dave@utcsrgv.UUCP (Dave Sherman) (08/07/84)
In article <8537@watmath.UUCP> csc@watmath.UUCP (William Hughes) writes: ~| A minimum tax on income over 50,000 is a good idea, and I hope that ~| both Liberals and Conservatives also adopt this policy... ~| ...However this measure would raise at most about ~| $200 million, and this is not going to make much of a dent in a $30 billion ~| deficit. And Dave Martindale (dmartindale@watmath.UUCP) writes: ~| Now, someone proposed having a minimum level of income tax, so ~| that people couldn't reduce their tax below that minimum level by using ~| shelters and loopholes. That would help reduce the deficit, wouldn't it? ~| But that was proposed by the NDP, so it can't be a good idea, can it? People who are opposed to "shelters and loopholes" are missing a point. There are no lasting "loopholes" in the Canadian tax system - the Department of Finance attends all the same tax conferences as the tax lawyers, and unintentional effects of legislation are quickly addressed. (That's one of the reasons the tax system is so complex.) There are indeed a number of incentives provided through the tax system, for the purposes of stimulating certain areas of the economy. For example, if you invest in the Maritimes or the Gaspe, you get a higher investment tax credit than normal. If you invest in a company performing R&D, you get a scientific research tax credit. All of the "shelters" or incentive systems are there for a purpose. Now, what do you accomplish by imposing a minimum tax on incomes over a certain figure? There will be much less investment in the areas which the government has targeted for incentive (e.g., R&D). So you might raise that extra $200 million (figure quoted above), but you'll have to pay out that much more to support the industries which lose out from not having the investment. There is no logical reason for this. Remember, you may call it a loophole, but when I put my money into an R&D company instead of into taxes, I'm helping the economy as directly desired by the government. Incidentally, people who like to complain about the numbers of high-income earners who pay no tax will have a field day after the 1983 and revised 1982 figures come out. As a direct result of the scientific research tax credit system, it was possible before March 1, 1984 to wipe out *all* of one's 1982 and 1983 income by investing in R&D. There will therefore be thousands more people who use this mechanism to pay not tax. (My wife and I both did, incidentally, so we will appear as people who made over $X but didn't pay any tax.) Again, so what? Our money is being put to good use in an industry which was crying for financing. Dave Sherman Toronto -- {allegra,cornell,decvax,ihnp4,linus,utzoo}!utcsrgv!dave