How the Rich Avoid Paying Taxes

[Mathgod]

Originally Posted by TorqueDog

Yes, you've said that you support an estate tax, but you've still given none of us a reason why we should. "Canada does not have an estate tax, and IMO badly needs one" -- why? I don't really care that you stand to lose and don't care, I do as do many of us, and thus I do care. You've explained that taxation happens for various transactions -- great, there are also plenty of instances where an exception exists. You've not explained why this particular exception should not be, only that you believe it so. I remain unconvinced.

As a left-leaning progressive who wasn't born into a family with significant wealth, an estate tax would impact what little I might get from my parents one day. The same argument against a flat income tax (10% of $50,000 is more impactful to that person than 10% of $5,000,000) could also apply to an estate tax. I do well for myself and my family, but someone who is less fortunate getting whatever their parents have left might be able to help themselves out quite a bit in this world, but somehow you think it's justified to impose upon them a tax that would disproportionately affect them versus someone who is getting a ton more.

Raising GST also impacts lower income people disproportionately. Nice.

I certainly 'give a damn' about others, but I think you're going about accomplishing your goals entirely the wrong way.

The point is the government has to raise revenues somehow. Inheritance is something that a person lucks into by being born into a family that has money. It is not earned directly via hard work. So it seems like the least controversial thing to tax. Kind of astonishing how controversial the idea of an estate tax seems to be.

Of course putting a threshold on it makes sense. The first (insert amount here) of a person's inheritance would only be taxed at a low rate, but the amount above that would be taxed at a much higher rate. That way, small inheritances don't get taxed much, but larger ones get taxed more heavily.

Perhaps raising the GST is superfluous if we're going to increase the carbon tax.

Originally Posted by puckedoff

I could be mis-reading this but are you arguing against due process? Would it be better if the CRA had ultimate power to seize assets with no recourse, I do not think so, that is third-world dictator-esque.

Specifically in cases that involve money in offshore accounts, shell companies, etc, it is not a good outcome when these cases get bogged down for years in the appeals process. Something has to change to make these cases more straightforward for the CRA to enforce its policies.

How is it that the funds to help others has to come from the rich, or other individuals? Is it more productive to fund government programs by taking money out of the economy, earning 5% than by the government raising funds at 1.5% with debt offerings?

The Government isn't really capital constricted, and I don't think they could necessarily solve the complex problems of helping everybody even if they had free reign to impose judgements on the risk and force liquidation of otherwise productive assets.

If you're suggesting getting rid of all taxes, and the government funding itself purely through printing money, the problem there is that it would create inflation.

[Jason14h]

Originally Posted by GGG

Unless you tax wealth (rather than earnings) or as some people put it double taxing.


A 10% annual tax on all wealth over 1 billion would eliminate billionaires.

Obviously this isn’t practical as the billionaires would just leave your jurisdiction and not hold wealth there.

I suppose a flat tax on your net worth would do the trick if higher then the rate you can accumulate wealth.

I thought we weren't actually being completely insane and only talking about taxes on yearly increases in net worth.

But if we literally say "1 billion is the highest net worth someone can ever have or we take it" then I guess you can cap the upper end and let the lower end catch up

No idea how this would work in reality though as most net worth is in companies and as a company appreciated the owner would effectively never endlessly loose their % stake of ownership.

Soooo... The reality is you can not use tax to close the wealth gap at all. You can only slow the rate at which it grows.

And does that really matter? Does Bezos being worth 100 billion or 120 billion have any effect on anyone other then paper net worth?

[Slava]

Originally Posted by Mathgod

The point is the government has to raise revenues somehow. Inheritance is something that a person lucks into by being born into a family that has money. It is not earned directly via hard work. So it seems like the least controversial thing to tax. Kind of astonishing how controversial the idea of an estate tax seems to be.

Of course putting a threshold on it makes sense. The first (insert amount here) of a person's inheritance would only be taxed at a low rate, but the amount above that would be taxed at a much higher rate. That way, small inheritances don't get taxed much, but larger ones get taxed more heavily.

Perhaps raising the GST is superfluous if we're going to increase the carbon tax.


Specifically in cases that involve money in offshore accounts, shell companies, etc, it is not a good outcome when these cases get bogged down for years in the appeals process. Something has to change to make these cases more straightforward for the CRA to enforce its policies.


If you're suggesting getting rid of all taxes, and the government funding itself purely through printing money, the problem there is that it would create inflation.

The reason that the estate tax is controversial is because (as you've already been told in this thread, but for some reason ignore), estates are taxed in Canada. There are ways to defer the tax, and things like that, but these assets are already subject to tax as it stands.

[Mathgod]

Originally Posted by Slava

The reason that the estate tax is controversial is because (as you've already been told in this thread, but for some reason ignore), estates are taxed in Canada. There are ways to defer the tax, and things like that, but these assets are already subject to tax as it stands.

As I've explained, the thing you're talking about (CGT) is not estate tax.

Originally Posted by Jason14h

And does that really matter? Does Bezos being worth 100 billion or 120 billion have any effect on anyone other then paper net worth?

This is probably the biggest misconception in this entire thread and probably in our entire society. The "rich being rich doesn't affect you" mindset. Reality is, the rich being rich as they are DOES take money out of everyone else's pocket, in the form of inflation. Their massive wealth cycles through the economy, meaning there's more money chasing around goods & services than their otherwise would be. Taxation is how you take some of that money out of the economy and fight inflation.

[Jason14h]

Originally Posted by Mathgod

As I've explained, the thing you're talking about (CGT) is not estate tax.

Stupid Slava, what do you know about finance, economics, and taxes

[Azure]

Originally Posted by PeteMoss

Part of the reason why having PST (and basically all US Sales tax) is a mess. HST just makes everything a zillion times simpler.

Plus the actual assessing of the HST is dead simple.

One of those things I've never understand why it isn't implemented.

Outside of the people who skirt paying the actual tax making such an uproar about it that provinces backed down.

I know in our business, we self assess ALL the time with PST, and it does become a nightmare.

There are even different PST rates charged for the same sale depending on where it is sold. Whacked.

[Slava]

Originally Posted by Mathgod

As I've explained, the thing you're talking about (CGT) is not estate tax.

Great, but it's not all capital gains. Things like RRSPs/LIRAs, etc. are all taxed as well. Second properties (or more) and the list goes on.

I would suggest that with a specific estate tax that you open another can of worms though, because people will find ways around it. If I knew that there was going to be an extra tax levied on my death, I'd give my kids the cash while I was alive (there's no gift tax in Canada either) and bypass that issue. If you close that as well, then people will look to trusts and similar vehicles to alleviate that tax burden.

[Slava]

Originally Posted by Jason14h

Stupid Slava, what do you know about finance, economics, and taxes

Well I'm no mathgod!

[Leondros]

Originally Posted by Slava

Great, but it's not all capital gains. Things like RRSPs/LIRAs, etc. are all taxed as well. Second properties (or more) and the list goes on.

I would suggest that with a specific estate tax that you open another can of worms though, because people will find ways around it. If I knew that there was going to be an extra tax levied on my death, I'd give my kids the cash while I was alive (there's no gift tax in Canada either) and bypass that issue. If you close that as well, then people will look to trusts and similar vehicles to alleviate that tax burden.

If you would be implementing an estate tax you would do what the US does and implement a gift tax as well though. Your personal exemption between gifting and estate transfers would be the same pool.

The more I think about it, the more I support an estate tax over the deemed disposition method or even would like to see both applied. Sure it is a double tax, but if you apply an exemption of lets say $10million on the estate transfer you effectively are not hamstringing anyone who truly needs the money and are collecting massive amounts of generational wealth transfers.

That, on top of a 20% VAT on luxury goods (boats, cars, toys, booze, etc.) would also help collect money off of net wealth versus net income (should the rich actually spend it).

[Slava]

Originally Posted by Leondros

If you would be implementing an estate tax you would do what the US does and implement a gift tax as well though. Your personal exemption between gifting and estate transfers would be the same pool.

The more I think about it, the more I support an estate tax over the deemed disposition method or even would like to see both applied. Sure it is a double tax, but if you apply an exemption of lets say $10million on the estate transfer you effectively are not hamstringing anyone who truly needs the money and are collecting massive amounts of generational wealth transfers.

That, on top of a 20% VAT on luxury goods (boats, cars, toys, booze, etc.) would also help collect money off of net wealth versus net income (should the rich actually spend it).

Well it depends on your view, but that's my main objection. I just think that the government arguably shouldn't get to tax it once (depending on the asset), let along twice "just because". I could get behind the exemption as long as that was high enough to not be a factor for the vast majority.

I just assume that most people who are in favour of these types of things are not impacted at all and don't think that they will be.

[Leondros]

Originally Posted by Slava

Well it depends on your view, but that's my main objection. I just think that the government arguably shouldn't get to tax it once (depending on the asset), let along twice "just because". I could get behind the exemption as long as that was high enough to not be a factor for the vast majority.

I just assume that most people who are in favour of these types of things are not impacted at all and don't think that they will be.

Okay, well I can sell it to you in another way. Axe the deemed disposition, apply a 50% estate tax over and above $10 million and call it a day. A deemed disposition plus an estate tax while a double tax would achieve the exact same thing from an effect tax rate perspective. Similar to the US there would be a spousal deferral mechanism in there along with the standard gift avoidance, etc.

At the end of the day it achieves the goal of taxing the super wealthy, but not to the extent where hard work and saving for your family isn't rewarded. If you are a beneficiary of that and can't make $x million work for you, I don't know what to tell you.

[Azure]

Originally Posted by Jason14h

I suppose a flat tax on your net worth would do the trick if higher then the rate you can accumulate wealth.

I thought we weren't actually being completely insane and only talking about taxes on yearly increases in net worth.

But if we literally say "1 billion is the highest net worth someone can ever have or we take it" then I guess you can cap the upper end and let the lower end catch up

No idea how this would work in reality though as most net worth is in companies and as a company appreciated the owner would effectively never endlessly loose their % stake of ownership.

Soooo... The reality is you can not use tax to close the wealth gap at all. You can only slow the rate at which it grows.

And does that really matter? Does Bezos being worth 100 billion or 120 billion have any effect on anyone other then paper net worth?

Plus, what are you actually taxing? Bezos has a lot of wealth, but it is all tied up in assets, and is by no means liquid. He sells a certain percentage of that wealth each year to finance his companies like Blue Origin.

So if you want to tax him say 10% on his 'wealth' you would force him to sell his assets in order to generate liquid to pay the actual tax.

Aren't we better off trying to get him to sell his assets to generate economic activity? Or donating to charity? Albeit the wealthy donating to charity as a tax write off is a problem in itself, but as an example his wife has donated billions since they got divorced.

Personally, I would much rather someone like Musk or Bezos take their billions and invest it into space companies that employ people and drive innovation.

Musk has basically created a worldwide internet system for $100 / month, and it didn't require any taxpayer money. How much money taxpayer money have governments funneled into internet access programs the last 25 years in an effort to make internet access available? Billions & billions.

[GGG]

Originally Posted by Jason14h

I suppose a flat tax on your net worth would do the trick if higher then the rate you can accumulate wealth.

I thought we weren't actually being completely insane and only talking about taxes on yearly increases in net worth.

But if we literally say "1 billion is the highest net worth someone can ever have or we take it" then I guess you can cap the upper end and let the lower end catch up

No idea how this would work in reality though as most net worth is in companies and as a company appreciated the owner would effectively never endlessly loose their % stake of ownership.

Soooo... The reality is you can not use tax to close the wealth gap at all. You can only slow the rate at which it grows.

And does that really matter? Does Bezos being worth 100 billion or 120 billion have any effect on anyone other then paper net worth?

Bernie and Warren were proposing a 2% and 4% tax on wealth and in the US that might actually work as owning US listed companies and assets is quite lucrative.

But because of the flaws identified the best place to tax wealth is at Death

[CaptainYooh]

Originally Posted by Slava

Well I'm no mathgod!

Why do you bother responding? For someone with a Mathgod user name, you'd expect an analytical mind (unless it was in jest). His long ramblings about the doom of humanity in another thread were so childish, I thought he's just a kid, but he said he wasn't. Unfortunately, this means he is simply clueless.

"Take away from the RICH and re-distribute to the POOR" is a slogan as old as Jesus, Robin Hood, Marx, Lenin, Sanders etc. It does sound very appealing.

[TorqueDog]

Everyone else has provided ample response, but I have to call this out:

Originally Posted by Mathgod

Kind of astonishing how controversial the idea of an estate tax seems to be.

Your condescending incredulity that no one buys your poorly supported argument isn't helping. Your justifications thus far can be distilled into "it should be taxed because, well, the government needs to raise tax revenue so why not, DUH, isn't it obvious?". We know you think it should be, nothing you've said explains the 'why' beyond increasing taxation for its own sake, and there are other venues out there including recovering tax from people who are supposed to be paying their fair share and aren't.

[Slava]

Originally Posted by Leondros

Okay, well I can sell it to you in another way. Axe the deemed disposition, apply a 50% estate tax over and above $10 million and call it a day. A deemed disposition plus an estate tax while a double tax would achieve the exact same thing from an effect tax rate perspective. Similar to the US there would be a spousal deferral mechanism in there along with the standard gift avoidance, etc.

At the end of the day it achieves the goal of taxing the super wealthy, but not to the extent where hard work and saving for your family isn't rewarded. If you are a beneficiary of that and can't make $x million work for you, I don't know what to tell you.

50% estate tax?! why do I think that you'd suddenly see a lot of $9.9m estates out there.

That percentage sounds insane.

[Mathgod]

Originally Posted by Azure

Musk has basically created a worldwide internet system for $100 / month, and it didn't require any taxpayer money. How much money taxpayer money have governments funneled into internet access programs the last 25 years in an effort to make internet access available? Billions & billions.

It costs $499US upfront for the Starlink kit, a barrier to entry for low income families. $99/month is the currently advertised price, but there's no telling what increases may be to come. Recently it won $885M in federal subsidies (so much for no tax money going towards it). And its long term reliability (and overall reliability) is a complete question mark.

[Leondros]

Originally Posted by Slava

50% estate tax?! why do I think that you'd suddenly see a lot of $9.9m estates out there.

That percentage sounds insane.

Go big or go home baby!

In all seriousness its a difficult problem to solve but at the end of the day most of the families I know (and I know quite a few) who would be leaving estates larger than $10M would be just fine. Their kids have already gotten legs up, private school paid for, university degrees, help with their homes, extra cash, have high paying jobs.

[Azure]

Originally Posted by Mathgod

It costs $499US upfront for the Starlink kit, a barrier to entry for low income families. $99/month is the currently advertised price, but there's no telling what increases may be to come. Recently it won $885M in federal subsidies (so much for no tax money going towards it). And its long term reliability (and overall reliability) is a complete question mark.

He has effectively created a launch system and committed all the money for R&D before he got any government subsidies, and the subsidies he got were due to being able to actually prove the product works.

Of course the cost is high, but he also has a massive waiting list and has said as they become more efficient the cost will come down.

Maybe you could go do some research on how much money the US government has wasted on subsidizing ISPs who have nothing to show for?

[Mathgod]

Originally Posted by TorqueDog

Everyone else has provided ample response, but I have to call this out:
Your condescending incredulity that no one buys your poorly supported argument isn't helping. Your justifications thus far can be distilled into "it should be taxed because, well, the government needs to raise tax revenue so why not, DUH, isn't it obvious?". We know you think it should be, nothing you've said explains the 'why' beyond increasing taxation for its own sake, and there are other venues out there including recovering tax from people who are supposed to be paying their fair share and aren't.

Well having a conversation on this is going to be hard if you just ignore certain things I say and then strawman my position. Again, people born into families that have money have basically won a lotto, so what's the downside to taxing those inheritances? Those who lucked their way into a pile of money they didn't work for, instead will luck into a smaller pile of money? Egads, what an unthinkable proposition!