There is a good book on tax avoidance or lack thereof from the higher income brackets, called Myth of the Millionaire Tax Flight. By Cristobal Young. Essential message is that high income earners generally speaking, do not move a lot to avoid tax.
That's not to say we necessarily jack up their rates, but it does speak to that point.
I think the point about corporations moving, my thought around that would be that there be a tax on revenue earned in Canada. These companies benefit from the infrastructure here whether that is roads or internet etcetera. Yes, these taxes do get passed to consumers, but again to generalize, it then becomes a consumption tax.
I don't know if it is possible, but I am always interested in the mix of taxes between consumption, income, capital. What's that right mix?
Interesting points. I wonder if there's a way to find data confirming (or denying) the large-scale existence of tax exiles. My assumptions were probably influenced by famous cases (like a couple of the Beatles and Gerard Depardieu).
Alexander Tytler's thesis on why and how all democracies die is catalyzed by the so-called progressive income tax as those tax payers with little to no skin in the game vote continually for the free stuff paid for by those in higher tax brackets and now borrowed to keep up with political demand. The net takers (including the public sector) tend to support politicians who argue for the "rich" needing to pay more of their earnings to achieve "fairness". It's the successful politics of envy, resentment, and hatred.
The question of whether the high earners pay their “fair share” of taxes relates not to what percentage of the population they are, but rather what percentage of the total personal income goes to them. If the top 2% earn 80% of the total personal income in the country, then they aren’t paying their fair share of taxes if they only pay 20% of the total taxes.
I just looked: the $250+ bracket earned a total assessed income of $262 billion and all brackets together were assessed a total of $2.5 trillion. So the top bracket earned around 7.5% of total national income.
I believe $262 is 10.5% of $2,500 - so the top bracket earns 10.5% of income, and pays 29% of the taxes. Does the 'assessed income' include capital gains on assets such as real estate, stocks, etc? It feels like it's being excluded... in which case that is a very significant omission.
As I understand it, the wealthiest people in Canada do not gain their wealth through salaries or wages, but through capital gains - the rise in value of shares, real estate and other assets. Comparing the tax contributions of Canadians as income earners therefore, IMHO, misses some pretty important information. Capital gains are only taxed when an asset is disposed of in some way, usually by selling, and then at only half the rate if it were wages or salary. The richest get around this by using their assets to back lines of credit, which allows them to spend money without cashing out their assets. As you point out this is not illegal.
My point here is that we can't discuss tax fairness if we're not including capital gains.
First first off, as always, thank you for your work herein.
Second first off, good on Brent Robinson for catching your ooopsie. An ooopsie is a real event that will happen in almost all analyses. But, those fact checkers! Best to quadruple their pay so that they will have the incentive ......
I am a retired accountant who did one heck of a lot of personal tax returns over many centuries (seems like) for taxpayers in all tax brackets. I certainly found that there were taxpayers who used tax shelters but for the most part those taxpayers found that a) the shelters worked - kinda - but that in the long run those shelters at best, at best, broke even; and b) they ultimately chose to just pay the calculated taxes.
Put differently, I found that most wealthy folks realized that they were paying the lion's share of taxes as compared to other income brackets and put up with it, resigning themselves to paying those amounts.
Now, having said that, most of those wealthy folks were actually fairly mobile and, while they resigned themselves to paying taxes, they also spent a lot of time mingling with wealthy folks of other countries and that always gave them both the resources and reason to continually consider whether their taxes were "too high" and whether a change in residence was in order. In some cases, employment moved them out of Canada and in other cases it was choice but it was always at the back of mind for most wealthy folks.
Ultimately, I became convinced that the real problem with wealthy folks was that there just weren't enough of them as they contributed so much to Canada's overall prosperity.
But there's no way I'll increase fact checker wages! I keep them toiling in the basement mechanical room deep below TheAudit Towers and I have no interest in giving them any uppity ideas.
Okay, then in the interest of promoting (alleged) despicable capitalist actions, cut their wages by ten per cent and give yourself a bonus of twenty per cent.
There is a good book on tax avoidance or lack thereof from the higher income brackets, called Myth of the Millionaire Tax Flight. By Cristobal Young. Essential message is that high income earners generally speaking, do not move a lot to avoid tax.
That's not to say we necessarily jack up their rates, but it does speak to that point.
I think the point about corporations moving, my thought around that would be that there be a tax on revenue earned in Canada. These companies benefit from the infrastructure here whether that is roads or internet etcetera. Yes, these taxes do get passed to consumers, but again to generalize, it then becomes a consumption tax.
I don't know if it is possible, but I am always interested in the mix of taxes between consumption, income, capital. What's that right mix?
Interesting points. I wonder if there's a way to find data confirming (or denying) the large-scale existence of tax exiles. My assumptions were probably influenced by famous cases (like a couple of the Beatles and Gerard Depardieu).
I think you’ve missed the last 3 0s in the $250,000 and up column. Should be $83.6 billion, not million.
Yikes. Looks like you're right. Well I think I'll have to update this post pretty quickly!
There should be no income tax, it is impossible to determine fairly.
The only definable data of the relationship between people is by cash flow.
People receive cash and use it for consumption or savings.
Annual total of cash received less the cost of assets acquired equals consumption.
The total of assets on hand remaining after consumption equals cash still in use.
Persons should pay graduated brackets and rate for cash consumed.
Persons should pay a fixed annual rate for the total of cash in use.
Business and other entities, which by nature do not consume, should also pay a fixed annual rate for cash in use,
Result: Efficiency and fairness
Alexander Tytler's thesis on why and how all democracies die is catalyzed by the so-called progressive income tax as those tax payers with little to no skin in the game vote continually for the free stuff paid for by those in higher tax brackets and now borrowed to keep up with political demand. The net takers (including the public sector) tend to support politicians who argue for the "rich" needing to pay more of their earnings to achieve "fairness". It's the successful politics of envy, resentment, and hatred.
The question of whether the high earners pay their “fair share” of taxes relates not to what percentage of the population they are, but rather what percentage of the total personal income goes to them. If the top 2% earn 80% of the total personal income in the country, then they aren’t paying their fair share of taxes if they only pay 20% of the total taxes.
I just looked: the $250+ bracket earned a total assessed income of $262 billion and all brackets together were assessed a total of $2.5 trillion. So the top bracket earned around 7.5% of total national income.
I believe $262 is 10.5% of $2,500 - so the top bracket earns 10.5% of income, and pays 29% of the taxes. Does the 'assessed income' include capital gains on assets such as real estate, stocks, etc? It feels like it's being excluded... in which case that is a very significant omission.
Here's what the CRA site says about "total income assessed" (https://www.canada.ca/en/revenue-agency/programs/about-canada-revenue-agency-cra/income-statistics-gst-hst-statistics/t1-final-statistics/2021-tax-year.html):
The income classes presented in the tables are based on the total income assessed. This corresponds to line 15000 of the return and includes:
* employment income
* pension income
* investment income
* self-employment income
* income from other sources
* non-taxable income
As I understand it, the wealthiest people in Canada do not gain their wealth through salaries or wages, but through capital gains - the rise in value of shares, real estate and other assets. Comparing the tax contributions of Canadians as income earners therefore, IMHO, misses some pretty important information. Capital gains are only taxed when an asset is disposed of in some way, usually by selling, and then at only half the rate if it were wages or salary. The richest get around this by using their assets to back lines of credit, which allows them to spend money without cashing out their assets. As you point out this is not illegal.
My point here is that we can't discuss tax fairness if we're not including capital gains.
Looks like fairness only applies to the $80,000 to $89,999 range - and unfairness increases dramatically over $100,000.
Two, first offs.
First first off, as always, thank you for your work herein.
Second first off, good on Brent Robinson for catching your ooopsie. An ooopsie is a real event that will happen in almost all analyses. But, those fact checkers! Best to quadruple their pay so that they will have the incentive ......
I am a retired accountant who did one heck of a lot of personal tax returns over many centuries (seems like) for taxpayers in all tax brackets. I certainly found that there were taxpayers who used tax shelters but for the most part those taxpayers found that a) the shelters worked - kinda - but that in the long run those shelters at best, at best, broke even; and b) they ultimately chose to just pay the calculated taxes.
Put differently, I found that most wealthy folks realized that they were paying the lion's share of taxes as compared to other income brackets and put up with it, resigning themselves to paying those amounts.
Now, having said that, most of those wealthy folks were actually fairly mobile and, while they resigned themselves to paying taxes, they also spent a lot of time mingling with wealthy folks of other countries and that always gave them both the resources and reason to continually consider whether their taxes were "too high" and whether a change in residence was in order. In some cases, employment moved them out of Canada and in other cases it was choice but it was always at the back of mind for most wealthy folks.
Ultimately, I became convinced that the real problem with wealthy folks was that there just weren't enough of them as they contributed so much to Canada's overall prosperity.
Interesting.
But there's no way I'll increase fact checker wages! I keep them toiling in the basement mechanical room deep below TheAudit Towers and I have no interest in giving them any uppity ideas.
Okay, then in the interest of promoting (alleged) despicable capitalist actions, cut their wages by ten per cent and give yourself a bonus of twenty per cent.