[can.general] Flat Tax Rate

TMCLELLA@UALTAVM.BITNET (Tim Mclellan) (08/17/89)

In article <1713@cs-spool.calgary.UUCP>, fare@.ucalgary.ca (Michael David Farebrother) writes:
 
>a "30(?)% income tax" , no exclusions, no deductions, just report your
>income and pay 30% of it.
 
I have been fond of this idea for a long time now.  Peter Pocklington in one
election campaign a few years back, also had this scheme in mind.
 
It would be so simple, and so fair.  If everyone had to pay tax on their gross
income, maybe we could all pay a little less in the end.  The rich would have
no write offs.
 
Every month, your employer (or whoever) would simply remit your taxes directly
to Rev Canada.  No forms, no headaches, no tax prep rip-offs.
 
Naw, that'd be too simple, easy, fair, ...
 
--
Tim McLellan                        University of Alberta
                                    Edmonton, Alberta, Canada
"Personal shopping only"              ( I only work there )
                                    Bitnet: TMCLELLA@UALTAVM.BITNET

david@torsqnt.UUCP (David Haynes) (08/18/89)

TMCLELLA@UALTAVM.BITNET (Tim Mclellan) writes:

>In article <1713@cs-spool.calgary.UUCP>, fare@.ucalgary.ca (Michael David Farebrother) writes:
> 
>>a "30(?)% income tax" , no exclusions, no deductions, just report your
>>income and pay 30% of it.
> 
>It would be so simple, and so fair.  If everyone had to pay tax on their gross
>income, maybe we could all pay a little less in the end.  The rich would have
>no write offs.

But I think you would also have to have a "no deductions" limit. 
Ie: Everyone under that limit would not pay any tax. 

For example, if the limit was $27,000 then if you earned $35,000 you
would pay (35,000 - 27,000) * tax rate in taxes. This would stop the
drain on those of limited incomes. 

Reagan proposed this idea a long time ago (1983 or 84) and we had a 
round of "gee, we should copy the Americans" in Ottawa. Nothing ever
came of it though.

-david-

Remember: Canada never implements *any* policy until the United
States has clearly shown that it will not work. (1/2 ;-) )
-- 
-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-
David Haynes			Sequent Computer Systems (Canada) Ltd.
"...and this is true, which is unusual for marketing." -- RG May 1989
...!{utgpu, yunexus, dptcdc}!torsqnt!david -or- david@torsqnt.UUCP

kevin@client1.DRETOR.UUCP (Socrates) (08/19/89)

In article <644@UALTAVM.BITNET> TMCLELLA@UALTAVM.BITNET writes:
>In article <1713@cs-spool.calgary.UUCP>, fare@.ucalgary.ca (Michael David Farebrother) writes:
> 
>>a "30(?)% income tax" , no exclusions, no deductions, just report your
>>income and pay 30% of it.
> 
>It would be so simple, and so fair.  If everyone had to pay tax on their gross
>income, maybe we could all pay a little less in the end.  The rich would have
>no write offs.
> 
>Every month, your employer (or whoever) would simply remit your taxes directly
>to Rev Canada.  No forms, no headaches, no tax prep rip-offs.
> 
Except that income takes more forms than a paycheque.  If I own a store and
sell some merchandise, using the profit as my income, how do I determine
how much of it is actual "income" and how much is expenses for the store?
And if expenses are fully covered, how much goes to expansion, and is it
taxable or not?  What about the money I spend in advance to keep the
shelves stocked?

The same can be said for people who use stocks, money markets, or any of a
number of different ways to make a living that don't involve an actual
paycheque, but are taxable.

These are just a few of the strange situations that make this idea about as
complicated as the current tax laws.  If everybody got their paycheques
once a week (or two weeks) and it was their only source of income then the
above system would work beautifully.  Unfortunately, us strange human
beings insist on this useless trait called "individuality". :-)

-- 
--- Kevin Picott   NTT Systems, Inc., Toronto, Ontario
    "There can be no offense where none is taken" - Japanese Proverb

    kevin@zorac.dciem.dnd.ca, or on some sites kevin@zorac.ARPA

jmsellens@watdragon.waterloo.edu (John M. Sellens) (08/19/89)

One of the things that the Canadian income tax system tries to do is
encourage certain types of expenditure (e.g. scientific research,
Canadian movies, etc.).  You can't do this under a flat tax system.
So an opinion on a flat tax system essentially includes an opinion on
this type of expenditure encouragement.

Another thing that the tax system tries to do is give people with lower
incomes a lower relative tax rate.  Someone suggested a $20,000 lower
bound.  But what happens if you have $20,001 of income?  So you need
a transitional provision around such a boundary.  Do you believe that
a family with more members deserves a break i.e. a higher lower bound?

If you believe that everyone should pay the same proportion, regardless
of any other attributes of a person, then a flat rate tax might be
workable.  But if you believe that some people deserve a break, or that
some expenditures are more "worthwhile" than others, a flat rate tax
system quickly degenerates into something like we have now.

rayt@heraclitus.UUCP (R.) (08/23/89)

In article <644@UALTAVM.BITNET> Tim McLellan writes, regarding Michael
David Farebrother's comment concerning a flat tax rate
  
>I have been fond of this idea for a long time now.  Peter Pocklington in one
>election campaign a few years back, also had this scheme in mind.
  
>It would be so simple, and so fair.  If everyone had to pay tax on their gross
>income, maybe we could all pay a little less in the end.  The rich would have
>no write offs.
  
>Every month, your employer (or whoever) would simply remit your taxes directly
>to Rev Canada.  No forms, no headaches, no tax prep rip-offs.
  
>Naw, that'd be too simple, easy, fair, ...

The biggest problem I have with this is that it misunderstands the position
of the entrepreneur: they are not (usually) wage earners and are INVESTING
(i.e. suppling capital) thereby allowing businesses to flourish. Thus, unlike
the typical wage earner, their income involves a significant amount of RISK,
and it is through that risk that the country as a whole prospers. One would
like to ENCOURAGE this activity as much as possible, and equally, it seems a
little odd to me that such an individual should expect to have that income
taxed in the same way as the wage earner who is employable only through the
agency of said entrepreneurs (outside of the govenment sector, that is), and,
especially in our modern society, demands varying degrees of wage GUARANTEE
(i.e. tries to minimize his risk asymptotically to zero).

Once this is appreciated, then further difficulties arise: Are all investments
of equal value or risk (e.g. gas and crude oil exploration or steel mill
refurbishing and construction versus, say a new corner Becker's)? Does this
apparent incommensurability warrant a different tax scheme? More indirectly,
there are investments in stock, bonds, etc., etc., etc.; where do these fit?

Further arguments can be applied to all sorts of ventures in an effort to
separate legitimate operating costs (as has been discussed already by others),
bonuses, etc. In short then, the flat rate scheme may be simple, but in
a complex business environment, if not unfair, is at least counterproductive,
and therefore self-destructive.

							R.
-- 
Ray Tigg                          |  Cognos Incorporated
                                  |  P.O. Box 9707
(613) 738-1338 x5013              |  3755 Riverside Dr.
UUCP: rayt@cognos.uucp            |  Ottawa, Ontario CANADA K1G 3Z4