Tuesday, November 27, 2012

TAXES ... they often are a knee jerk reaction to financial distress governments in most cases have created themselves


A couple of weeks ago I posted a quote by Winston Churchill on my Facebook page; the quote was, "There is no such thing as a good tax."  Boy did that ever generate a LOT of comment.

C.S. Except when that tax pays for things that benefit society, that help people who need help, that makes sure our children are educated and that people receive medical treatment, that helps to make sure that everyone is taken care of.......etc etc.

ME: True ... but look at the wording ... "good" tax

There really is NO good tax as taxes inherently impact the 'total' population to unequal degrees. That being the case, ALL taxes should be carefully thought out, and planned, to get maximum benefit, and to be applied across the board as fairly possible.

A good example (to me) is the Carbon Tax which is very much unequally applied across the province -- hitting those in the interior and north far more than those to the south and in the larger cities.

We have the same thing now with tolls.  Some area that have had transportation infrastructure already completed, are seeing people driving free and clear of tolls -- however, people in other areas are now being targeted for tolls as new projects are completed.

Churchill is right ... There is no such thing as a good tax

C.S.  I disagree. Taxes are not good or bad. They are a necessary part of any society that believes that some things are a collective responsibility.

ME:  Necessary? -- yes I agree -- but again the trouble in most cases, I believe, is they are not well thought out.  They often are a knee jerk reaction to financial distress governments in most cases have created themselves.

Personally I am in favor of a flat tax, that would apply equally to all across the board, to all above 'above' a set income level

E.W. -- in reply to CS ... "To make sure everyone is taken care of . . ." Therein lies the problem - everyone - rather than those in genuine need due to circumstances beyond their control. Having everything "free" to all who demand is what has caused many of the problems we endure today. A little more self-reliance and personal responsibility would go a long way.

L.M. Therein lies the difference between a Liberal Democrat and a Conservative....makes the world go around...slowly, but around.

C.S.  Our systems are wholly inadequate, and mismanaged - I agree. I don't support the concept of a flat tax, however. What's the statistic.....90 percent of the wealth is held by 10 percent of the population? The rich get richer, and the poor get poorer. A flat tax does nothing to address that - in fact, it makes it worse.  Unless ALL tax breaks and write-offs were eliminated.

M.U.  That's the theory behind a flat tax - although it could contain a Minimum base level so nobody under a certain income would pay taxes. That could really be set at any standard that governments chose. With no other deductions, "the rich" would pay a percentage of their total income with no other deductions. That would make it fair.  Hopefully, that would eliminate the income tax claw-back for old pharts like me who live on CPP. Sounds fair to me.

C.S.  And the corporate tax structure would need to be looked at, as well. This race to the bottom on corporations paying their share is not working. We cannot and should not try to compete with countries that are not on a level playing field when it comes to environmental, labour and other laws and standards that we consider important as a society, and that do not have the social systems in place that our taxes pay for. Unfettered free trade does NOT work.

S.B.  You would have loved Peter Pockington who campaigned on a flat tax of 10%, but really he was only gathering support and votes for Mulroney to be leader of the Progressive Conservative Party. Their scheme worked. Mulroney became our Prime Minister. Peter "Puck" went his merry way into bankruptcy and other schemes that brought him trouble.  I don't know why the flat tax idea won't fly among those who get in power...

ME:  Personally??? I think it's because a Flat Tax is too simple, and can't really be manipulated.

This current BC Liberal government for example has indeed reduced a few taxes on us, but all the new hidden ways of taking from us, along with the carbon tax and HST, have all ended up with us having LESS in our pockets

AND ... if the NDP are elected next year -- you can expect even more new ways to squeeze a dollar from us :(


S.B.  Just proves power corrupts and absolute power corrupts absolutely. I'm very discouraged and cynical of all politicians now, and today I'm only a voter who picks my battles to support, like evil fish farms and dirty oil pipelines.  I never thought I'd be defined as a tree hugger, but I also never thought our provincial and federal governments would sell our sovereignty and clean environment out from under us either.

M.U. in response to C.S.  When will people get it-corporations don't pay taxes, they simply collect taxes from us and pass them on to government. People need to get off that agenda of corporations having an unfair advantage. They don't. If taxes go up they can't compete with U.S., China, etc. and we lose the economic activity that comes with it. Raise corporate taxes and you and I pay more for the product.

M.H.   Don't underestimate the lobbying power of CGA et al. If we went to a flat tax there would be A LOT of tax accountants out of business.

Many people really believe what M.U. is talking about where the truth is Corp. Income taxes are the dumbest thing ever invented by government. People truly believe lowering taxes will end up in reduced government revenue. Even Michael Levy on CKNW talks about lost revenue due to cutting tax rates. He doesn't make the cross over to real driver of revenues - economic growth.

Ask the average person about the Laffer Curve. I'll bet dollars to donuts 99% of them won't have a clue what you are talking about.

A flat tax combined with a corporate user pay system is by far the best system. When companies pay for something, it is because they see value in it. Complex subject, but the economic ignorance of the general population is astounding. Not necessarily their fault mind you. How many personal, micro or macro economic courses did you take in high school? Funny, how money management, the one skill EVERYBODY needs no matter what his/her lot in life is, is not taught. Things that make you go hmmmm.

ME:  There is a lot of 'common sense' stuff that regrettably isn't taught in schools -- agreed!

P.D.  Speaking as a CA, all a flat tax would do is reduce the number of tax brackets to one. The tax brackets take up about half a page in the Income Tax Act, which is about 4 inches thick. Even if you eliminated all tax credits except the basic exemption, it wouldn't put too much of a dent in the Act. Much of what CRA and taxpayers fight over is what should be included in income, and what should be deductible. Per CRA, the deductions should be limited to what is "reasonable under the circumstances", and taxpayers and CRA often have a different interpretation of what that means. No flat tax will end that argument.

ME ... in response to D.P.  But there has to be a way to simplify all aspects of this thing. Has it not just simply gotten more and more complicated over the years as government simply manipulated things to squeeze every nickel they can, with making it look like they are?

D.B.  Government must learn to say "no". People want everything delivered by the government. Hello.. the government is "us". And where pray tell does the $$ come for all the bells and whistles.. our pockets (via taxation). People.. want a decrease in taxes? Stop asking for stuff you can do yourself.

C.S.  Profitable businesses should pay taxes. People that can afford to pay taxes should. I find it strange that the same people who target funds spent on lower income programs and assistance rarely, if ever are as vocally critical of corporate welfare, and tax write-offs for business and upper income earners. Those that can afford to pay, should. Simple as that. And we have a compassionate society - at least I thought we did - that makes sure that no one should go without the basics - food, shelter, warmth, medical, education, human rights, fair access to justice, etc. That is the Canada I belong to.

M.H. ... in response to CS ... I've been trying to think of how to put it in a relatively short note how while your intentions are honorable they are actually counter productive to the goals you desire.

The adage businesses are people is true. Companies have to sell at market rates (barring subsidies). Nobody can force people to take money out their pocket and hand it over. Taxing business drives investment out. Driving businesses out decreases wealth and removes opportunity from the very people you are trying to help. Tax more, drive more business out, and create a lower living standard.

I doubt anybody here doesn't believe in the safety net but in order to minimize the number of people who are economically depressed and raise the number of people who can afford those attributes you speak of, they can't be given it. They need to earn it. if we start providing food, shelter, etc. we start eroding the resources required to pay for those.

Don't get me wrong, I'm not talking about the mentally and physically challenged. I'm talking about the vast majority of the population who is perfectly capable of holding and performing jobs.

In fact, I learned one of my greatest lessons when I was teaching skiing to the handicapped in Ontario. While they all recognized they needed assistance, the one thing they all agreed on was contributing to society through work, however menial we may have considered it, was their best therapy. Where I saw people with true handicaps loving working and contributing to society, it made me realize there are a lot of people who argue for their limitations and by doing so, achieve them.

I recognize this is just the tip of the ice berg but you can't teach the effects supply and demand curves in one easy lesson. Milton & Rose Friedman's "Free to Choose" was a great book for understanding the wealth destroying nature of socialism. Note, it was written in 1980 so the examples are stale but the concepts are still quite accurate. There's a whole video series on You Tube too.

D.B. We were put on earth to work and be useful. We all have unique strengths and skills. We all have something to give back to society. Now go out and do it!
This was an interesting conversation, and perhaps you may have a few suggestions and ideas you would care to add?  If you do, I hope you'll take a moment to post them.

I'm Alan Forseth in Kamloops, with the thoughts of one conservative.
:)

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