There is an interesting debate going on in North America. In the US Gadzillionaire, Warren Buffet, says that he pays only 17.5% tax rate on his earnings while the average American Joe pays 30%. Is that fair and equitable? No says Buffet and yes says the Tea Party. Buffet wants millionaires to pay more and Tea Party-ers says no way?
In Canada there was an exchange on the
CBC TV that was worth watching. On the
Lang and O'Leary Exchange, featuring Amanda Lang and Kevin O'Leary, O'Leary claimed he was paying over 50% in income taxes and demanded that he, as a job creator (prove it Kevin), should not be penalized for creating those jobs. Lang, in one her best cool shots yet, commented that investors, such as O'Leary, had more ways to hide their income from taxes than anyone. She wanted to talk to his accountants. Caught by surprise, O'Leary tripped over his own tongue trying to change the channel on the discussion.
Canada's tax code contains over 2 million words. How many of them are loopholes designed for Kevin O'Leary? The code was written by tax lawyers and accountants for tax lawyers and accountants. The average Canadian Joe has less knowledge about the tax code than he does about catalytic convertors. Is that right?
The economic morass could have been avoided if there was equitable tax laws for all. If you make $30,000 or $30,000,000 per year you should pay the same tax percentage to the government. By flattening the tax rate and eliminating loopholes, you can also streamline Canada Revenue Agency, and thus save money.
Up next in Part 3 - Making the money Canadians pay; work for Canadians.
An unchanging tax percentage is regressive in nature. When you make 30k a year, that X% means more to you than when you make 300k a year.
ReplyDeleteThe large earner will still have more than enough left over to provide well for his/her family and to plan for the future.
The lower earner will have far fewer options.
Furthermore, what would the value of X be? 10, 25, 35? The higher X, the greater inequality will become. And there have been many studies that highlight reasonable equality as the foundation of a stable democracy.
This will be posted well after you wrote your piece, but I hope that you get it and consider it.
Actually the current regime is also regressive. The more you make the more exemptions and loopholes there are in the tax code. The reality is that the uber-rich pay a lesser rate that do the middle class. If you want to play the math game, think about this: If you make $30,000 per year and pay 33% tax rate, you have to live on $20,000. But if I make $3,000,000, use loopholes and deductions to reduce my effective tax rate to 33% then I get to live on $2,000,000. Ask yourself, can I afford to pay more taxes?
ReplyDeleteIn our example above, in a flat tax environment, say at 33%, I will not pay more tax that in the current environment, but the costs of the tax system will go down since we can eliminate tax lawyers and tax accountants and the need for tax consultants.
I would think that even a weak-conservative would agree with that.