The flat tax

[Bunk]

Two things that relate to the question of whether to end the flat tax in Alberta:

First is the simple reality of our tax revenues. We rely very heavily on royalties to pay for the basic operations of our province. Downward fluctuationsin oil/gas prices, as we see now, leave a budget deficit. Likely, we will need more taxation revenue, if oil prices stay below government projections.


Failing oil prices put pressure on Alberta to rethink income flat tax

BY MARIAM IBRAHIM, EDMONTON JOURNAL NOVEMBER 19, 2014

http://www.edmontonjournal.com/news/...608/story.html

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Second is the startling revelation that income inequality in Alberta is more pronounced than even the United States. The top 10% of earners here have over 50% of personal wealth. We're the only province without a progressive tax rate.

Alberta Income Inequality Is Worse Than In The U.S.

The Huffington Post Alberta | By Michelle Butterfield

http://www.huffingtonpost.ca/2014/11...n_6186066.html

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How should Alberta respond?

We can likely make some reasonable cuts and find efficiencies, but we all know that will come nowhere close to closing potentially a multi-billion dollar gap. On the spending side, this could only be closed with massive and deep cuts.

So, that leaves the revenue side. That we continue to fund the operating budget with oil and gas royalties astounds me as very irresponsible and short-sited. One obvious choice seems to be changing our tax structure and end the flat tax - a higher rate for wealthy, and perhaps marginally lower rates for lower income households. This would also help level out our increasing income inequality.

Discuss.

[Canehdianman]

I'd love to see us save all royalty revenue (a la Norway).

I'd be fine paying more taxes to see it happen, but I'd prefer cuts to spending.

[Canehdianman]

I also think that might screw us when it comes to equalization payments.

If we get agreement that saved royalty funds aren't included, then we would be stupid to not do it.

[troutman]

Can progressive tax work when there are so many deductions, exemptions and loop-holes?

[Locke]

I think the amount of business that you'd likely lose would negate any perceived benefits of a tiered marginal tax rate system.

Alberta is the only province with a flat tax, and a lot of businesses came here not solely because of that, but it plays it's part.

[Resolute 14]

The income inequality argument is worthless without knowing what each class earns and what their cost of living is. If most everybody is doing well, then who gives a damn about the 99%er "wah, the rich are rich" whining? If the middle and lower classes are consistently getting squeezed, that represents a real issue.

[DoubleK]

Originally Posted by Resolute 14

If the middle and lower classes are consistently getting squeezed, that represents a real issue.

IMO, this is the real issue.

[nfotiu]

That article about Alberta hockey players paying less money was interesting. I know when I first moved to the US as a single guy making pretty decent consultant money and renting an apartment, I was paying far less tax in Alberta vs living in North Carolina and Virginia.

Now, as a father with a couple dependents and a mortgage I am paying far less tax in Virginia. I honestly would have never guessed that Canada/Alberta taxes would be far less progressive than US/Virginia. I am not sure where I politically stand on this issue, but my instinct is to think that Alberta is really not doing it right when taxes for millionaire hockey player's are lower, but taxes for middle class family guys are significantly higher.

[bc-chris]

wow - i read the thread title and thought there was a new tax on breast implants




i think i spend too much time on cp

[Flash Walken]

Originally Posted by troutman

Can progressive tax work when there are so many deductions, exemptions and loop-holes?

I think this deserves more serious debate.

It's is a parallel discussion with increasing and collecting royalty rates.

What good is taxes as a percentage when that percentage can be substantially chiseled away?

[Johnny199r]

Admittedly, my wife and I make 100K plus each and have no kids. I've lived in two other Provinces and don't see any difference in the level of services in this Province vs other ones. But I'm also not a single mother on welfare.

My personal opinion is the government would just waste any extra money they got from people without giving much benefit to those who pay it.

[edslunch]

the perpetual fire/hire/fire/hire cycle in education is a clear indication that the province needs a more stable revenue base. This is a very wealthy province from a personal income perspective. A progressive tax rate is the sensible thing to implement.

[Slava]

The real Alberta Advantage would be a straight consumption tax and no income tax at all. Its feasible, efficient and far more effective. The problem is that no one will trust politicians and we can't have an adult conversation about it.

[Zarley]

I prefer a flat income tax to progressive bracket, I ideally I'd like to see income tax replaced in its entirety by a consumption tax.

Unfortunately your average dullard thinks sales taxes=bad news and doesn't understand the superiority of a consumption based tax system

[GP_Matt]

If we are going to alter the tax system in Alberta I would rather they consider giving cities a better way to raise revenue. The current system sees the province raising money and then handing it out to the cities with a bunch of strings. Let the people spending the money raise it and justify it.

[BigNumbers]

You can never go to a consumption based tax rate - you folks don't understand that this is one of the largest economic levers we have. Going to consumption-based taxation creates a huge tax advantage for savers, which is bad for the economy.

It'll never happen, terrible full cycle economics idea.

I would prefer the feds moved to a flat tax rate as well.

[Tron_fdc]

When the goons running this province stop burning my tax money on "entitled waste" (™), I'll support tax reform.

Until then get f'd

[Locke]

Originally Posted by Zarley

I prefer a flat income tax to progressive bracket, I ideally I'd like to see income tax replaced in its entirety by a consumption tax.

Unfortunately your average dullard thinks sales taxes=bad news and doesn't understand the superiority of a consumption based tax system

Its not quite as simple and straightforward as that either.

[Bill Bumface]

Originally Posted by BigNumbers

You can never go to a consumption based tax rate - you folks don't understand that this is one of the largest economic levers we have. Going to consumption-based taxation creates a huge tax advantage for savers, which is bad for the economy.

It'll never happen, terrible full cycle economics idea.

I would prefer the feds moved to a flat tax rate as well.

Does it though?

If you bury your tax in the prices of goods and services and people's perceived disposable income is now much higher to account for it, you honestly think people will just start spending less?

There are tax incentives for saving now. RRSP, TFSA, RESP. How many people maximize those vehicles?

I'd be really curious what percentage of the population maxes out their RRSP every year.

[Slava]

Originally Posted by BigNumbers

You can never go to a consumption based tax rate - you folks don't understand that this is one of the largest economic levers we have. Going to consumption-based taxation creates a huge tax advantage for savers, which is bad for the economy.

It'll never happen, terrible full cycle economics idea.

I would prefer the feds moved to a flat tax rate as well.

Its just not true. While there are obvious incentives for savers under that system, this has been implemented in other jurisdictions successfully. I think that there are a number of states that have no personal income taxes. Some have corporate taxes and some use purely consumption taxes to pay the bills.

There are ways to structure things, and frankly its better than individuals saving receipts for $58.47 of spending so that they can file a return and save like $8. That is just plain stupid, but we all have to play along with this song and dance anyway.