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Old Posted Feb 5, 2019, 11:12 PM
misher misher is online now
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Eliminating or Dramatically Reducing Income Taxes

I have a theory that I'd like to propose. Of course its open to modification. Please read the research below I use to base this theory on. I am going to be quite radical and of course I don't fully believe in what I'm saying, I'm only making a proposal for consideration.

Government Revenues 2016-2017


Government Expenses 2016-2017


Reliance on Income Tax 1917-2017


So I set out to figure out a way we can reduce income taxes in Canada. Lets be honest, wages are increasing but its too slow. None of us seem to be making enough so that we feel satisfied. But, the average person is paying around 30% of their wage in income taxes. Of this, around 20% goes to the federal government. So what is the best way we could increase wages fast? Reducing this 20%. I think an extra 20% would help everyone a lot.

So long-term I propose that we seek to achieve a large reduction in income taxes on the middle class. Now income taxes are half of federal revenues. So by every 1% I lower federal expenses I can lower income taxes by 2%.

First, I propose we cut spending and repay our debt. That's 15% of our income taxes gone. Second is elderly benefits. I propose over the next 20-30 years we cut these to 0. Thats a 31% decrease in income taxes. Lets then cut the new $5 billion to First Nations (thats ontop of other spending so we'd just be funding them according to 2016ish numbers) which saves us another 6%. So were at a 51% decrease in income taxes now. Lets cut children's benefits (benefits to families that have children). This brings us another 14%.

Ok so I got to a 65% decrease in income taxes. I think with this decrease we could lower income taxes on the middle class by around 80% if we only reduce the brackets that hit the middle class? I'm sure its not as easy as I've made it out to be and we couldn't cut as much as I would like, but we should at least try some cuts? Even a 10% reduction in income taxes means the middle classes wages would rise by 2-3%.

What do you think? Screw cutting corporate taxes, lets cut income taxes on everyone.

Last edited by misher; Feb 6, 2019 at 1:36 AM.
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  #2  
Old Posted Feb 5, 2019, 11:17 PM
acottawa acottawa is offline
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Those appear to be accurate pie charts for the revenue and expenses of the federal government.
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  #3  
Old Posted Feb 5, 2019, 11:34 PM
Mikemike Mikemike is offline
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In summary:
Other people should lose their jobs and/or benefits so that you can keep a little bit more.

Congratulations on being in that portion of the population that's currently young, employed and healthy but we have these programs and this funding for a reason. You'll figure it out eventually.
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Old Posted Feb 5, 2019, 11:53 PM
ssiguy ssiguy is offline
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Nice of you to offer up getting rid of pensions in 20 to 30 years...……...the young people pay for all the Boomers {as usual} and then when they are finished working all their lives, they get squat.


There is nothing wrong with progressive income taxes, the more you make the more you pay. The reason income taxes are high today is because corporate taxes are so low. Corporate tax rates are less than half of what they were in 1970 when , conversely, income taxes were significantly lower for the middle class. This was suppose to help corporations become more profitably so they could reinvest in the economy and/or hire more workers. Well of course they invested very little relative to their size which is why small business has been the engine of growth over the last 30 years. This is made worse by the fact that the rate of unionization in small/medium sized businesses is drastically lower than at the corporate level and union jobs uniformly are higher paying, offer more benefits, and are more secure.

They did however create a lot of new jobs...……..in China and Mexico. They took all those saved taxes and spent the money shutting down plants in Canada and opening them in ultra low wage countries. Much of the expansion into developing countries by corporations were paid for out of your pocket. If you want to lower the income tax rate, raise it on the corporate rate by an equal amount.

Last edited by ssiguy; Feb 6, 2019 at 12:08 AM.
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  #5  
Old Posted Feb 6, 2019, 12:07 AM
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Originally Posted by misher View Post
But, the average person is paying around 30% of their wage in income taxes.
My income is higher than the average Canadian (according to someone else responding to something I wrote), and I only paid 17.5% of my income in taxes last year. Even if you add up all of my other deductions, including my supplemental health insurance which isn't going to the government, it's only 25.3%. And you can say "but the HST!!!!", and sure, but I keep a detailed budget and last year, based on the list of things that are HST taxable, including car payments and utilities and 20% of my groceries (which is a generous assumption), I spent about 3.7% of my income on sales tax, so we're still only at 21.2% of my income going to taxes overall. We get up to 29% if you throw in CPP (which I will get back, in theory, when I "retire", assuming that concept still exists), EI (which just a 3 month stint of unemployment will give me back all I've ever paid into that in my adult life), and health insurance (which is private and optional), and this despite the fact that as I said, I make more than the average Canadian.

So I call bullshit on this claim.

The governments, collectively, have to take $800B out of the economy to fund their shit (virtually all of that money goes back into the economy btw; government worker salaries don't just end up in a black hole. And they're paid by taxes but they pay taxes?????) so whether that's happening at the very bottom (your paycheque) or the very top (corporate profits), it's coming out and we'll eventually pay for it some how. Sure, you'll be able to keep an extra 30% of your income, I will be able to keep an extra 17.5% of mine, but if everything costs 40% more, we're not coming out ahead.

Anyway I don't want to call you young and stupid because I was you once, but there is a reason what you propose hasn't been done and won't be done and it isn't because of greed, it's because of math.
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Old Posted Feb 6, 2019, 12:14 AM
misher misher is online now
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Originally Posted by vid View Post
My income is higher than the average Canadian (according to someone else responding to something I wrote), and I only paid 17.5% of my income in taxes last year. Even if you add up all of my other deductions, including my supplemental health insurance which isn't going to the government, it's only 25.3%.

So I call bullshit on this claim.

The governments, collectively, have to take $800B out of the economy to fund their shit (virtually all of that money goes back into the economy btw; government worker salaries don't just end up in a black hole. And they're paid by taxes but they pay taxes?????) so whether that's happening at the very bottom (your paycheque) or the very top (corporate profits), it's coming out and we'll eventually pay for it some how. Sure, you'll be able to keep an extra 30% of your income, I will be able to keep an extra 17.5% of mine, but if everything costs 40% more, we're not coming out ahead.

Anyway I don't want to call you young and stupid because I was you once, but there is a reason what you propose hasn't been done and won't be done and it isn't because of greed, it's because of math.
Dope I admit I was off a bit on the amount of tax we pay.

But I will point out income taxes did not exist previously and putting them in did not decrease prices. If we existed in isolation yes, but as we get more money we can buy things from other nations rather than just be forced to compete for limited quantity among ourselves.

Last edited by misher; Feb 6, 2019 at 12:36 AM.
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  #7  
Old Posted Feb 6, 2019, 12:23 AM
milomilo milomilo is online now
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Yeah, that's definitely bullshit. I know everyone likes to think they're taxed to death but it's nonsense, I just looked at my last tax return and it was 21.5%, which is more than reasonable. Add a few percentage points to that and it would still be reasonable, and if everyone paid the same it would knock out the deficit.

I don't think your plan of getting rid of the debt ($1.4 trillion) and reducing income taxes is very feasible, TBH.
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Old Posted Feb 6, 2019, 12:25 AM
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Originally Posted by misher View Post
But I will point out income taxes did not exist previously and putting them in did not decrease prices.
Income taxes have existed since 1917. The world was a very different place back then. The role of government in people’s lives was obviously much smaller, but the material standard of living in 1917 was probably worse than that of most sub-Saharan African countries today.
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Old Posted Feb 6, 2019, 12:26 AM
milomilo milomilo is online now
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Apparently Canada introduced income taxes during the First World War and couldn't afford to remove them. Personally, that's a price I'm OK with paying, along with the myriad ways our life has improved vs 1917.
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Old Posted Feb 6, 2019, 12:33 AM
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You need to tax people a variety of ways to minimize the number of cheaters. The fewer the methods of taxation, the greater number of people who find a way to not pay their fair share of tax needed to fund public services.

As someone who will soon be reaching retirement, I ask everybody what we will do with seniors who are destitute without OAS and GIS. Many of these people are no longer able to work to make up for this financial loss. And this will get worse as private pension benefits decline as we move into the future. Can you imagine the future with reduced private pensions (or none at all), and no OAS and no GIS? It is a dim future.

Life will be very harsh as we depend 100% on the individual to prepare for their own retirement. Life is not always straightforward. None of us know what financial hiccups we may face between age 20 and 70. Not everybody is able to invest well. Not everybody is able to budget well to put money aside. If our careers are not stable or jobs are not lucrative, there may be little extra for retirement.
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Old Posted Feb 6, 2019, 12:34 AM
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So what is the plan for old people?

Soylent green?
Ice floes?
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  #12  
Old Posted Feb 6, 2019, 12:40 AM
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Originally Posted by lrt's friend View Post
As someone who will soon be reaching retirement, I ask everybody what we will do with seniors who are destitute without OAS and GIS. Many of these people are no longer able to work to make up for this financial loss. And this will get worse as private pension benefits decline as we move into the future. Can you imagine the future with reduced private pensions (or none at all), and no OAS and no GIS? It is a dim future.
We've been there before. It was called "the past". *Donald Trump air pinch motion* OK? Back in the 1930s, almost all seniors lived in abject poverty, many living in poorly maintained housing *sniff* without plumbing and electricity. They were "used to it" back then.

Misher just wants to Make Canada Great Again, is all.
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Old Posted Feb 6, 2019, 12:46 AM
lrt's friend lrt's friend is offline
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We've been there before. It was called "the past". *Donald Trump air pinch motion* OK? Back in the 1930s, almost all seniors lived in abject poverty, many living in poorly maintained housing *sniff* without plumbing and electricity. They were "used to it" back then.

Misher just wants to Make Canada Great Again, is all.
Yes, not just seniors lived in abject poverty. People lived in shacks or tents. I have heard the stories. I actually remember one gentleman living in a shack until he was found dead. That was the 1980s believe it or not. But, it hasn't changed so much. Today, they are called the homeless. The difference today is that they are mostly mentally ill or addicts.

But, also in the 1930s families were larger so granny or grandpa lived his and her last years living with other family members. Of course, people died younger back then.
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Old Posted Feb 6, 2019, 12:50 AM
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Unfortunately not only do we have to contend with proximity to the USA and it's "let's untax ourselves to mediocrity and bankruptcy" mentality, but we now have many new Canadians from the developing world who think that because they didn't pay much/any tax in the hellhole they escaped from that this should work in Canada. It doesn't.

We aspire to a living standard of Scandinavia/Western Europe and should compare our tax rates accordingly.
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Old Posted Feb 6, 2019, 1:03 AM
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But, also in the 1930s families were larger so granny or grandpa lived his and her last years living with other family members. Of course, people died younger back then.
People didn't die too much younger back then, the life expectancy was skewed by all the children who died from diseases that we've nearly eradicated. Only half of my great grandfather's siblings became adults, the other half died of diphtheria, mumps, and the 1918 flu.

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we now have many new Canadians from the developing world who think that because they didn't pay much/any tax in the hellhole they escaped from that this should work in Canada.
Haha, yeah, because that 4% tax rate in Syria is working so well for them!
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Old Posted Feb 6, 2019, 1:34 AM
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One problem is that your proposal is not going to bring back the glory days because those were an era of compound wage growth and deflation in the price of goods while the income tax is slice of an essentially fixed pie as far as plausible tax rates are concerned.

In 1912 the Model T cost $600 US and roughly matched the average American annual wage. By 1924 the price fell to $290 and wages more than doubled. People could on average buy 4.5 Model Ts a year if they wanted. The "pie" grew because of innovations like assembly lines and more precisely manufactured interchangeable parts. The question of 0% vs 20% income tax is nothing next to that.

Another thing missing from your model is that when the government gives out money it captures it back through taxes again. If you give out $10B in CPP or EI payments, the recipients go out and buy stuff, they pay GST, the people they buy from pay income tax, etc. Each change has knock-on effects that need to be thought through. It is not necessarily true that if you cut back an entitlement costing $X you can eliminate a tax that generates revenues of $X.

I think our real problem is that we have a misallocation of money on a society-wide level that is going to housing, education, and health care, and we do not invest enough in infrastructure and real research and development.
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Old Posted Feb 6, 2019, 1:54 AM
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So what is the plan for old people?

Soylent green?
Ice floes?
Will we even have enough ice floes, after climate change wreaks its havoc?
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Old Posted Feb 6, 2019, 2:21 AM
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Will we even have enough ice floes, after climate change wreaks its havoc?
He did mention Soylent Green first. Good to keep one's options open.
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Old Posted Feb 6, 2019, 2:48 AM
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The pie charts you post are misleading. They focus exclusively on federal taxes, whereas government services are split federally, provincially and municipally. The proportions of all taxation varies by province and municipality, so I suspect the income tax percentage is lower than indicated on that pie chart.

There are a bunch of reasons income tax is a good thing:

1. It captures a large portion of society within its net - everyone has a 'stake' in the services provided. Thus, individuals have an incentive to participate in democratic debate about the role of government. There's not many freeloaders relative to the taxpaying population, so the resentment towards any certain group is minimized.

2. By splitting taxes into multiple streams (income, corporate, sales, property etc.) it prevents one tax from dominating revenue and thus making an attractive target to evade. A punitively high sales tax will lead to black markets, for instance.

3. The idea behind a social safety net is to minimize the downsides faced by the market. Pulling the rug out from the bottom of society by cutting social programs tends to lead to more crime. No rational health insurance company would write a policy for elderly people (unless it was outrageously expensive) or cancer survivors because it's not profitable. Making tertiary education so expensive as to be unaffordable will rob a nation of the next generation of educated people to fill the jobs of tomorrow, while leaving an ill-educated and resentful large lower class.

I don't think the United States' model of cutting the bottom out of society is producing good results. In fact, I suspect it might be a cause of the polarization they are facing. A large, secure middle class will enhance social stability.

Untaxing themselves into bankruptcy (because let's face it, Medicare and Social Security will be getting the axe if they keep spending beyond their means) will likely lead to social upheaval.
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Old Posted Feb 6, 2019, 4:23 AM
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He did mention Soylent Green first. Good to keep one's options open.
I'm thinking some version of Carousel from Logan's Run might be good. Side bonus: boost arena ticket sales, providing more spin-off bar/restaurant business, and generating more government revenue which may allow a deeper cut to income taxes. Win, win, win, win.

But make it mandatory at age 60, not 30. Or at least 50, because personally, I want a few more years before my renewal.

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