The bubble finally deflating. not bursting.............

[Slava]

Originally Posted by Tinordi

Laugh. Like clockwork: We've gone from communism to supply side economics. Essentially we're waving our hands at tropes in the hope that we don't have to make hard decisions.

I'm impressed that you have responded three times in one page. No real thoughts or ideas from you and its your usual drive-by style, but triple the quantity!

[Tinordi]

Originally Posted by Slava

I'm impressed that you have responded three times in one page. No real thoughts or ideas from you and its your usual drive-by style, but triple the quantity!

And again trying to discredit. Is it not more of a drive by to invoke communism and then to dust off the most discredited of economic doctrines against my basic point?

[Locke]

Originally Posted by Slava

I don't completely disagree, and to be clear I am in line for zero dollars from a personal perspective. But there are taxes on assets already (house, RRSPs and savings, etc.) and this seems fine. There are strategies to get around these things or fund them pre-emptively, and that is also fine.

I guess I'm getting more and more in line with the "dark side" that says if we can't fund everything then where should we begin cutting back? There are many, many places where the government is involved and just shouldn't be. So if you can't meet your obligations to your constituents (healthcare, education and basic services like that) then maybe start by eliminating areas like corporate welfare, advertising, and pet projects?

I also find it disheartening that anytime there is a problem we want to solve the only solution that gains traction seems to be taxes. Too much junk food, too much energy use, wrong lightbulbs, people texting and driving, and the list goes on. And the only way we can address these issues is by giving the government more money? It's bizarre that with so many smart people we can't seem to find any other way.

I look to the campaign by Alberta Health to increase the number of organ donors, and they decided an awareness campaign was the best way. The answer is so simple though; make it the default selection that your organs are going to be donated. If you have an objection and don't want to, then you complete the card. Quick, easy and basically free of cost. Instead its advertising and spending money to get much lesser results.

tldr; we pay enough tax and the government should look for places to cut if they can't fund things.

Originally Posted by Slava

At what point is it enough though? The Alberta government already takes in more per capita than either Saskatchewan or BC from my brief look into things. So at what point is it just easier to raise taxes than to find alternative solutions and make tough decisions?

Maybe I'm the only one irritated, and maybe I'm in the extreme minority who feel that way (I doubt it), but that's fine. Just because the majority is with you or against you doesn't make you right.

Oh I agree, I agree wholeheartedly, but its just a conversation that Canadians have no interest in having.

Look at the Governments being elected all over the Country, all on promises to give Canadians more with no plans on how to pay for it.

That seems to be what people want, but they want it without consequences and they dont want to pay for it.

The fact of the matter is that at the moment we're coming to a tipping point in terms of how much we can reasonably expect people to pay in taxes for what we have now, the highest Marginal Tax Rate in Alberta is 47%.

I'd wager that we are at a point where there is no longer much room left to tinker with Personal Tax rates, and reducing spending and services isnt even a conversation that is on the table which means that they have to go looking elsewhere for money and to that end an Estate Tax fits the bill.

It disproportionately taxes the wealthy which is what everyone is clamouring for and it taxes 'Capital' rather than 'Income' which is also a much easier sell to the vast majority of people.

[Mr.Coffee]

Originally Posted by Tinordi

And again trying to discredit. Is it not more of a drive by to invoke communism and then to dust off the most discredited of economic doctrines against my basic point?

Lol what basic point? I've asked a few times now. You actually haven't made one yet. And no, going by what you wrote I honestly assumed you meant that it didn't matter how much or how many times people are taxed.

The challenge you have on this message board is that you actually have to explain things.

[V]

So does this mean you have to institute a gift tax too? What's stopping me from transferring all of my wealth to my children before I kick it? What do the States do to avoid this? Do they have a gift tax?

Also, what part of any of Tinordi's posts are ever worth responding to? My goodness, just let the drive-byes happen and pretend they don't exist. Sheesh.

[opendoor]

Originally Posted by V

So does this mean you have to institute a gift tax too? What's stopping me from transferring all of my wealth to my children before I kick it? What do the States do to avoid this? Do they have a gift tax?

In the US, any gift amounts are counted against the estate tax exemption. So if you gift $100K, then that's $100K less of your estate that is exempted from the tax. Though it should be noted that the estate tax exemption is currently $5.5M for individuals and only about 1 in 500 estates pay any taxes as a result.

[puckedoff]

Originally Posted by Locke

...


There are vast sums of wealth in untouchable places, there needs to be a mechanism to get that wealth back into the general pool.

.

Are you referring to that guy who smuggled gold out of the mint?

[Jason14h]

Originally Posted by opendoor

In the US, any gift amounts are counted against the estate tax exemption. So if you gift $100K, then that's $100K less of your estate that is exempted from the tax. Though it should be noted that the estate tax exemption is currently $5.5M for individuals and only about 1 in 500 estates pay any taxes as a result.

Didn't know it was so high . Well I'm not get 5.5$ million so tax away!

Isn't that how it works with these arguments 😉

[Enoch Root]

lol at Tinordi with the usual 'anyone who criticizes more tax is just selfish' garbage.

The issue with estate tax is that it lowers the value of saving. Saving should be encouraged at all times, it creates wealth and reduces pressure on the social safety net.

If you tax inheritance, all you do is change the rules for those with savings. One solution is putting more of your savings into insurance products (you avoid taxes by having the insurance proceeds go directly to the beneficiaries). So in that regard, all the tax does is make estate planning more complicated, and line the pockets of insurance companies. It's not like people with money aren't going to plan.

There is nothing more annoying than the constant self-righteous whining of people like Tinordi that try to play the 'if you have money and don't share it with the rest of us, you're a bad person' crap.

Things are substantially more complicated than that. Savings is good. If you pass on wealth to your children - good for you. The ability to build wealth for your family is precisely the motivator that drives a free economy.

Oh and it should be noted that when you die (or more precisely, once both spouses die), the estate IS taxed. Death (excluding the spousal rollover) is ALREADY a taxable event.

Inheritance tax on top of that is needless, counter-productive, and yes Tinordi, double dipping.

[Locke]

Originally Posted by Enoch Root

lol at Tinordi with the usual 'anyone who criticizes more tax is just selfish' garbage.

The issue with estate tax is that it lowers the value of saving. Saving should be encouraged at all times, it creates wealth and reduces pressure on the social safety net.

If you tax inheritance, all you do is change the rules for those with savings. One solution is putting more of your savings into insurance products (you avoid taxes by having the insurance proceeds go directly to the beneficiaries). So in that regard, all the tax does is make estate planning more complicated, and line the pockets of insurance companies. It's not like people with money aren't going to plan.

There is nothing more annoying than the constant self-righteous whining of people like Tinordi that try to play the 'if you have money and don't share it with the rest of us, you're a bad person' crap.

Things are substantially more complicated than that. Savings is good. If you pass on wealth to your children - good for you. The ability to build wealth for your family is precisely the motivator that drives a free economy.

Oh and it should be noted that when you die (or more precisely, once both spouses die), the estate IS taxed. Death (excluding the spousal rollover) is ALREADY a taxable event.

Inheritance tax on top of that is needless, counter-productive, and yes Tinordi, double dipping.

You're right, the issue with an Estate Tax is exactly that it would lower the value of saving but I'd contend that you are wrong in saying that saving should be encouraged 'at all times.'

I'll admit up front that I'm approaching this topic from a relatively academic point of view, we cant all save, we have to spend otherwise the World as we know it stops spinning. We cant all just not spend anything ever.

As for reducing pressure on the social safety net, I think thats arguable. It will allow some people to not rely on said same 'Social Safety Net' but that same net has some serious flaws.

You could be a millionaire, own your house, cars paid off, taking the minimum out of your RRSPs via RRIF, collecting CPP and hell, maybe even having an annual draw low enough that you dont even have to pay a clawback on your OAS.

Is that beneficial? Sure, to you and yours, but it means that there is significant Capital that is not circulating through the General Pool.

And thats sort of the crux of the issue, isnt it? That person doesnt 'need' the CPP or OAS, but its there and they have the option to take it so they will, because its the smart move.

In some cases, to make everything keep working, sometimes its required that the determination of the 'smart move' be altered.

I agree with you, people with money are always going to plan, but the parameters within which they generate their plans are subject to Government intervention. The Government sets the rules of the game and everyone else has to play within those rules.

Now, again, I want to be clear, I dont support an Inheritance or Estate Tax, but I can definitely see the potential appeal of one. How that goes in terms of implementation, I cant say, but there are substantial savings within small groups (families) that used tax-deferral strategies and that will potentially remain locked into those groups in perpetuity.

You can see the issue.

[Slava]

^ OK, but to play devil's advocate, there is a good chance that money is invested in something and not just "cash". So whether it's a GIC and being lent out again, or in shares of a company, there is a benefit to other people. Sure if a guy has $500k under his mattress it's dead money, buys that's an extreme minority one would hope.

[Enoch Root]

How did you come to the conclusion that I was saying that by saving, people might stop spending altogether?

The idea that, with savings, capital is not 'circulating through the general pool' is misleading at best. Savings results in investment in capital enterprise. It isn't dormant, it's fueling growth, and creating jobs, it's stimulating the economy and thus creating more wealth.

If you want money to stop creating wealth, slap more taxes on it.

[Clarkey]

Originally Posted by Tinordi

Because tax is used as a mechanism to achieve policy objectives. Such as ensuring there isn't a permanent under class in your society.

Show me a society that DOESN'T have an underclass?

It's still very much the case in Western Societies that anyone with half a brain and some ambition can improve their lot without stealing other people's stuff or free riding on the everybody gets a medal mentality.

The next generation's will look back on Millennial's as the entitled generation who had the golden goose handed to them. The generation after will do the same...

[CliffFletcher]

Originally Posted by Jason14h

So is taking money from people positioned to create new jobs - the people who had successful parents, better education, etc, and giving to the government, really going to solve any of these issue?

It's a better way to pay for our relentlessly rising health care costs than the alternatives of taxing income and taxing consumption.

Originally Posted by Jason14h

You bring in the health care system and pension and that the inheritance tax should be used for these. So how does this help employ the 40% of people in your example who need jobs? Unless you believe the government actually 'creates' jobs....

How to deal with an economy where most work is automated is a massive challenge facing every country on earth in the next 50 years. We don't know how we're going to address that challenge, but in the meantime we need to manage the transition to whatever comes next without our whole social system breaking down. That means we need to find ways to pay for services that have conventionally been paid for with income and consumption taxes.

Originally Posted by Jason14h

Estrada's example above is becoming less common because people are not able to just start a business and earn. And even if they do, it is so difficult to stay afloat with the government pinching them for every penny to support the social programs and their own 'job creation'

One of the reasons it's harder to grow a company is because the era of economic growth is coming to an end. 0 to 3 per cent growth a year is the new normal. The growth in the post-war decades will likely never come back. Our governments haven't come to terms with it yet, but we have to at some point.

[Enoch Root]

Originally Posted by CliffFletcher

One of the reasons it's harder to grow a company is because the era of economic growth is coming to an end. 0 to 3 per cent growth a year is the new normal. The growth in the post-war decades will likely never come back. Our governments haven't come to terms with it yet, but we have to at some point.

It's human nature to assume the current trend will continue indefinitely, but the reality is that that is almost universally not the case.

Economic growth has continued unabated since the beginnings of free economic activity hundreds of years ago. Productivity gains have only enhanced its pace.

The slowing of activity that we have seen recently is a function of global debt: it's a current problem, it isn't some permanent change in the human condition.

Even if one were to argue (incorrectly) that growth has permanently slowed in first world nations, the vast majority of the global population is not first world.

The days of economic growth are not over. It is the nature of humans to see the challenges, but not be able to see the opportunities as easily. It is also part of the human condition to strive to better oneself, and provide for the betterment of one's family.

[CliffFletcher]

Originally Posted by Locke

See, I look at this from both sides, yes it would be double-dipping, no argument there, but at the same time the group of people who are dying right now (Boomers) perpetrated one of the most egregious misappropriations of wealth and resources in centuries and there is no mechanism in place to rectify that.

By the time they shuffle off this mortal coil, the average Canadian Boomer will have received far, far more in government services than they ever paid in taxes. Which would be manageable if

A) We were still seeing the economic growth rates of the 50s to 90s, and
B) We had a young tax base like the one the Boomers enjoyed in order to soak up the relentlessly rising costs of health care and pension in an ageing population.

But those conditions are gone. So the governments who have always danced to the tune of the Boomer electorate keep kicking the demographic fiscal crisis further down the road.

Originally Posted by Locke

Its a very common feeling, "I'll struggle harder so my kids wont have to!"

Your kids should have to.

It has always struck me how many of those who most ardently bang on about the value of hard work and self-reliance don't seem to want their own children to enjoy those character-building experiences.

Originally Posted by Locke

Look at the Governments being elected all over the Country, all on promises to give Canadians more with no plans on how to pay for it.

That seems to be what people want, but they want it without consequences and they dont want to pay for it.

Our elected leaders have no plan of how to keep government functioning in an economy with 0-3 per cent growth for the forseeable future and relentlessly shrinking workforce. Their 'plan' is to assume we'll see repeat the patterns of the post-war era and more cycles of growth. It's like the Alberta government having no plan to balance the budget beyond crossing their fingers and hoping we have another oil boom. And voters are even more short-sighted. There will be a reckoning.

[CliffFletcher]

Originally Posted by Clarkey

Show me a society that DOESN'T have an underclass?

It's still very much the case in Western Societies that anyone with half a brain and some ambition can improve their lot without stealing other people's stuff or free riding on the everybody gets a medal mentality.

The next generation's will look back on Millennial's as the entitled generation who had the golden goose handed to them. The generation after will do the same...

It's a matter of degree. There is less economic mobility in Canada today than there was 30 years ago (though thing's aren't nearly as bad here as they are in the U.S., where people rarely rise above or fall below the income quartile they're born into). And yes, most societies have their 20 per cent who are insecure or poor. But we're moving towards a society that is 20 per cent affluent and 80 per cent insecure or poor.

The post-war boom of the 50s to the 80s was remarkable in both the growth of the economy and the breadth of how the wealth it generated was spread across society. It came about because of a confluence of several geo-political and technological changes, and was super-charged by the favourable demographics of North Americans at the time - lots of young, working-age people and few older citizens.

Those conditions are over, and likely never coming back. We simply aren't seeing the same levels of growth, what growth we do see is largely fuelled by debt, and the wealth generated by that growth is ending up in the hands of a smaller proportion of citizens.

And where demographics were once our friend, they're now our enemy. I've posted this stat here before, but back in the early 60s the were 9 working teachers for each retired teacher. In the 90s, that number had dropped to 3 working teachers for every retired one. Today, we're at 1.5 to 1, and soon there will be as many retired teachers as working teachers.

Those kind of economic and demographic changes pose enormous challenges to our economy, and to the delivery of public services. But our tax system is still based on models and assumptions put in place back in the glory days of the post-war boom. And Canadians, especially Boomers, are in dangerous denial about the looming crisis. There will be a reckoning.

[CliffFletcher]

Originally Posted by Enoch Root

Economic growth has continued unabated since the beginnings of free economic activity hundreds of years ago. Productivity gains have only enhanced its pace.

The slowing of activity that we have seen recently is a function of global debt: it's a current problem, it isn't some permanent change in the human condition.

Even if one were to argue (incorrectly) that growth has permanently slowed in first world nations, the vast majority of the global population is not first world.

Demographics play a huge part in economics. Japan, a country with low birth rates and extremely low immigration, has been in an economic malaise for over 20 years now. China, now rapidly aging, may have missed the boat on broad economic prosperity. And most of the countries that still have high birth rates are politically dysfunctional and are unpromising candidates for the role of engines of the global economy.

Yes, there is still growth and increased productivity. But the rewards are going to a smaller and smaller group of people. Thomas Piketty argues persuasively in Capital in the Twenty-First Century that the widespread prosperity the West enjoyed in the post-war boom was an anomaly. That it was only as a consequence of the enormous wealth destroyed in the two great wars that labour temporarily secured leverage in the enduring struggle against capital. And now we're returning to the historical norm, where capital takes home the lion's share of wealth generated by productivity, and labour has to settle for the scraps. Combine that with the rapidly accelerating automation of the economy, and it's hard to see how we'll see a return to the halcyon days of the post-war boom.

[AltaGuy]

+1 for Piketty - while, like most economists with a large scope, some of the prescriptive stuff is iffy (even Marx), as a description of inequality, it's pretty hard to argue with his historical statistics.

Maybe Trump can be a "shock" to spark a change, although even Trump will likely be unable to replicate the effects of two world wars and the great depression.

The moral of the story with Piketty is that labour loses to capital in the long-run. Owning: land, business, just basically "stuff" is how you get rich and stay rich.

[Bend it like Bourgeois]

Originally Posted by CliffFletcher

Those kind of economic and demographic changes pose enormous challenges to our economy, and to the delivery of public services. But our tax system is still based on models and assumptions put in place back in the glory days of the post-war boom. And Canadians, especially Boomers, are in dangerous denial about the looming crisis. There will be a reckoning.

That's a pretty dramatic view of it I think.

Of course the world is changing. Always does. But it's global not just here so (further) taxing the #### out of Canadians is not going to stop or help that trend. It'll only make it worse, as we'll all have less means to deal with actual problems when they become real.

The tax system has evolved plenty in the last 50 years. The government doesn't let a nickel it can collect sit idle for long.

If you're worried about sustaining social services the first place we ought to look is how they get delivered. Unlike the tax system, service delivery in health and education has hardly changed at all and people panic at the thought of it. Imagine what a car would cost if the 50s unions still ran the show, there'd been zero automation, no supply chain management, etc. That's the sustainability issue iMO.