Flat tax, All in.
 

There seems to be so much confusion on taxes. I think it is set up this way so no one really understand this elaborate walnut shuffle shell game.
There are many people involved in this shuffle, and a HUGE government beaurocacy.
Maybe it is time for a flat tax for all and eliminate all the loopholes. RRSP's, tax free saving accounts, etc, etc, etc
Everyone pays say 25%, and if you want your retirement savings will be your savings account. No, pay so much per year, get a tax refund or exemption and pay tax on it later when you retire at a lower rate.
I know, I know this is simplistic and may rub some wrong as this is a big industry. But, it was suggested several years ago as a political point.
People complain that the rich use loop holes to avoid taxes or not pay their fair share. Well just get rid of the loopholes with a flat tax no exemptions.
There would have to be some consideration for the low income earners.
When this was explained to me at a town hall meeting it sounded good, and I imagine, someone in here will highlight the downfalls.
Thanks

1. It's set up this way not to confuse people, but to buy votes. Every single tax deduction that you see has been created to target a specific group of people during an election campaign. And it's political suicide to try to remove any deductions. Decades later, here we are.

2. The biggest problem with the rich not paying taxes is that much if not most of their money is not "income". It has little to nothing to do with tax deductions or loopholes. Raise everyone's personal income tax rate to 90% and you'll still miss most of the rich folks. We have to start introducing wealth and inheritance taxes before we can really make these people pay their fair share.

3. Income taxation is progressive - ie: the more you have, the more you can contribute. The idea is that really poor people should pay very little, but as you earn more, you can afford a little bit more out of each paycheque, proportionally. And as you earn waaaay more and your costs of living are more than covered, you can contribute even more. Because of this, most "flat tax" proposals are actually more beneficial to the upper classes as they're entirely regressive. Tax rates increase for lower/middle class folks, but actually would DECREASE for the wealthy.

Personally I'd be in favour of a progressive flat tax. Use similar brackets as we have today (first $x,000 is untaxed, next $y,000 is 17%, next is 24% etc) and NO deductions. Simple, neat, fair. But parents, seniors, farmers, northern workers, disabled people - basically every group you can think of will scream.

Flat tax is extremely regressive. Awful for the middle class and/or working class striving to enter middle class.

Taxation systems should be simple. Keep in mind, this does not mean they should be simple structurally, but rather simple to understand.
There is a well-thought out motive behind every intricacy in our tax system. What it comes down to is rich people manage their money much more effectively than less rich people. (and having more money in a capitalist framework makes it a lot easier: you need money to make money)

The loopholes you're referring to shouldn't be seen so much as loopholes, but rather opportunities to pay less tax. For example, owning a home or having your own business offer several ''loopholes'' in our system. So do gains made on investments. While these may sound like cruel initiatives (cruel because they help the richest get even richer) but in fact they are in place as a means of promoting certain monetary 'values'.

The government wants you to buy a home, it wants you to have your own business and it wants you to invest your money. Less moneyed folks would be very foolish to endorse a flat tax system. Ironically, the working classes tend to promote these types of simple systems. This is because they are more naive, gullible and superstitious and their professional counterparts. (I'm generalizing of course)

Make no mistake, we'd be worse off if our system was more simple just for the sake of being more simple. That doesn't mean there aren't ways of making the tax filing system more easy and appealing. A 25% flat tax-policy would do nothing to prevent people from seeking unlawful ways of avoiding taxes. Tax havens, etc. Those who use illegal loopholes should be more harshly punished.

The one thing I find so scandalous about our tax system is that it taxes everyone making above 132,000$ exactly the same rate. Everyone making less than 200,000$ should be paying less than they are now. The extra revenue could come from higher tax rates at 200,000$, then even higher at 300,000$, etc. I am sure people making 500,000$ would argue against what I'm proposing on the grounds of it being another ''complicating'' measure ;)

My opinion.

Most deductions (though not the farming-, senior-, disability-related ones you speak of) are meant to provide incentives for people to MOVE their money, risk their money, etc. When money is active, it contributes more greatly to the country's economic pulse.

If you made a million bucks tomorrow and kept it under a pillow, it would generate far less wealth for you and your country. So some policies seek to encourage the re-investment of that money.

As for parents, seniors, farmers, northern workers and disabled people, well tax benefits being accorded to these groups reflect the common values we share. ''Canadian values'' as it were.

We consider parents, parenting and the family unit to be an essential part of our success. So we add give incentives to those who 'make families'

Farmers grow food. This is an important function in society, particularly if something were to f*ck up on a global scale. It keeps us autonomous. And unfortunately it pays really poorly on average. So government watches out for farmers.

Northern workers contribute economic development of our resources in unexploited areas. Nobody wants to do this kind of work. Government creates added incentive.

Seniors and disabled people are extra-vulnerable. Government provides them with additional protection through tax policies.

I think if folks looked at our system very carefully, they would understand that behind 95% of measures there exists a well-thought out, well-meaning and commonly supported purpose. Now, the effectiveness of tax collection is a different story.

I currently pay an effective 16% tax rate. A 25% flat tax rate would kill me.

Our tax system really isn't that difficult, it is just tedious to fill out the form properly and keep up-to-date with all the vote-grabbing tax breaks. Most of them don't apply to me any because I am a lower income single male. No one actually wants my vote. I think the only deduction I get to claim this year is work boots.

10% flat income tax with increased corporate and consumption tax would be a good start. Also, getting rid of corporate lobbysists and special interests would be in 99% of people's interests.

Why would you want to shift taxes onto corporations? All they'll do is pass them back in the form of more expensive services. Corporate taxation is perhaps the worst form.

A tax-free corporation is an RRSP without any annual contribution limits.

I could shove a bunch of into a numbered company and pull a very small salary having the company make a large annual (tax-free) profit and pay for most of my expenses (all travel, housing, etc.).

Corporation taxes need to be equal to the dividend tax rate or they just become a personal bank account.

"The top one-10th of one per cent, meaning those who are earning more than $2.1 million, pay 17 per cent of all federal income tax but only have seven per cent of the total income."

Taxing the rich is already fundamentally unfair . Oh sure , we can all argue fairly convincingly that since they make so much cash , it's not so bad for them to carry a greater burden . I agree . That doesn't actually make it fair in the strictest sense .

The point , however , is that a flat tax would necessarily have to increase the burden on everybody who makes less then the top %0.1 of the working population to keep the money coming in at the same rate from the government's standpoint . This is why the flat tax idea doesn't go very far when it's discussed .

And as far as increasing taxes for the rich alone , well , that's fine too right up until they buy their way into a country with a far less punishing tax regime . Whatever else we may think of the rich , the fact is that thirty million people with a dollar each don't invest it in a factory but one guy with 30 million dollars will .

Count me out.

I've never understood why I can't opt out of public health care in exchange for a reduced income tax.

The system would collapse, obviously. Men until the age of 40 have virtually no reason to go anywhere near a clinic or hospital. Naturally, you'd be inclined to opt out over this period.

Mind you if you were allowed to opt out and had any kind of accident, you'd be f*cked.

Sorry, the thread title clearly states "all in".

I never understood why I can't opt out of society in exchange for not having to have any form of responsibility for my actions.

I'm not against a flat tax with a high enough 'personal amount'.

Set the personal amount to whatever is determined to be the minimum one needs to make to just simply survive. Lets say that is 20k. Lets say then the flat tax rate is.. hmm 20%


So someone who makes 25k = 25k-20k = 5k x 20% they pay 1000 tax, which is 4% of 25k.

Someone who makes 500k = 500k - 20k = 480k x 20% they pay 96k, which is 19.2% of 500k.

The gist being that everyone pays the same rate on their 'disposable income', but their income necessary for survival is tax free.

I wouldn't mind opting out of the jail system in exchange for lower taxes, seeing I don't plan on going to jail.

If we start adding thresholds and other types of exemptions, it's no longer a flat tax and we're trending back to the complexity that is inevitable in system of taxation.

Simplicity is attractive to some people, but a flat tax is regressive no matter how you slice it.

There is also the concern about what is revenue and what is income. People employed need to spend money to keep their job. People receiving dividends or rents spend not much, unless they do spend to upkeep those revenue sources.

Money is a funny thing. It can come from a variety of sources, each with their own cost.

I think there's a middle ground worth exploring, though. A flat tax with a basic exemption, and a very small handful of other rules is nothing like what we see today - where the tax code is hundreds of pages long, filing a return takes most people a couple of hours, complex computer programs that need annual updates are almost required, and many companies exist seemingly for the sole purpose of "maximize your return!".

I got lazy a few years back and started using Quicktax. This year it asked me if I was a volunteer firefighter. I mean seriously, wtf. Do people honestly take on entirely new and dangerous, unpaid professions just to get a few hundred bucks back from the government? Couldn't this be handled much simpler by a government subsidy to volunteer fire departments?

How about eliminating the income tax altogether and raise the GST/HST rate?