stagflation", a concept that is _impossible_ under Keynsian models of economics. Luckily, President Reagan's advisors were of the classical school of economics......

Attempting to manipulate the economy by manipulating the tax code, fiscal or monetary policy is about as useful as current attempts to model climactic conditions under the "global warming" argument. There are simply far too many interacting variables and unknown linkages, which makes economics a descriptive science at best (i.e. you might be able to explain what happened but you cannot make testable predictions of the future). Stripping down and limiting State intervention in the economy will have a far more stabilizing effect than any number of intervention tools.


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## Zell_Dietrich (24 May 2008)

The major argument for motivation for a flat tax is that very high income earners would pay substantially lower amounts in tax than they do in a proportional system.   If the same amount of tax needs to be collected, this simply means that the lowest income earners and the middle class would have the increased burden. This also removes the ‘automatic stabilizing’ effect that a proportional tax systems offer.   (no benefit, except to the very rich. Many disadvantages, including to the very rich)

Even if you think that “freeing up money for the very rich will allow them to use that money to create jobs” you still have to acknowledge that no one will open up a ‘widget’ factory when the demand for widgets is lower (because most of the consumers suddenly don’t have the money to buy more widgets)

------

Random points:

Definition of overheated economy:  http://www.investopedia.com/terms/o/overheated_economy.asp 

Most historical examples of overheated economies are during war time – when the government injects large sums of money into the economy towards the war effort.  With more money in their pockets people go out and want to spend their money, prices go up, people demand more wages to keep the same standard of living and so costs go up and the prices go up and so on. With a lot of materials going towards the war effort, the supply of the remaining items goes down – price goes up. (Yes, government interference is the chief cause of overheated economies) 

The theory that governments should stay out of the economy and everything will sort itself out for the better is lassie-fair economics.  It is a great theory, in theory.  However when it was put into practice it doesn’t work very well for very long.

There are other causes for inflation:  Demand-pull inflation – when everyone wants something, more is charged for it.   The cost-push – where the costs of items trickle into other items.  (like gas prices raising so bread costs more)

Stagflation – where there is high levels of inflation but low employment levels and little or no economic growth -  Is possible in Keynesian economics, now anyways.  Early Keynesian economics didn’t account for “limited supply”.  For things such as oil, the increasing cost raised the prices for many things.  

  Just like how the past 7 years Canada has had a long period of low unemployment levels and very low levels of inflation.  This was the result of two major things, foreign investment creating many many jobs and the lowering of trade barriers causing a reduction in the price of most consumer goods.

The government using the tax code to influence behaviour is extremely effective.  Giving tax breaks for certain types of investments, costs such as scientific research and development is a motivator.


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## a_majoor (24 May 2008)

Without getting into minutia (there are thousands of economic textbooks to do that), most of your arguments don't hold water.

You acknowledge that monetary policy is the prime cause of inflation. Monetary policy can cause inflation even without "push" or "pull" variables, and of course will drive push and pull harder than they would go otherwise. Under normal circumstances, push and pull are translated into changes in supply and demand, and are sorted out by noninflationary means, mostly substitution of expensive, high demand items to less expensive, lower demand items.

To suggest that the availability of investment funds free to find the highest rate of return would not result in more jobs is disingenious, to say the least. While a few investors will pick the wrong horse, their losses will serve to direct other money to more profitable investments. The idea that people will build widget factories when there is no demand for widgets is nonsense, unless you look at governments using tax monies to subsidize widget factories for purposes of "economic development", "regional investment" or other euphemisms for buying votes.

Finally, the idea of "automatic stabilizers" makes no sense whatsoever. The monies taxed away from the rich or productive does not disappear from the economy, it is simply put into different hands and spent for different purposes (in economic terms this is actually successful, since the "maximum rate of return" for a bureaucracy is to expand its size and power, and for politicians it is buying votes). Sensless government spending is in no way stabilizing.


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## a_majoor (31 Jul 2008)

New Brunswick might actually lead the charge. Go team!

http://www.nationalpost.com/opinion/story.html?id=688482



> *New Brunswick rising*
> A wide-ranging tax revolution is set to turn New Brunswick into a 'have' province, and a tax haven for business
> 
> Jack M. Mintz, Financial Post
> ...



The shift from income to consumption taxes is a good thing (even if they have a nonsensical "carbon tax" in the mix), now they have to realign spending downwards so expenditures are ideally lower than revenues and I'll be packing my bags!


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## Proud_Newfoundlander (4 Aug 2008)

My view on the flat tax is that Im against it. It should be based on ability to pay. Why should a guy making 23K a year pay the same rate as a guy making 2,000K (2 million) ? Im not saying tax them till everyone has the same disposable income, but if you're making money hand over fist you should pay a higher rate than a lower middle class mill worker


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## Osotogari (4 Aug 2008)

My first instinct would be to say that I'm in favour of a flat tax but only if equalization were drastically changed if not eliminated altogether.  That program is nothing more than a patronage program, and if we're going to re-tool the way taxes are levied then the methods for spending have to be changed as well.

Still, both situations are as likely as a cold day in hell.


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## SeaKingTacco (4 Aug 2008)

Why?

Your $23K/year worker would pay no tax per year under most flat tax regimes- they don't usually kick in until at least $30K, to avoid being regressive.

Even at 10%,  a guy who makes $2 Million is going to pay $200,000 (remember- no deductions under flat tax- he owes exactly $200,000.  It doesn't matter how much charity he gives away or how many political parties he supports).  Is that not enough for crappy, socialized medicine and poor roads throughout most of the Dominion?  Or is your premise that anyone making that kind of money must have stolen it or done something other than work hard?


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## Proud_Newfoundlander (4 Aug 2008)

SeaKingTacco said:
			
		

> Why?
> 
> Your $23K/year worker would pay no tax per year under most flat tax regimes- they don't usually kick in until at least $30K, to avoid being regressive.
> 
> Even at 10%,  a guy who makes $2 Million is going to pay $200,000 (remember- no deductions under flat tax- he owes exactly $200,000.  It doesn't matter how much charity he gives away or how many political parties he supports).  Is that not enough for crappy, socialized medicine and poor roads throughout most of the Dominion?  Or is your premise that anyone making that kind of money must have stolen it or done something other than work hard?





> Or is your premise that anyone making that kind of money must have stolen it or done something other than work hard?



Whatever, the Libertarian Party is down the hall, to the left

Ok, what if my country isnt one of those that has minimum income laws for taxation ? On another note, isnt this also an ideological argument ? That falls in to the arena of equity and fairness, and to have the people making less income after to give a higher proportion of their income isn't fair. Why should I give the same amount as a rich person, even if is johnny Hard Working he will still have a lot of disposable income and no significant loss to happiness by giving more. That leads me to another point, what about your Paris Hilton's and your other spoiled inheritors ? There are likely more people that are rich through virtue of their parents than through their own hard work. or who were allready on the 10th step of the ladder before reaching the 11th.

Id rather my crappy socialized medicine than the ludicriciously expensive private system, where Ill  go bankrupt from treatment costs for anything more serious than diabetes, but thats an argument for another thread.

Also, what if the country dosent make enough revenue as a result ? They will have to raise other taxes to compensate. Also, what if the business community moves somewhere else , where taxes are lower ? Unless you want to severly reduce government revenue you will have to comply by lowering the taxes ro the rich, thus shouldering the state on the Lower and middle classes.


Oh, we havent been a dominion since 1982


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## a_majoor (4 Aug 2008)

Proud_Newfoundlander said:
			
		

> My view on the flat tax is that Im against it. It should be based on ability to pay. Why should a guy making 23K a year pay the same rate as a guy making 2,000K (2 million) ? Im not saying tax them till everyone has the same disposable income, but if you're making money hand over fist you should pay a higher rate than a lower middle class mill worker



Read the previous six pages and you will see those arguments for "progressive" tax demolished



> My first instinct would be to say that I'm in favour of a flat tax but only if equalization were drastically changed if not eliminated altogether.  That program is nothing more than a patronage program, and if we're going to re-tool the way taxes are levied then the methods for spending have to be changed as well.
> 
> Still, both situations are as likely as a cold day in hell.



Taxation is a means for governments to collect revenues. Attempting to make taxation a vehicle for social or economic adjustments results in a complex and inefficient tax code that is estimated to cost $30 billion a year in compliance costs, plus an unknown amount as Canadians shift their monies into vehicles and investments designed to minimize taxation (monies that could have been invested in other vehicles with greater ROI and impact on the Canadian economy). Simply changing the tax code to a flat tax will release $30 billion into the productive economy; contrast that with Mr Dion's claim to extract $10-15 billion from Alberta and Saskatchewan's oil industry for social programs (the "Green Shift", copyright owned by Jennifer Wright).

At any rate, if New Brunswick follows through, the effects of compound interest alone will almost certainly compell other Canadian jurisdictions to follow suit (the extra monies released to New Brunswick's productive economy will create new wealth in an ever accelerating cascade; wait too long in Nova Scotia or Ontario and you will never catch up!)


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## Proud_Newfoundlander (4 Aug 2008)

> Quote from: Proud_Newfoundlander on Today at 14:54:36
> My view on the flat tax is that Im against it. It should be based on ability to pay. Why should a guy making 23K a year pay the same rate as a guy making 2,000K (2 million) ? Im not saying tax them till everyone has the same disposable income, but if you're making money hand over fist you should pay a higher rate than a lower middle class mill worker
> 
> 
> Read the previous six pages and you will see those arguments for "progressive" tax demolished



No, I will see arguments and opinions, some of which are good. Flat tax is mostly used by second/third world nations to help grow their economies, and eventually msot will plateau and become more progressive in their taxation


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## SeaKingTacco (4 Aug 2008)

> That falls in to the arena of equity and fairness, and to have the people making less income after to give a higher proportion of their income isn't fair.



You do understand the meaning of "proportion", right?  

I'll help you out-

Q. If citizen A earns $50K/year and citizen B earns $100K/year under a 10% flat tax regime, what "proportion" of their income do each pay in taxes?

A. The same- 10%.  The quantity each citizen pays is different, however ($5k and $10k respectively).

So- the guy making more money, pays more.  But, clearly, that burns your a$$, so he should pay even more.  How about 50%?  or 70%?  or 93%?  At what point do you calculate citizen B either:

emigrates someplace else or
quits working altogether because it no longer pays?


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## SeaKingTacco (4 Aug 2008)

> Flat tax is mostly used by second/third world nations to help grow their economies, and eventually msot will plateau and become more progressive in their taxation



And more is the pity...


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## Reccesoldier (4 Aug 2008)

Making money is evil, making more money than someone else is way evil, making more money than you or your offspring will ever be able to rationally spend is the epitome of absolute evil...

Now where on earth is that puking smiley?

Now...

While Paris Hilton is a useless debutante her father built a company that employs tens of thousands of people, who in turn support hundreds of thousands of family members and numerous separate business interests.  

The economic spin off of Mr. Hilton's obscene wealth easily leads directly and indirectly to the enrichment of hundreds of business' and the livelihoods of hundreds of thousands of individuals.  

But Mr Proud_Newfoundlander seems to think that it would be perfectly acceptable to tell Mr Hilton that not only is he to be punished for his success through paying more taxes but, Proud_Newfoundlander also seems to want to tell Mr. Hilton and his ilk what they can do with their wealth once they die (i.e. not give it to their useless offspring).

Now if you have been paying attention you aught to be able to determine Proud Newfoundlander's political philosophy.  No? Here's a hint... _From each according to his ability to each according to his need_  lets take a look at what that means.

It means that the MORE you contribute to the enrichment of society through your productive labour the more some in that society want to milk you like some sort of sacrificial cow.  The more money you make, the better standard of living you create for those that work for you or work because of your ingenuity or intelligence, the more able you are the more some want you to pay.

Why?

What Proud Newfoundlander and his fellow travellers want is an ideological blank cheque on the productive effort of every single person who earns above some arbitrary quota of their choosing.  

He mouths the words "fair and equal" but ignores the meaning of the words and what he really wants is unfair and unequal, in his favour of course.

I could have sworn that I spent 4 years in Germany opposing that same sick ideology.


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## Proud_Newfoundlander (4 Aug 2008)

Theres no need to act condenscending and smug, and using all the right wing jargon stereotypes to characterize your opponenents. You can also expect a response with sake to the flat tax tomorrow


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## RangerRay (4 Aug 2008)

Proud_Newfoundlander said:
			
		

> Theres no need to act condenscending and smug, and using all the right wing jargon stereotypes to characterize your opponenents. You can also expect a response with sake to the flat tax tomorrow



Well, by reading your posts, you definitely sound like someone who is envious of others' wealth and success, and want the state to "eat the rich"...


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## Proud_Newfoundlander (4 Aug 2008)

Yeah, I absolutely hate the rich, im just a red commie trying to redistribute all money equally, I also wear a Che Guevera shirt and demonstrate outside Bell canada with my free time, which is always cause I have no job. 

Its hard to take you seriously when your response is "oh, your just envious of the rich or hate them". The federal tories act like that as well, and it hurts their popularity


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## evil drunken-fool (4 Aug 2008)

Proud_Newfoundlander said:
			
		

> Yeah, I absolutely hate the rich, im just a red commie trying to redistribute all money equally, I also wear a Che Guevera shirt and demonstrate outside Bell canada with my free time, which is always cause I have no job.
> 
> Its hard to take you seriously when your response is "oh, your just envious of the rich or hate them". The federal tories act like that as well, and it hurts their popularity



I don't think anybody here believes that you are like that, you just need to back up your arguments a little better.  You just came in and said, "My view on the flat tax is that Im against it. It should be based on ability to pay."

You need a little more meat to your point.


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## SeaKingTacco (4 Aug 2008)

Proud Newfoundlander,

Look- you are free to believe whatever you like but, if your neighbour earns more than you do- does it hurt you?  How?

I've actually sat through a University Economics class and the answer is (drum roll)- no.

You appear to be under the quite normal misapprehension that there is a finite amount of wealth in the world.  In fact, there is not.

I will give you an example:

Before Microsoft existed, where did all of the money that Bill Gates currently has (what, like a $100 Billion?) come from?  It wasn't just sitting in bank accounts or invested in now defunct abacus companies, waiting for him to invent Windows so that thousands of investors could give him Billions of dollars.  He quite literally created that $100 Billion out of thin air (more or less) when the market place decided that was what his idea was worth.

That, in a nutshell, is how economics works, my boy.  You have a good enough idea and the marketplace will "create" a billion for you, too.  And it won't hurt another soul.  That is the beauty of the system.

But, like I said, you are free to believe whatever you like.  Just promise me that you will never run for office...


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## Proud_Newfoundlander (4 Aug 2008)

Uh huh, you sat through an economics class ? How often, do you have a degree or diploma ? 
Well, you take into question my validity, and your response, again, is "you're envious" or you imply I have something against the rich. Oh, and yes I do plan on running for public office in 10-15 years


Uhh, there are hundreds if not thousands of people supporting progressive taxation that have university degrees in Economics, including Warren  Buffet http://abcnews.go.com/GMA/story?id=3869458&page=1


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## Proud_Newfoundlander (4 Aug 2008)

Steel Horse said:
			
		

> I don't think anybody here believes that you are like that, you just need to back up your arguments a little better.  You just came in and said, "My view on the flat tax is that Im against it. It should be based on ability to pay."
> 
> You need a little more meat to your point.



I wasnt serious, he used stereotypes and exaggerations against me, so I ran with it


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## evil drunken-fool (4 Aug 2008)

Proud_Newfoundlander said:
			
		

> I wasnt serious, he used stereotypes and exaggerations against me, so I ran with it



No, that was obvious. I am basically telling you to stop making silly comments.

Anyway, I was just trying to give you some advice on how to come in here and make a point without getting torn apart.
So do with that as you see fit.


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## SeaKingTacco (4 Aug 2008)

> Uhh, there are hundreds if not thousands of people supporting progressive taxation that have university degrees in Economics, including Warren  Buffet



And millions supported Stalinism... look how well that worked out.

You seem like a nice enough kid.  It just that you come off... well... knowing everything.  I doubt being 19 qualifies you for that.

And it was two years of Economics at University.  At the time, I thought it was horse$hit, too.  Then, I met the real world.

Like I said- believe what you want, but you are going to have to work alot harder than "cuz I think it's fairer" to convince me our current system of taxation is particularly fair or works well.


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## aesop081 (5 Aug 2008)

Proud_Newfoundlander said:
			
		

> How often, do you have a degree or diploma ?



I also detect a certain "my shit dont stink" comming from you.......that really helps your argument.

Yes, i do have a degree.


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## aesop081 (5 Aug 2008)

Proud_Newfoundlander said:
			
		

> but if you're making money hand over fist you should pay a higher rate than a lower middle class mill worker



Why?

Because you are successful the state should penalize you more ?


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## Proud_Newfoundlander (5 Aug 2008)

CDN Aviator said:
			
		

> I also detect a certain "my crap dont stink" comming from you.......that really helps your argument.
> 
> Yes, i do have a degree.



I wasn't asking you


Acting no more than anyone else I've been arguing, I just havent been as childish in my argument, with such crap as

-why do you think rich should be penalized more
-you must be envious of the rich
-implied dislike of the rich

Least when I do it it's to mock these incessent statements. if you wanna play that game, I can easily say "why do you not care about the poor", etc etc. It can go both waysb'y


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## Bruce Monkhouse (5 Aug 2008)

BACK ON TOPIC FOLKS.


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## Bruce Monkhouse (5 Aug 2008)

..and actually I do care about the poor, thats why I like the flat tax.

Right now if someone wants to work two jobs to try and get ahead he/she is taxed like one of your "rich people" because of it..................is working 80 hours a week "rich"?

Under the flat tax there is encentive for someone to work extra as it will not bite them come tax time.


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## aesop081 (5 Aug 2008)

Proud_Newfoundlander said:
			
		

> I wasn't asking you



I dont give a rat's rear end if you were asking me or not.

I work very hard and for very long hours for my money. I dont like being burdened by a complicated tax system that says "becuase you make more than tho other guy you will pay more taxes". Even under a flat tax system i will still pay more than the "poor" but it would be proportional, which is immensly more fair than the system we have now.

At 19 years old, i too thought i had it all figured out. One day you will see your paycheck disapear in taxes every month.........


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## RangerRay (5 Aug 2008)

Proud_Newfoundlander said:
			
		

> Its hard to take you seriously when your response is "oh, your just envious of the rich or hate them".



Hey, just going by what you posted, and you haven't posted anything to convince me otherwise.


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## Reccesoldier (5 Aug 2008)

Proud_Newfoundlander said:
			
		

> Theres no need to act condenscending and smug, and using all the right wing jargon stereotypes to characterize your opponenents. You can also expect a response with sake to the flat tax tomorrow



I'm not acting.  

Nice doesn't get peoples attention most of the time.  The ideal you espoused leads directly to the failed experiment that is communism.  Was I supposed to let you continue to spout that crap like some Che hat wearing liberal Arts student just because your ideas were poorly formed and you couldn't possibly have meant what you said?

I look forward to your response to the flat tax.  Please try to consider the real meaning and implications of the words _fair_ and _equitable_.  The meanings are fairly straightforward, but their implications are much more broad.


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## a_majoor (5 Aug 2008)

The best way to examine the "left wing jargon" arguments against the flat tax might be to start here.

Since New Brunswick seems set to move to a flat tax, it will be interesting to see how the experiment works out and compare the results to non flat tax provinces in the Maritimes. (Special attention needs to be paid to what sorts of exceptions/exemptions are introduced to the tax system, as these distortions will affect the general case).

Prediction: even with a less than ideal flat tax, New Brunswick will experience significant economic growth and rapidly outpace its competitors in the Maritimes and Atlantic region. This includes Newfoundland and Labrador, which will attempt to build its growth on resource extraction, and the US Eastern seaboard's "Boston States", which are generally "Blue" states with high taxes and regulatory structures. (An Obama administration with even higher Federal taxes wil certainly not help).


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## Proud_Newfoundlander (6 Aug 2008)

Argument against Flat Tax


*Fairness and Equality*

To proponents it is said since everyone has to pay the same , that is equal, and therefore fair. But is it ?
For example, is it fair that someone making  $12 million a year to give 10% of their income, and for someone making $32 Thousand to give the same proportion ? Well, no, it isn't. This 10% to the rich individual is less meaningful than it is to the person making less income. Seeing the strain of taxes these days, and other costs associated with kids and their schooling, mortgage, etc, this 10% tax is rather significant to him.. Now, the reason i want the progressive tax here is that the person of riches has to give what is significant to him, as does  the lower middle class individual. Now, to the individual, the definition of "fair" varies. To me, someone making  12 million and having to give up 10%, while a middle class family with various essential expenses giving up the same isnt fair at all. The rich person still has oddles of money, probably cant find enough things to spend it on. This is hardly picking on the rich and taking all his money, because theres probably a good chance a rather sizeable minority, even majority that this rich person barely works, or at all. Lets reverse that, should a hard working middle class individual pay the same amount proportionally as the rich, despite the giant gap between incomes ? One says it is picking on the rich, but the same tax is picking on the middle class  of sorts, as the tax takes away a rather significant amount of the middle class persons, while, again, the rich is barely effected.  Therefore, the amount of tax should be proportioned to what i make. 

*[Practicality/u]*

To start, the flat tax isn't border adjustable. So, all the taxs and codes you have on a product domestically do not get removed when you ship overseas. This in turn makes it difficult to compete ona  foreign market. The United states, for example, is at a 15-20% disadvantage.

In addition to this, the flat tax denies flexability. Say, for example you needed to raise taxes. You would have to increase the flat rate, taking up an even harder amount of the middle class income, while the rich remain rather unphased, putting the burden of government services on the middle class. Also, say that other countries became more competitive and you needed to attract more people of alluence for the country, you would then need to lower your taxes as an incentive, with a flat tax it will be evenly cut throughout. This can severly weaken government revenue, and in turn public servives (but I assume most people arguing in favour here want services strongly curtailed anyways, from what Ive seen). What if a country also has items of value ? Allthough I'm in favour of more decentralization, I think the government should have some significant central control for various reasons. It allows flexability to adapt to coming issues, and the government can use tax cuts to, say, stimulate growth in green energy, or use tax deducations to stimulate the arts industry, so on, so forth. Plus, if you guys wanted to suddenly change the tax code from progressive to flat it would be awfully ahrd to balance the budget, wouldnt it ? You would have to increase the flat tax, leading to bad economic effects.

Not to mention the loopholes with regards to a consumption flat tax


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## RangerRay (6 Aug 2008)

Proud_Newfoundlander said:
			
		

> This is hardly picking on the rich and taking all his money, because theres probably a good chance a rather sizeable minority, even majority that this rich person barely works, or at all.



That's a huge generalisation that "a rather sizeable minority, even majority that this rich person barely works, or at all".  I hope you have some evidence of this.

Are you also suggesting that government determine who works harder for their money and tax accordingly?  Why should it matter if someone who make $300,000/annum lounging at the pool be treated different than someone making the same amount working 80 hour weeks?  In either case, they acquired their property legally.

Still sounds like the politics of envy to me.


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## Bruce Monkhouse (6 Aug 2008)

Ok, I was wrong ....you're right.......we should tax the poop of the guy making 12 million so that he takes his company to Mexico and  can make 24 million and all those middle class people he employs can now pa.... wait, whats the tax on a pogie cheque again?

Oh boy.....


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## GAP (6 Aug 2008)

If I am smart enough/lucky enough/ambitious enough/work enough long hours/etc to earn $XXXX.XX why should I have to pay more tax percentage wise, than the guy/gal earning $35,000.00. 

It's my money, I earned it, I should not be penalized for all of the above reasons...


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## GunfighterSB (6 Aug 2008)

Proud_Newfoundlander said:
			
		

> Argument against Flat Tax
> 
> 
> *Fairness and Equality*
> ...



I have known several millionaires, most of whom have worked harder, smarter and longer than alot of people making 32K. (The ones that don't work harder and smarter anymore are the ones who hired the others who worked harder and smarter). Using your logic and values "To me, someone making  12 million and having to give up 10%, while a middle class family with various essential expenses giving up the same isnt fair at all", that 10% to the rich individual is even more precious since that Rich Individual has allocated a battery of assets (lawyers, accountants, charities - alot of whom hire the persons making 32K) to preserve and promote as much of his/her wealth as possible while still paying for "various essential expenses". So we should have a Progressive Tax Scheme for the benefit of the RICH!!



			
				Proud_Newfoundlander said:
			
		

> *[Practicality/u]*
> 
> To start, the flat tax isn't border adjustable. So, all the taxs and codes you have on a product domestically do not get removed when you ship overseas. This in turn makes it difficult to compete ona  foreign market. The United states, for example, is at a 15-20% disadvantage.
> 
> ...




Are you talking about Income Tax or Consumption Tax. 

If its income tax, then I do prefer a Flat Tax Rate. Its easier to program my excel spread sheet to allocate the tax. I do not have to hire an accountant. (unless that accountant can devise legal ways to include deductions that I have overlooked). I am already paying more than my share in proportional taxes and gross tax amount. I would like to make $12 million and still pay as much as the guy making $32K. (I'll also pay for my own health care just to be more than fair!!)

If it is flexibility for capricious politicians, never under estimate Human Ingenuity. They will find "User Fees", "Temporary Measures", "Emergency Funding Allocations" and all other synonyms of TAXES.

By the way, we should encourage people to get RICH!


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## a_majoor (6 Aug 2008)

Since the notion of "fair" is pretty situational, that should never be part of the equation. A Flat tax with no exemptions that taxes everyone equally is "just", and hence the best possible solution.

Real Flat Tax/Single Tax schemes always have high cut off limits, so low income individuals do not get taxed at all, and most allow/provide for exemptions like RRSP's or their foreign equivalents, so there will still be wriggle room for both politicians to curry favour and the clever and industrious to shelter more of their income than the lazy and stupid. frankly, that is about as much as we should expect, and since it is still closer to a "just" tax than any other proposal, I will go with it.

Just as a BTW, I suggest Proud_Newfoundlander do a little research on what proportion of total tax revenues is collected from each income group, and especially look for changes over time (particularly after major changes to the tax rate. In the United States look at the Administrations of Calvin Coolidge, John F Kennedy and Ronald Reagan). You will be very surprised at what you find....


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## Reccesoldier (7 Aug 2008)

P_N your argument is based on emotion, your assertion that 10% of a wealthy man's income is worth less to him than 10% of a poor mans, or any other mans is nothing more than a feeling.  

In your scenario the poor guy making $32,000/year would pay $3,200.  That is what, three mortgage payments? 1/3 of a years tuition for a child in university?

The filthy rich making $12,000,000 pays $1,200,000. That's not a couple of mortgage payments it's a house, or two or three. It's not 1/3 of a years education for his kids it's the entire University debt (at an easy $60,000 for a 4 year program) for 20 University students. Or more importantly it's enough to employ 37 other guys earning $35,000 a year, or even better yet it could be used to start up a new business venture that ends up employing thousands of $35,000/year people.

You blithely skip over inconvenient facts and inject your arbitrary assumptions and _feelings_ of what is and is not of value to others.  This is the reek of socialism that I talked about earlier.  The arrogance that since you _feel_ that it is unfair for the millionaire to make so much more money than Mr. Bluecollar, that the rich man's wealth, (however earned) somehow belongs to you and others who did not lift a single greasy finger to earn some of it for yourself is disgusting.

P_N, how about this...  

The next time you are on a career course in the Military and achieve an outstanding mark (98%) on a PO check that the military gives any percentage of your mark over, say 70% to the guy sitting beside you that failed.  

That would be fair wouldn't it?  

I mean there is no reason for you to be sitting there with an embarrassingly high mark of 98% and him to fail off a career course (_think of the implications on his future employment!!!_) with a 55%.

Surely those marks would be worth much, much more to him than you.  I mean you've already passed so why be greedy?  Oh, don't worry, we know that you worked really hard for those marks and that the other guy spent his nights out at the local bar getting wasted but he _needs_ the marks and you don't.

Or is it the case that you don't really have to work hard at it at all, and it just comes naturally to you?  If that's the case then you will miss those marks even less, because it's just natural ability and therefore not really anything you have anything to do with at all! 

Either way the CF will do it because it's only _fair_ that Mr. RTU passes because you earned such a high score and are compelled to give him your easy marks.

Isn't socialist fairness and equality grand!

EDIT to add...

By the way, you will not receive any recognition for your outstanding marks, as a matter of fact you will be belittled and derided for your achievements.


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## GAP (7 Aug 2008)

> Isn't socialist fairness and equality grand!



Only if it doesn't effect you.....


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## Brad Sallows (17 Aug 2008)

>Uhh, there are hundreds if not thousands of people supporting progressive taxation that have university degrees in Economics, including Warren  Buffet

Hundreds if not thousands of people with university degrees in all sorts of things - some at advanced levels - believe that 9/11 was an inside job.  What's your point?  Understanding how something works is not necessarily a barrier to emotionally driven responses to questions.

The objection to flat tax, phrased in the first person, is very simple: there are a lot of things I want provided to me, and someone else needs to pay because my requirements exceed my resources.


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## a_majoor (28 Sep 2008)

Another reason for a flat tax:

*Global Tax Revolution: The Rise of Tax Competition and the Battle to Defend It* 
by Chris Edwards and Daniel J. Mitchell (Author) 

http://www.amazon.com/gp/product/1933995181?ie=UTF8&tag=wwwviolentkicom&linkCode=as2&camp=1789&creative=9325&creativeASIN=1933995181



> Editorial Reviews
> 
> In the world's increasingly integrated economy, competition between governments to attract investment and skilled workers is heating up quickly. Increasingly, nations are waging this battle by overhauling their tax codes to create a more attractive business environment-a process known as tax competition. The United States used to be the best place in the world to do business, but today its income tax is a huge drag on economic growth. America needs to change course and learn from the best tax reforms abroad, such as the flat taxes that have been enacted in more than 20 countries. Policymakers also need to defend against international efforts to squelch tax competition when nations try to form cartels, which damage global prosperity and reduce incomes.


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## a_majoor (24 Oct 2008)

From a much larger article in Forbes (worth reading in its entirety):

http://www.forbes.com/home/forbes/2008/1110/018.html



> Cutting tax rates is also a necessity. Political cultures have a hard time understanding that taxes don't just raise revenue, they are also a price and a burden. The tax you pay on income is the price you pay for working, just as the tax on capital gains is the price you pay for taking risks that work out and the tax on profits is the price you pay for success. *If you make it more worthwhile for people to work productively and take risks, they will do so. Rebates are useless--they don't change incentives the way lower tax rates do.* Ideally, we should enact a simple flat tax. Twenty-five countries have adopted some form of a flat tax, all successfully.


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## a_majoor (7 May 2009)

Flat tax returns to Ontario politics:

http://freedomnation.blogspot.com/2009/05/elliott-flat-tax.html



> *The Elliott Flat Tax*
> 
> Christine Elliott announced today the ‘Elliott Flat Tax.’ The plan is basically to increase the personal amount to 18 000 then collapse the three tax brackets into a single bracket. This would massively simplify the tax system and ensure that the poorest income earners are not burdened by taxes. This is in contrast to another candidate that seeks to complicate the tax code with rebates. Any fiscal conservative worth their salt knows that a simple tax system is ‘simply better.’
> 
> ...


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## a_majoor (14 May 2009)

Flat tax for Ontario? Soon please:

http://network.nationalpost.com/np/blogs/fullcomment/archive/2009/05/12/kevin-libin-ontario-can-overcome-its-flat-tax-phobia.aspx



> *Kevin Libin: Ontario can overcome its flat-tax-phobia*
> Posted: May 12, 2009, 7:30 AM by Kevin Libin
> Kevin Libin, Conservatives, alberta, taxes, ontario, flat tax, christine elliott
> 
> ...


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## a_majoor (30 Sep 2011)

Thel flat tax has now been in effect in enough nations for a long enough period to make reasoned conclusions. The economic efficiency and the extra revenues raised (without a punishing raise in marginal tax rates) make this a great addition to spending cuts when considering how to fix the debt crisis:

http://www.forbes.com/sites/nathanlewis/2011/09/29/the-rise-of-the-flat-tax-gives-us-morning-in-albania/



> *The Rise Of The Flat Tax Gives Us Morning In Albania*
> 
> _The study of economics is best done, I would say, without remuneration -- in the tradition of the gentleman economists of the past, such as David Ricardo, Adam Smith and John Stuart Mill. This is the best way to avoid bias and to be able to discuss controversial ideas of the sort that might otherwise diminish one's marketability. I was previously an economist and macro strategist for a firm that served institutional investors. Today, I run a small private investment partnership, which invests globally with a macro theme. My book Gold: the Once and Future Money was released in 2007, and is now available in German, Chinese, Korean and Russian. My opinion pieces have appeared in the Financial Times, Asian Wall Street Journal, Dow Jones Newswires, Worth, Daily Yomiuri, Asia Times, Pravda, Huffington Post, and numerous other print and online publications. I also have a personal website at newworldeconomics.com._
> 
> ...


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## a_majoor (8 Nov 2011)

This applies to Canada as well (and even provinces in Canada). As a fact check, if a broad based tax cut generated an extra $10 billion in tax revenue due to increased growth (remember the "Common Sense Revolution tax cuts increased provincial tax revenues by $20 billion dollars, so this is a very conservative amount), then the extra revenues would eliminate the deficit and put $70 billion/year to paying down the national debt; a project that would be complete in roughly under 8 years.

http://www.hoover.org/publications/defining-ideas/article/99241



> *Three Cheers for Income Inequality*by Richard A. Epstein (Peter and Kirsten Bedford Senior Fellow and member of the Property Rights, Freedom, and Prosperity Task Force)
> Taxing the top one percent even more means less wealth and fewer jobs for the rest of us.
> --------------------------------------------------------------------------------
> 
> ...


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## a_majoor (20 Nov 2012)

Another examination of the Flat tax, in this case the political argument that it will deliver long term market stability since it is less capable of being "gamed" by clever people. Remember the 1937-38 "Capital Strike" was the worst year of the Depression, and was caused by business simply refusing to take any more investment risks due to the continuing changes caused by the implimentation of the "New Deal". America's current economic crisis is exacerbated by uncertainty due to the approaching Fiscal Cliff (when many tax changes expire) and the uncertainty caused byh the introduction of Obamacare. There are several examples in the article of real life examples of responses to negative incentives, and of course one can consider the drop in revenues caused byt the increase in tax rates in the UK and various US States that instituted "millionaire taxes":

http://www.hoover.org/publications/defining-ideas/article/134921



> *The Flat Tax Solution*
> by Richard A. Epstein (Peter and Kirsten Bedford Senior Fellow and member of the Property Rights, Freedom, and Prosperity Task Force)
> To step back from the fiscal cliff, we need to simplify our tax policy.
> --------------------------------------------------------------------------------
> ...


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## ModlrMike (21 Nov 2012)

Thucydides said:
			
		

> Remember the 1937-38 "Capital Strike" was the worst year of the Depression, and was caused by business simply refusing to take any more investment risks due to the continuing changes caused by the implementation of the "New Deal"



Are there not companies like Apple that are currently contributing to the mess in a similar method by holding billions off shore? AFIK Apple has something on the order of $35+ billion in cash that would be subject to tax if it were repatriated. I'm sure they're not the only culprit, but they're certainly indicative of the climate of fear that some corporations have vis-a-vis taxation.


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## a_majoor (21 Nov 2012)

That is exactly right. While Apple's dragon's horde is probably the most impressive example, other companies do much the same thing, regardless if they are Obama supporting Crony Capitalists (GE comes to mind) or not. For small and medium companies which do not have the ability to move their cash offshore, they are simply sitting on it rather than investing in goods and services or hiring new people.

A flat or single tax environment, by eliminating much of the gameing and political uncertainty, will start to attract money. Even without a flat tax, just look at the difference in the economies of various Canadian Provinces. The ones with high tax and regulatory environments are generally poorer or even "Have Not" provinces. A flat tax might still be high, but falls into the low regulatory environment, so a flat tax set at a low rate will have a much larger impact.


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## a_majoor (24 Dec 2012)

Arguing for a flat tax from a different direction. High tax rates and tax and regulatory uncertainty changes people's economic behaviour (to maximize their wealth, not increase the Government's take). Real life examples include all those US States that tried to impliment a "millionaire tax", the UK which saw tax receipts drop as higher tax rates were introduced and now France:

http://reason.com/archives/2012/12/23/taxpayers-arent-stationary-targets/print



> *Taxpayers Aren't Stationary Targets*
> Sheldon Richman|Dec. 23, 2012 8:00 am
> 
> Actor Gérard Depardieu's decision to flee France for Belgium to avoid a 75 percent marginal tax rate on incomes above $1.3 million sends a message we here in America should heed: Those who are singled out for tax increases are not stationary targets. The means of avoiding and evading the taxman are legion.
> ...



And Instapundit suggests the real reason for the continuing manipulations of tax codes rather than the adoption of an efficient one:



> Two things. First, most politicians aren’t good at math. That’s one reason they went into politics in the first place. Second, it’s not so much about revenue as it is about control. Particularly in Obama’s case, it’s about punishing high-earners — or as he puts it, “fairness.”
> 
> Also, while revenue may be roughly the same at different tax rates, higher tax rates produce more distortions in the economy, and inflict deadweight losses from conduct that is driven by taxes rather than economics. That’s why research shows that GDP grows faster when tax rates are lower. But if you derive your own sense of importance from slicing up the pie, you don’t care as much whether the pie grows or not.


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## a_majoor (2 Apr 2015)

Sadly, the idea of the Flat Tax seems to have been stifled in Alberta (yes, it is only by a tiny amount, but there is a saying about a camel putting it's nose under the tent...) Hopefully, some more _disciplined spending control_ will be applied to future budgets and the Flat tax re instituted:

http://business.financialpost.com/fp-comment/william-watson-requiem-for-the-flat-tax



> *William Watson: Requiem for the flat tax*
> William Watson | April 1, 2015 | Last Updated: Apr 1 4:22 PM ET
> More from William Watson
> 
> ...


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