Quote:
Originally Posted by Mathgod
From the 100 times in the Canadian Politics thread where I mentioned we need to get the rich to pay their fair share in taxes.
Yes we need to tax all citizens not just residents, but that's not my main gripe. The biggest problem with the system right now IMO is that those who own huge stock portfolios can secure massive loans at virtually zero interest, live lavishly off the loan money, and basically circumvent the tax law by not bringing in any of what's considered "income" for tax purposes. When the loans are due they can just get more loans to cover off the previous ones, and repeat the cycle indefinitely because the value of their assets increase way faster than their debts do.
And yes it's a big problem that in Canada right now there is no estate tax. In the US there is one, but the rich find sneaky ways around that too, so I'd hope those loopholes get closed if/when Canada implements an estate tax.
The conversation around capital gains tax is a complex one, because you don't want to gut punch small time investors and 401ks, but at the same time you do want to raise more revenue from the ultra wealthy.
That said, keeping tax rates low for the wealthy purely out of fear that they'll leave and go elsewhere, is a fool's errand. When all the countries of the world compete for investor dollars, it becomes a giant reverse-auction and a race to the bottom. In this game, everyone loses except the wealthy. The only way to avoid losing this rigged game is to not play it. I always chuckle when people complain about inflation because "there's too much money circulating in our economy" and then turn around and suggest that we should keep tax rates low to woo more investment dollars to Canada... to add more money to our economy.  The bottom line is this: Canada is a beautiful country with great people and a stable economy; people want to live here. Will raising taxes on the rich cause some of the ultra-wealthy to leave? Perhaps. But that outcome is preferable to having a joke tax system where we leave all kinds of loopholes in it because of the misguided notion that wealthy investors are "job creators".
Look at this, the pandemic has caused billionaire wealth to soar while everyone else has been suffering:
https://ips-dc.org/global-billionair...-wealth-surge/
How can anyone not be upset by that? Ultimately, I think there needs to be some kind of shift in the way we tax; there needs to be more emphasis on taxing already accumulated wealth, and less emphasis on taxing income. |
I agree especially with the bolded bit - it sure seems like a ridiculous way to circumvent income taxes while leveraging massive wealth. I do wonder if has become more attractive within the past decade because of the extended period of low interest rates that we've seen - if people had to pay 10%+ interest on these loans, for example, it may not be sustainable for them to keep rolling over their debt into new loans without eventually having to sell some of their assets (at that point paying taxes on them).
I do like the idea of a wealth tax but also feel like it could be quite tricky to implement in a fair way - forcing someone to sell their ownership in a company, for example, to pay wealth taxes could be problematic if it ends up causing someone to lose control of a company that they own (though perhaps that's an unrealistic situation, since there should be many ways for a company owner to leverage the value of their company to get money to pay taxes without having to give up control, whether that be through dividends, collateralized loans, etc.). Plus, property taxes exist so precedence obviously exists on taxing people just for owning something.
I would hope that a plus side of wealth taxes is that it might put some downward pressure on ridiculous stock valuations. Perhaps investors would be less interested in pumping so much money into stocks like TSLA or meme stocks if they knew they would have to pay taxes on companies with inflated value; stock prices might better reflect companies' inherent value.