Taxation and the middle class

[Acitta]

I might be wrong, but there are a ton of tax loopholes rich people use so no matter how much tax they owe, they'll find a way to get around it and not pay. We obviously need to fix the system but that seems unrealistic atm

There really aren't a ton of them. It's possible to lower the amount of taxes paid in many ways and possible to avoid some entirely, but it's not an easy thing to do. It's also precarious legally, so most people out there are not going to opt to do something that could result in having money taken away or face prosecution for. People in general just do not really like having to have their money be taxed. Every person out there looks at their finances, gets to the Tax and Deductions sections and sighs.

But contrary to the fact that there are countless economic philosophies that exist in human culture and people will develop their own views of what they see as ideal, we are all more or less constantly forced to participate in whatever system exists in our state by being held in bondage under the threat of force and/or violence should you attempt to not play by the rules of the state you reside in (with the concept of a state itself already being a complete abstraction as well). A state can't exist without taxation, so they've developed pretty good ways to ensure people do not find ways to not pay their fare share. There are very few actual loopholes remaining that make it easy these days. Most wealthy people are just wealthy because they have financial literacy, not because they're using tax loopholes or perhaps other schemes. If they'll chase someone down for years for owing say 1500 dollars, you can be assured the CRA does everything they can to chase down people with even money who may be dodging taxes or something.

If the issue is whether we should tax them more, well, that's a different issue. On that, I'd argue the government should learn what the hell they're doing with the tax they already do get. There is an insane amount of waste. There is also a lot of questionable reasoning to what they choose to tax. One example is the carbon tax is one contentious issue in Canadian society for some years now with all sides providing scientific, economic and political views both in support and against said tax. Whatever the case, a lot of our money we end up giving them isn't being spent too well whether it's at the local, provincial or federal levels. They should be fixing that to optimize what they currently have before seeking to take more.

Conservatives are always claiming that there is a lot of waste and taxes are too high. What they end up doing is cutting taxes for their rich friends and cutting social services like health care for the rest of us. They never want to cut the huge subsidies for oil companies, which is where the real waste is.

[ac3r]

You can't really blame the entirety of wasteful spending on whatever political party is in office. It's more of an economic/financial issue at its core, not an ideological one. You can look at deficits and debts, for example, and see that both sides have done superb jobs of screwing that up.

[Acitta]

You can't really blame the entirety of wasteful spending on whatever political party is in office. It's more of an economic/financial issue at its core, not an ideological one. You can look at deficits and debts, for example, and see that both sides have done superb jobs of screwing that up.

Yes, but the Conservatives always end up increasing the deficit by cutting the taxes that pay for everything the government does.

[plam]

I might be wrong, but there are a ton of tax loopholes rich people use so no matter how much tax they owe, they'll find a way to get around it and not pay. We obviously need to fix the system but that seems unrealistic atm

There really aren't a ton of them. It's possible to lower the amount of taxes paid in many ways and possible to avoid some entirely, but it's not an easy thing to do. It's also precarious legally, so most people out there are not going to opt to do something that could result in having money taken away or face prosecution for. People in general just do not really like having to have their money be taxed. Every person out there looks at their finances, gets to the Tax and Deductions sections and sighs.

I, for one, am happy to pay the 27% tax rate that my federal tax return says. There's that Oliver Wendell Holmes Jr quote “I like to pay taxes. With them, I buy civilization.”

It is also the case that the US IRS has been underfunded and are not as effective in going after higher-income people as they would like to be. It's a lot harder for people with regular T4 (W2) salary income to hide it from the government than people with more complicated investments.

https://www.irs.gov/newsroom/irs-announc...ce-efforts

[Vojnik_Vahaj]

Ok fair enough. To your point about tax waste, I know that Denmark has VERY high tax rates but the people don't really complaing because they have a very non-corrupt government and most of their tax money goes directly back into improving their standard of living.

Also, with and aging population, there will be a greater burden on the younger, working generations to support the retirees and I'm guessing that would be through more(but maybe not too much more) taxation to support public elder care facilities. For this, I think we should bring back multi-generational homes. They're a win-win in most cases. The grandparents get a place to live and in return babysit the children. Now, obviously some might not be able to take care of themselve for one reason or another, but in those cases there should be long-term care facilities or in-home nurses that come every day to help out when the household's breadwinners are at work. this obviously would require a good economy, which we don't have, but if its possible in poorer countries, a western country should be able to do it.

[danbrotherston]

Ok fair enough. To your point about tax waste, I know that Denmark has VERY high tax rates but the people don't really complaing because they have a very non-corrupt government and most of their tax money goes directly back into improving their standard of living.

Also, with and aging population, there will be a greater burden on the younger, working generations to support the retirees and I'm guessing that would be through more(but maybe not too much more) taxation to support public elder care facilities. For this, I think we should bring back multi-generational homes. They're a win-win in most cases. The grandparents get a place to live and in return babysit the children. Now, obviously some might not be able to take care of themselve for one reason or another, but in those cases there should be long-term care facilities or in-home nurses that come every day to help out when the household's breadwinners are at work. this obviously would require a good economy, which we don't have, but if its possible in poorer countries, a western country should be able to do it.

Care to define "bring back"..who is the voice in that passive sentence?

Multi-generational homes are not something our culture really sees as normalized, in fact, it's actually seen as a sign of failure (and is in fact being driven by our failure in housing) and there are various reasons for this in our society. But whether you think it's a good idea or not, changing this would involve pretty fundamental changes to our culture. So how does one change this?

Solutions, no matter how good or bad, need to be sociological in nature, and yes, that absolutely means also political.

[Vojnik_Vahaj]

Ok fair enough. To your point about tax waste, I know that Denmark has VERY high tax rates but the people don't really complaing because they have a very non-corrupt government and most of their tax money goes directly back into improving their standard of living.

Also, with and aging population, there will be a greater burden on the younger, working generations to support the retirees and I'm guessing that would be through more(but maybe not too much more) taxation to support public elder care facilities. For this, I think we should bring back multi-generational homes. They're a win-win in most cases. The grandparents get a place to live and in return babysit the children. Now, obviously some might not be able to take care of themselve for one reason or another, but in those cases there should be long-term care facilities or in-home nurses that come every day to help out when the household's breadwinners are at work. this obviously would require a good economy, which we don't have, but if its possible in poorer countries, a western country should be able to do it.

Care to define "bring back"..who is the voice in that passive sentence?

Multi-generational homes are not something our culture really sees as normalized, in fact, it's actually seen as a sign of failure (and is in fact being driven by our failure in housing) and there are various reasons for this in our society. But whether you think it's a good idea or not, changing this would involve pretty fundamental changes to our culture. So how does one change this?

Solutions, no matter how good or bad, need to be sociological in nature, and yes, that absolutely means also political.

Every society has had multigenerational housing at some point, it just needs to be more normalized in our current society. How to change this? Couldn't tell you, it is just an idea

[Acitta]

Ok fair enough. To your point about tax waste, I know that Denmark has VERY high tax rates but the people don't really complaing because they have a very non-corrupt government and most of their tax money goes directly back into improving their standard of living.

Also, with and aging population, there will be a greater burden on the younger, working generations to support the retirees and I'm guessing that would be through more(but maybe not too much more) taxation to support public elder care facilities. For this, I think we should bring back multi-generational homes. They're a win-win in most cases. The grandparents get a place to live and in return babysit the children. Now, obviously some might not be able to take care of themselve for one reason or another, but in those cases there should be long-term care facilities or in-home nurses that come every day to help out when the household's breadwinners are at work. this obviously would require a good economy, which we don't have, but if its possible in poorer countries, a western country should be able to do it.

Multi-generational homes only work if the family all live in the same city. These days, families are scattered all over the country or even the planet.

[jeffster]

You can't really blame the entirety of wasteful spending on whatever political party is in office. It's more of an economic/financial issue at its core, not an ideological one. You can look at deficits and debts, for example, and see that both sides have done superb jobs of screwing that up.

Yes, but the Conservatives always end up increasing the deficit by cutting the taxes that pay for everything the government does.

I dunno. The federal Liberals doubled our debt in less than 9 years - causing generation debt for anyone born after 1980. Debts are created by large deficits. Much of this debt was also before covid-19 - when the economy was apparently steaming along nicely.

We have had several tax increases the past 9 years with very little to show for the majority of Canadians, other than record high home prices that make it impossible for 90% of Canadians wishing to buy a home or rent a small apartment totally impossible and unaffordable. Many of the tax increases affect the lower income folks the most, including a 20% increase to payroll tax (CPP) - that increase (and increased payment when you retire) don't actually give you more money, as your GIS is subsequently wiped out if you qualified for it. This is no different than the 'invisible' tax increase during Mulroney and Chretien - that was, the personal exemption stayed the same. Plus massive cuts to CPP death payments by same Liberals.

Doug Ford, not loving the guy, but he did decrease taxes for the poorest of the working class ($0 taxes for those making $30,000 or less for employment income) - also record increases to ODSP. You won't hear Liberals talk about that - as they solidly increase taxes on the poor the most - while creating more money for banks (their friends). As announced yesterday, Trudeau wants people to be in mortgage debt for 30 years rather than 25 years - so yeah, save 5% on your month payments, but end up paying 25% more in the long run.

[nms]

The Canadian federal debt was relatively low until the late 1970s, then took off around 1984, shrank starting around 1996 and then has increased every year since 2008.  The most recent rise since 2008 is roughly evenly split between the Harper years (2006-2015) and the Trudeau years (2015 to today). Setting aside the unprecedented Covid debt (roughly 2020 to 2022, but there are likely still ongoing Covid costs), what have political parties of any stripe proposed that might actually succeed in lowering the federal debt and/or deficit?  The Conservatives didn't do it, and nor have the Liberals.

What has happened economically in the last 40 years to put the federal government in this position? Will it ever be reversed?

[bravado]

The Canadian federal debt was relatively low until the late 1970s, then took off around 1984, shrank starting around 1996 and then has increased every year since 2008.  The most recent rise since 2008 is roughly evenly split between the Harper years (2006-2015) and the Trudeau years (2015 to today). Setting aside the unprecedented Covid debt (roughly 2020 to 2022, but there are likely still ongoing Covid costs), what have political parties of any stripe proposed that might actually succeed in lowering the federal debt and/or deficit?  The Conservatives didn't do it, and nor have the Liberals.

What has happened economically in the last 40 years to put the federal government in this position? Will it ever be reversed?

The wild post-war growth stopped and the bills for maintaining that social welfare net and infrastructure are starting to appear more over time? I don't think the Canadian finance story is unique at all in the western world. We just happen to compare ourselves to the US - which is a bit unfair because they can print money and do things that nobody else can do in the global economy. Not a fair comparison...

If there is anything partisan about the discussion, it's that Conservatives get elected talking about reducing the debt and never do and Liberals get elected talking about how the debt might not be so bad if we get something 'good' out of it - the end results are the same.

[tomh009]

Realistically, the debt will never go to zero (nor will it in nearly any other developed economy). It's really better to look at it as a percentage of GDP as that takes out inflation as a factor, and accounts for population and (hopefully!) productivity growth. This is from wikipedia:



The big recent spikes are 2007 (Harper, financial crisis) and 2020 (Trudeau, COVID-19). Neither got to the level of the early 1990s debt (Mulroney). The only time there was serious management of the debt load was during Chretien/Martin, and that was helped by strong economic growth.

[ijmorlan]

I remember during the Chretien/Martin years they got heat from the opposition for budgeting with a reserve, so the final results tended to be slightly better than originally budgeted. I suppose I understand why the opposition did that, but to me it looked like obvious prudence — you don’t budget for everything to go perfectly well. I defy anybody to explain why continuing to budget with a small surplus (maybe $5-10 billion per year) would have been worse than what actually happened. If we’d continued that through the Harper years then when Covid hit we would probably have gone from maybe 15 to 35 % debt to GDP rather than the actual 30 to 50 %. Also I’d like to see the occasional discussion of “we’d like to do this for all of us, but we have to pay for it so we’re proposing the following tax increase” rather than the usual lying about increasing government services while putting money back in our pockets.

[ludo643]

 Also I’d like to see the occasional discussion of “we’d like to do this for all of us, but we have to pay for it so we’re proposing the following tax increase” rather than the usual lying about increasing government services while putting money back in our pockets.

You'd like a tax increase? Really?

[bravado]

I think a lot of people would find it a bit refreshing if a leader just said out loud "if you want nice things you have to pay for it."

Anyone who doesn't is usually just lying. There is no bit of creative accounting to be done on the macro like this.