How high is 'too high' when we're talking taxes?

[Gyaos]

I also have an accounting degree, tax manager,...a Certified Financial Planner, and a Registered Investment Adviser.

Are you lap-topping it here in GTA, or lap-dancing?

Gyaos.

 

[wet_suit_one]

For me, it is theft. For the government, it is taxation.

For me, it is counterfeiting. For the government, it is printing fiat currency.

For me it is fraud (accounting for something as held in safe keeping and given out on loan simulatneously). For the government, it is fractional reserve banking.

You know what markvee, you may well be correct in your views on all of the above points.

However, I suggest to you that you travel to those countries where no taxes are paid whatsoever.

Good examples are (and I am guessing here to a certain extent, but I'm reasonably sure there are no taxes as there is no government): Somalia and Afghanistan.

Other fine contenders probably include Iraq, the Congo and probably a few other places.

I am certain that you can live in those countries (if you can call them "countries" as the term "country" is commonly understood) and not pay a cent of taxes for your entire life (well, assuming that Iraq never develops a functioning government now that the U.S. has destroyed it). Somalia hasn't had a government for more than 20 years. Imagine that! 20 years of tax freedom.

I'm reasonably sure that you can get into these countries with ease too, as there are no border guards (again no government), no immigration officials ('cause there's no government) and nothing at all that looks like a society in which you might actually want to live in, because, guess what, there's no government.

Freedom from all taxes is great. Just ask any Afghani, Somali, Iraqi (since about 2003), or Congolese. They'll tell you how wonderful it is not to pay any taxes.

And if I'm the fucking retard for saying this, well, tell it to me with a straight face (that I'm a retard) and pack your bags and move to any one of these fine outposts of human civillization. Be sure to post a photo of your plane ticket to the Congo too on your way out of whatever over taxed place you happen to live just so there's some evidence that you're not full of shit.

On with more intelligent discussion....

 

[fuji]

I like the idea of optimal solutions. Unfortunately, it is unclear that any political system can ever be devised to produce optimal solutions.

Sure, proving what is optimal is hard, if you want to do it to a level of rigour that would stand as scientific proof. There is also likely to be problems in measurement, a sort of economic heisenberg uncertainty principle, that may make it impossible to know whether you are on the "efficient frontier" or not, to borrow a phrase from one specific theory.

However I think it is sensible to work towards agreement that we should be seeking optimal, rather than ideological, solutions. The policy debates will then still be fuzzy debates based on intuition and conjecture, just as now, but intuition and conjecture about what is likely to be a more efficient.

I am trying to frame the debate and set the terms: We should be assessing policies based on whether we have 'good reasons' to believe that they lead to a greater economic return or a less variable economic return, not whether they fit in with some or other ideology.

 

[fuji]

You think that the American safety net has precipitated the entreperurial system in the US?

Yes. I think it has contributed greatly.

I really think that is a stretch and if carried to its logical conclusion would suggest that the Soviet Union had a much greater basis for creative ideas than the US. As would Sweden.

I did point out that the cost of laziness in society outweighs the entrepreneurial benefits of the safety net at some point, and I would agree that in theory the Soviet Union was well beyond that point. Sweden is a better case to debate.

I say "in theory" because I also think it's questionable whether the Soviet safety net ever actually worked--was there ever a time when Russians were sure of where their next meal was coming from? My understanding is that their system never delivered any such level of personal security.

Sweden's, however, does deliver that level of security so it is probably a better case to discuss.

My personal bias is that Canada's safety net is probably cose to about right. It is really not very fun to be on welfare in Canada, but you won't starve. If you lose your life's savings in a risky business venture you won't enjoy a very comfortable retirement on CPP/OAS, but neither will you be homeless.

Thus I think in Canada there are strong incentives to work and make a good living for yourself, but enough to fall back on that it is worthwhile taking some considerable business risks to try and better yourself.

 

[fuji]

All your interesting theories aside, the bond market is the absolute best indicator of future economic activity and pricing pressure & its saying inflation is on its way & in a big way

You are factually incorrect.

http://www.ustreas.gov/offices/domestic-finance/debt-management/interest-rate/yield.shtml

The current yield on a 30 year treasury is about 4.3%, that does not say "raging inflation" to me.

Assuming that bond investors want to earn at least 2% or so in real return on their investment the 30 year treasuries are pricing in a rate of inflation less than 2.5% over the next 30 years. Even if bond investors simply want to retain their capital and earn no return that puts an upper limit of 4.3% on the inflation rate, and certainly bond investors want to earn some sort of real return?

The five year yield is around 2.5% which means over the next five years the bond markets are predicting a rate of inflation rate of between 0.5% and 2%.

In fact if you look at the one year yield--just a half a perecent--if you assume bond holders want a 2% return then that predicts DEFLATION of 1.5% and not any inflation at all.

So, you are wrong.

 

[chiller_boy]

c theory.

However I think it is sensible to work towards agreement that we should be seeking optimal, rather than ideological, solutions. The policy debates will then still be fuzzy debates based on intuition and conjecture, just as now, but intuition and conjecture about what is likely to be a more efficient.

I am trying to frame the debate and set the terms: We should be assessing policies based on whether we have 'good reasons' to believe that they lead to a greater economic return or a less variable economic return, not whether they fit in with some or other ideology.

Isn't there a chance that 'optimal' solutions will drastically change society in ways that may not be all that appealing. For example, why educate all the masses since most of them will not use that education? Why let people vote when they haven't the faintest idea of the issues or the implications of their vote?. While I appreciate the tone and direction of your post, you may be just substituting one ideology for another. Worship at the temple of Mammon is worship just as is Christianity.
The greatest good for the greatest number is not just economics.

 

[fuji]

Isn't there a chance that 'optimal' solutions will drastically change society in ways that may not be all that appealing.

I am not opposed to drastic change, if it leads to a better outcome. There is certainly something to be said for being sure of the better outcome before implementing a drastic change--you don't want to implement a drastic change only to find that you didn't get any of the benefits.

If you could be sure, though, that benefits would flow from a drastic change, why wouldn't you implement it?

For example, why educate all the masses since most of them will not use that education?

Good question. I happen to think our educational system is far from optimal because it has been polluted by a bunch of wrong-headed, ideological ideas about who should receive what kind of education.

We have crappy community colleges because they are looked down on, and we have people with University degrees doing a piss poor job in their occupation, because they haven't been to a good college to learn how to do it properly.

I think you've hit on an issue where ideology has resulted in a non-optimal outcome!

Far fewer people need University degrees than have them, and far more need GOOD college degrees.

Why let people vote when they haven't the faintest idea of the issues or the implications of their vote?

Well one answer is we tried that, and it didn't work out very well. The system in which only "landed" people had votes did not in fact produce very good economic outcomes. It led to a society in which an elite few manipulated the system to their own advantage even when that led to inferior outcomes overall.

I bet there are political reforms we could enact that would bias us towards better outcomes, but I do not think this is one of them.

The greatest good for the greatest number is not just economics.

I'm not necessarily arguing for the greatest good for the greatest number. That is slightly different. I am arguing for systems which optimize net production. How you redistribute that production is a different question--it need not be distributed in the name of the greatest good for the greatest number.

 

[Mrbig1949]

It is hard to argue with Sweden. Few loafers, strong work ethic fantastic social programs one of the best education programs. Social democracy built from the ground up with co-ops and unions. No big outrage in the country. They seem to understand we are our brother's keeper.

 

[JohnLarue]

It is hard to argue with Sweden. Few loafers, strong work ethic fantastic social programs one of the best education programs. Social democracy built from the ground up with co-ops and unions. No big outrage in the country. They seem to understand we are our brother's keeper.

A buddy of mine moved to Sweden.
Married a Swedish hottie. Can't blame him for that
He says there are many good things about Sweden, however he also says

The taxes are are sky high (obscene is the word he used)
A beer in a bar will cost you close to $12-$15 Can. Everyone drinks at home
Housing, transportation and food prices are extremely high.
The red tape & bureaucracy is also extreme
They treat foreigners like shit, both socially & in terms of jobs
It was extremely difficult & took him many years to obtain work in his field, despite extensive experience in his field & a need for his skills. (Union rules)

On the upside his kids get to grow up in a good environment & there is a very strong social safety net

There is always two sides to every story

 

[K Douglas]

Taxes are too high when they are not optimal i.e. at the point where a single point raise in the tax rate reduces overall tax revenues. In my mind there is no question that most countries are far above the optimal level. I've read many theories where that optimal income tax level is estimated between 15 and 30%. We all know that in economic theory higher taxes reduce productivity, investment, employment and leads to a shift of capital to lower tax jurisdictions. This is not a political argument this is a fact. But I'm sure the lefties on here will spin this somehow.

 

[K Douglas]

It is hard to argue with Sweden. Few loafers, strong work ethic fantastic social programs one of the best education programs. Social democracy built from the ground up with co-ops and unions. No big outrage in the country. They seem to understand we are our brother's keeper.

The disenchantement has already set in with alot of native Swedes. Socialism as they know it will crumble within the next 10 years......it cannot sustain itself in its present form.

 

[K Douglas]

All the more reason for you to get behind my 3% flat tax. It is designed to collect more from those making more and less from those making less.

I advocate a flat tax as well but more in the range of about 15-20%. I also advocate a high consumption tax rate 20-25% and a luxury tax on certain goods like premium vehicles over $50,000, residences over $1 million, jewellry, fur coats, boats etc..

 

[fuji]

one way to implement a flat tax that is progressive is to send everyone in Canada a cheque for a certain sum, thought to be the minimum you can live on, say $1000/month, or $12k.

Then tax every dollar of corporate profit, income, dividends, interest, at a flat rate, of say 35%. This means essentially that you pay no tax if you earn under $34k/year (in fact receive a subsidy) and your effective tax rate starts out small at $34k and grows towards 35% as you earn more and more money.

However, there is always a straight incentive to work: If you earn $10 on your own, you get an extra $6.50 in your pocket. If you earn $100k on your own, you get an extra $65k in your pocket.

Also, abolish the minimum wage, welfare, EI, CPP, OAS, and all other such programmes: The $12k payout replaces all of those things, and no-one ever needs to apply for welfare, or OAS, and so there is never any shame. The cost of government is thus much lower as you need no-one to administer those programmes.

The numbers $12k and 35% should be adjusted so that the government winds up taking in the same money that it takes in today, less the cost of administering programmes. Thus this would not be inflationary, would not be printing money, and so on, just a shift in the way taxes transfer money.

As with any flat tax most people would not even have to file a tax return. If your income is entirely from your employer, your employer can simply remite 35% of payroll to the government, and none of the employees will have to file a separate return unless they have income elsewhere.

 

[onthebottom]

Taxes are too high when they are not optimal i.e. at the point where a single point raise in the tax rate reduces overall tax revenues. In my mind there is no question that most countries are far above the optimal level. I've read many theories where that optimal income tax level is estimated between 15 and 30%. We all know that in economic theory higher taxes reduce productivity, investment, employment and leads to a shift of capital to lower tax jurisdictions. This is not a political argument this is a fact. But I'm sure the lefties on here will spin this somehow.

I think that's only optimal if the goal is the maximize tax revenue... shouldn't the goal be to fund government for as little as possible leaving the money to the people who made it.....

OTB

 

[markvee]

You know what markvee, you may well be correct in your views on all of the above points.

However, I suggest to you that you travel to those countries where no taxes are paid whatsoever.

Good examples are (and I am guessing here to a certain extent, but I'm reasonably sure there are no taxes as there is no government): Somalia and Afghanistan.

Other fine contenders probably include Iraq, the Congo and probably a few other places.

I am certain that you can live in those countries (if you can call them "countries" as the term "country" is commonly understood) and not pay a cent of taxes for your entire life (well, assuming that Iraq never develops a functioning government now that the U.S. has destroyed it). Somalia hasn't had a government for more than 20 years. Imagine that! 20 years of tax freedom.

I'm reasonably sure that you can get into these countries with ease too, as there are no border guards (again no government), no immigration officials ('cause there's no government) and nothing at all that looks like a society in which you might actually want to live in, because, guess what, there's no government.

Freedom from all taxes is great. Just ask any Afghani, Somali, Iraqi (since about 2003), or Congolese. They'll tell you how wonderful it is not to pay any taxes.

And if I'm the fucking retard for saying this, well, tell it to me with a straight face (that I'm a retard) and pack your bags and move to any one of these fine outposts of human civillization. Be sure to post a photo of your plane ticket to the Congo too on your way out of whatever over taxed place you happen to live just so there's some evidence that you're not full of shit.

On with more intelligent discussion....

How is Somalia doing under greater anarchy than before under stronger central government?

From: http://en.wikipedia.org/wiki/Anarchy_in_Somalia

Although it states that no reliable statistics are available for the period in question, the United Nations claims that Somalia, already one of the poorest countries in the world, has become even poorer as a result of civil war.[5] However, the CIA Factbook maintains that gains were made during the early 2000s; "despite the seeming anarchy, Somalia's service sector has managed to survive and grow. Mogadishu's main market offers a variety of goods from food to the newest electronic gadgets. Hotels continue to operate, and militias provide security."[3]

When extreme poverty (percentage of individuals living on less than PPP$1 a day) was last measured by the World Bank in 1998, Somalia fared better than many other countries in Africa, over some of whom Somalia also had superior infrastructure.[16] The CIA World Factbook counsels that "Statistics on Somalia's GDP, growth, per capita income, and inflation should be viewed skeptically",[3] while estimating Somalia's GDP per capita at $600.

In the absence of a Somali state and its institutions, the private sector grew "impressively" according to the World Bank in 2003, particularly in the areas of trade, commerce, transport, remittance and infrastructure services and in the primary sectors, notably in livestock, agriculture and fisheries.[15] In 2007, the United Nations reported that the country's service industry is also thriving.[5] Economist Peter T. Leeson, in an event study of "the impact of anarchy on Somali development", found that "[t]he data suggest that while the state of this development remains low, on nearly all of 18 key indicators that allow pre- and post-stateless welfare comparisons, Somalis are better off under anarchy than they were under (a central) government." Powell et al. concur that in absolute terms, Somalia’s living standards have improved and compare favorably with many existing African states, but also report that living standards have often improved "relative to other African countries since the collapse of the Somali central government."[13]

We have been through some hard times…but the worst was when we had a government. Once there was no government, there was opportunity!
—Telecommunications tycoon Abdirizak Ido[20]

And the military occupations of Afghanistan and Iraq were funded by taxation in the occupying countries, but it comes as no surprise that governments that would steal labour through taxation would also steal life through war.

And so long as we're giving out advice on where to move, might I suggest North Korea for you?

 

[fuji]

shouldn't the goal be to fund government for as little as possible leaving the money to the people who made it.....

Nope. That goal would be a purely ideological goal, and in many cases inefficient and literally counter-productive.

The goal should be to maximize production, or in other words, to maximize wealth. Sometimes the most efficient solution will be a publically funded solution, and in other cases the most efficient solution will be a private market solution.

Private financing, public financing, these are not goals in and of themselves, these are means to ends.

 

[Mrbig1949]

Taxes and Fairness

Taxes are too high when they are not optimal i.e. at the point where a single point raise in the tax rate reduces overall tax revenues. In my mind there is no question that most countries are far above the optimal level. I've read many theories where that optimal income tax level is estimated between 15 and 30%. We all know that in economic theory higher taxes reduce productivity, investment, employment and leads to a shift of capital to lower tax jurisdictions. This is not a political argument this is a fact. But I'm sure the lefties on here will spin this somehow.

You seem to advocate a flat tax. It will never fly in democratic debate. Dennis Mills used to advocate it. Considered a flake, Flat taxers are like the Flat Earth Society. Nobody listens. Taxes are not only about efficiency they are about fairness. You guys can really only push sales taxes which are flat but of course very unpopular as a result. The take it easy on the rich crowd just ran the deficit through the roof and the economy into the ditch. A little out of fashion now.

 

[Mrbig1949]

1935

The disenchantement has already set in with alot of native Swedes. Socialism as they know it will crumble within the next 10 years......it cannot sustain itself in its present form.

They have been saying that about Swedish socialism since 1935, hmmm

 

[WoodPeckr]

I think that's only optimal if the goal is the maximize tax revenue... shouldn't the goal be to fund government for as little as possible leaving the money to the people who made it.....

OTB

The MIC would strongly disagree....

 

[wet_suit_one]

How is Somalia doing under greater anarchy than before under stronger central government?

From: http://en.wikipedia.org/wiki/Anarchy_in_Somalia



And the military occupations of Afghanistan and Iraq were funded by taxation in the occupying countries, but it comes as no surprise that governments that would steal labour through taxation would also steal life through war.

And so long as we're giving out advice on where to move, might I suggest North Korea for you?

And Somalia seems like a good alternative how exactly?

As for Afghanistan and Iraq, this is the real world buddy. Gotta be ready to defend yourself and your people from the law of the jungle of that is the international system. You don't have to like it, but them's the facts on the ground you must deal with.

Personally, while I don't think the tax levels in Canada are optimal (whatever that level is), I have no problem paying taxes here. Like most people on Earth (namely those people who will die trying to get here, unlike say, Somalia and Afghanistan) I'm happy to have the privilege of paying taxes here.

Tax me, I'm Canadian. I also have (on a relative basis) one of the best lives on Earth because of those taxes. I don't have a problem admitting it.

As for North Korea, I never said I was a fan of communism. I'm simply against the stupidity of arguing for no taxes whatsoever. The places where are there are no taxes whatsoever, aren't places that ANYONE from the developed world wants to live (including you I bet, c'mon be honest, I was. I LIKE living in Canada and paying taxes here. Would you be happy paying no taxes in the Congo? C'mon be honest and give us an answer. Stand up behind your bullshit and state for the record that you WANT to live in a taxless society and name the one you want to live in. There's enough to choose from. Heck, many of them have very nice climates.)