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Old 09-22-2021, 11:26 AM   #61
stone hands
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It's just a philosophical difference, I dont think anyone should make multiple millions of dollars a year when the average salary for canadians is 54k a year and we've got real problems like unaffordable housing and reservations without running water and etc

Combine it with societal givens, like how taxpayers are gleefully ready to donate hundreds of millions of dollars to pay more for the same product so that the flames ownership which consists of multiple billionaires' private buisness can make more money

Even in these examples of "true tax" I think it's ridiculous to advocate for a system where you can see the disparity between someone who makes a pretty decent wage (100k) would need to work for 70 thousand years to achieve
one year earnings of our hypothetical rich guys salary and somehow think the rich guy is paying enough tax
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Old 09-22-2021, 11:28 AM   #62
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I'm saying just because the tax rate is 40%(or whatever), it's not like they are paying that. Anyone making that kind of money is going to use whatever methods they can to reduce below the 40%. Yes, it's all legal, but it also means throwing out that they pay 40% is not really accurate. And yes, it also applies to the person making 50k not actually paying what their tax bracket puts them at.


I have no idea what the rich actually pay, but I'd be pretty blown away if they actually pay out near the highest rate they could theoretically pay.
So wait you have no idea, but you just use your gut feel as if it's fact to argue your stance?

As already pointed out by another poster, there's only a finite number of levers you can pull to reduce your tax burden. Even if all are exercised to the full degree, it's still north of 40% in taxes here in Canada for high income earners.
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Old 09-22-2021, 11:29 AM   #63
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I'm saying just because the tax rate is 40%(or whatever), it's not like they are paying that. Anyone making that kind of money is going to use whatever methods they can to reduce below the 40%. Yes, it's all legal, but it also means throwing out that they pay 40% is not really accurate. And yes, it also applies to the person making 50k not actually paying what their tax bracket puts them at.


I have no idea what the rich actually pay, but I'd be pretty blown away if they actually pay out near the highest rate they could theoretically pay.
They are - I have personally seen the tax filings that we prepare.

As I said before - in my mind the largest tax we are missing out on is the transfer of wealth from one generation to the next which is a massively lost opportunity. If we taxed the wealth transfer at a relatively high amount, this could allow for way more tax dollars. For example, if you are a high worth individual with an estate worth $400M in Alberta, and you leave that to your children, and have completed a high level of tax planning (estate freezing, step-ups, etc.) then upon death you are paying very little tax and the transfer to your beneficiaries are also nominal. Whereas if you transferred that $400M at 40%, $160M would go back in taxes.

Last edited by Leondros; 09-22-2021 at 11:34 AM.
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Old 09-22-2021, 11:29 AM   #64
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Originally Posted by stone hands View Post
It's just a philosophical difference, I dont think anyone should make multiple millions of dollars a year when the average salary for canadians is 54k a year and we've got real problems like unaffordable housing and reservations without running water and etc

Combine it with societal givens, like how taxpayers are gleefully ready to donate hundreds of millions of dollars to pay more for the same product so that the flames ownership which consists of multiple billionaires' private buisness can make more money

Even in these examples of "true tax" I think it's ridiculous to advocate for a system where you can see the disparity between someone who makes a pretty decent wage (100k) would need to work for 70 thousand years to achieve
one year earnings of our hypothetical rich guys salary and somehow think the rich guy is paying enough tax
Yes, wealth disparity sucks.

The discussion here is taxing the wealthy. And the thing is - we do.

Solving wealth disparity is a different issue that has never been successfully dealt with. Even the most extreme example - communism, created a society that was hugely disparate. But the 'haves' were either those in power, or criminals.

Society has never been fair.
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Old 09-22-2021, 11:31 AM   #65
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Pretty simple to avoid taxes. Set up a personal corporation. You pay 11-13% tax on the money you keep in the corporation. This rate is lowered with write offs. You can also invest this money into passive investments while in corporate solution, and the profits from these investments are also sheltered.

Structure your finances in a way that any money you take out is minimal, and use write offs for things like home officers, employment use vehicles, business dinners, etc... To keep that tax minimal.

The more you make, the higher proportion of money that stays in corporate solution, and the lower the effective tax rate.

Things like capital gains exemptions, a lack of inheritance tax, trusts, etc. ensure the rich stay rich.

The only real thing the government has done to impede this is getting rid of income splitting.

Edit: disclaimer... Do not do this before talking to a tax lawyer or accountant.
Passive income tax rate on Canadian controlled private corporations is around 50%. When you pay a dividend part of this tax is refunded but you pay tax personally on the dividend. The effect is to tax you at a rate that is similar to if you just took the income personally. In practice this is not perfect integration.

If you are talking about active business income ~~10%, the concept is that tax rate is lower so you have more cash to reinvest in your business and grow it. When you take it out as dividends and wages you pay tax personally. You can defer tax only if you are reinvesting and growing your business which makes perfect sense to me.
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Old 09-22-2021, 11:32 AM   #66
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This is a load of crap - please give me your professional background as to how you can make this comment or alternatively some documented real examples.

My wife is a CPA and a tax practitioner dealing with very high wealth individuals. If they are making $10M in a year personally, they are paying MORE than 40% in their marginal tax rates. There are only so many levers that can be pulled here in Canada that can reduce your rates - ie. charities, income splitting, personal corps, RRSPs, TFSAs, etc.
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The overall effective tax rate for Canada's top 1% of tax filers edged down from 31.3% in 2016 to 31.0% (correction) in 2017. This was due, in part, to lower provincial effective tax rates for the top 1%.
https://www150.statcan.gc.ca/n1/dail...90924b-eng.htm


So no, not 40 ,or around 50%, which is the top actual tax bracket with provincial share. So they are paying ~20% less effective tax, which is all I was getting at.
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Old 09-22-2021, 11:35 AM   #67
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Originally Posted by stone hands View Post
It's just a philosophical difference, I dont think anyone should make multiple millions of dollars a year when the average salary for canadians is 54k a year and we've got real problems like unaffordable housing and reservations without running water and etc

Combine it with societal givens, like how taxpayers are gleefully ready to donate hundreds of millions of dollars to pay more for the same product so that the flames ownership which consists of multiple billionaires' private buisness can make more money

Even in these examples of "true tax" I think it's ridiculous to advocate for a system where you can see the disparity between someone who makes a pretty decent wage (100k) would need to work for 70 thousand years to achieve
one year earnings of our hypothetical rich guys salary and somehow think the rich guy is paying enough tax
Ok, but how do you propose this get solved? Because disproportionally taxing the rich more than they already are paying isn't the solution. Unless you get the whole world and their governments to buy in, you'll inevitably get people leaving for countries with lower taxes.

Are you saying if you were making $10M a year in Canada, you'd voluntarily give up 80% of it for the better of Canadian society, and not move to another first world country that lets you keep more of your money? I somehow doubt that. If I were making $10M a year, you bet I'd be looking at all my alternatives to legally lower my tax burden as much as possible. Why is that wrong?
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Old 09-22-2021, 11:38 AM   #68
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Maybe I'm naive, but I highly doubt that. Is there any stats to back that up? I feel like a lot outrage is due to stories sensationalizing the few cases that do have people skirting the laws on taxes. If this was really a problem, how come the CRA is not on it like crazy?
Agree, having done personal tax for several years for various income groups, my experience is that people with high earnings pay a lot of taxes. For deductions that people complain about such as donations, investing in flow-through shares etc. this is simply reallocating where their money is going (i.e., to the gov't or to support charities that the gov't would otherwise have to support or putting money directly into the economy.
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Old 09-22-2021, 11:38 AM   #69
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Originally Posted by Fuzz View Post
https://www150.statcan.gc.ca/n1/dail...90924b-eng.htm

So no, not 40 ,or around 50%, which is the top actual tax bracket with provincial share. So they are paying ~20% less effective tax, which is all I was getting at.
Why are you referencing 2017 numbers?

Anyway, there's an easy way to calculate this out: https://www.wealthsimple.com/en-ca/tool/tax-calculator/

In Alberta:
$60,000 = Average tax rate of 23.95% (marginal is 30.5%)
$6,000,000 = Average tax rate of 47.47% (marginal is 48%)

In British Columbia:
$60,000 = Average tax rate of 22.40% (marginal is 28.2%)
$6,000,000 = Average tax rate of 52.83% (marginal is 53.5%)

Edit: Ah, effective tax rate. Anyway, calculator is still handy to have around.
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Old 09-22-2021, 11:38 AM   #70
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Originally Posted by Fuzz View Post
https://www150.statcan.gc.ca/n1/dail...90924b-eng.htm


So no, not 40 ,or around 50%, which is the top actual tax bracket with provincial share. So they are paying ~20% less effective tax, which is all I was getting at.
If you want to talk about effective tax rates sure, but that is still 20% higher than the average Canadian:

Individual Canadian tax filers spent, on average, 11.7% of their modified total income on federal and provincial/territorial income taxes.

Effectively that is the exact same delta (~20%) on the marginal tax brackets between average and 1%.
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Old 09-22-2021, 11:43 AM   #71
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Originally Posted by Fuzz View Post
https://www150.statcan.gc.ca/n1/dail...90924b-eng.htm


So no, not 40 ,or around 50%, which is the top actual tax bracket with provincial share. So they are paying ~20% less effective tax, which is all I was getting at.
So this site pretty much proves my point. The effective tax rate for the non 1% is on average 12%, while the effective tax rate for 1% earners is 31%. If anything, it's even higher than my hypothetical example.
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Old 09-22-2021, 11:46 AM   #72
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If you want to talk about effective tax rates sure, but that is still 20% higher than the average Canadian:

Individual Canadian tax filers spent, on average, 11.7% of their modified total income on federal and provincial/territorial income taxes.

Effectively that is the exact same delta (~20%) on the marginal tax brackets between average and 1%.
OK, so can we accept that my objection to saying people don't actually pay the marginal rate, and actually pay an effective rate significantly lower is correct? and I'll retract "probably pay less than you or I" which is more of a US thing, I think.

Sorry, this just pisses me off because it's the kind of shallow scary number manipulation the Frasier Institute does when they go on the radio with Danielle Smith to "prove" we pay more taxes than Americans.
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Old 09-22-2021, 11:47 AM   #73
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Yeah. So... nothing to add?
The question was why people are concerned about wealth disparity. Considering the disparity we're experiencing is historically significant, is historical precedent not a valid reason to be concerned?
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Old 09-22-2021, 11:49 AM   #74
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Ok, but how do you propose this get solved? Because disproportionally taxing the rich more than they already are paying isn't the solution. Unless you get the whole world and their governments to buy in, you'll inevitably get people leaving for countries with lower taxes.

Are you saying if you were making $10M a year in Canada, you'd voluntarily give up 80% of it for the better of Canadian society, and not move to another first world country that lets you keep more of your money? I somehow doubt that. If I were making $10M a year, you bet I'd be looking at all my alternatives to legally lower my tax burden as much as possible. Why is that wrong?
I dont have an answer, because it hinges on people knowing what "enough" is and to abandon the idea of unlimited convenience that wealth provides which drives people to acquire it at all costs

For example, to answer your hypothetical question: yes I would voluntarily give it up.if I was making 2 million dollars a year after taxes that's a 1900% increase over our current household income that we dont even spend 50% of. I understand most people are not like this but my life wouldn't significantly change if I had that much money other than I would be retired today instead of in under a decade
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Old 09-22-2021, 11:51 AM   #75
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Taxing rich won't help reduce the wealth gap. Do you think the government actually use that money to do anything that solves a problem? Or would they just piss it away on $600MM elections, Billion dollar pipelines to nowhere, or lightbulbs for everyone?
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Old 09-22-2021, 11:52 AM   #76
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OK, so can we accept that my objection to saying people don't actually pay the marginal rate, and actually pay an effective rate significantly lower is correct? and I'll retract "probably pay less than you or I" which is more of a US thing, I think.

Sorry, this just pisses me off because it's the kind of shallow scary number manipulation the Frasier Institute does when they go on the radio with Danielle Smith to "prove" we pay more taxes than Americans.
Yes, I can accept that. Sorry, but as an accountant I always appreciated the fact that your effective rate is always going to be lower than your marginal rates. I could see how it could be confusing.

Edit - as an addition to this and added clarity on the concepts it is important to recognize that when tax planning, you should be using your marginal tax rate when looking at doing things. For example, If I am in a marginal tax rate of 42% (highest in Alberta) when looking to sell a stock for lets say a $50K profit. Given it is a capital gain its taxed at 50% so $25K * the 42% means I would pay $10,500 in extra taxes. Or in percentage terms I paid 21% in tax on my $50K gain.

Now when calculating the effective rate I would take all of the tax paid and divide it by my taxable income to get my effective tax rate. That is the difference when looking at tax rates.

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Old 09-22-2021, 11:52 AM   #77
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I remember a Freakanomics podcast from a few years ago where they invited on a bunch of economists to tell what policies they would implement if they were running the country.

The vast majority advocated for zero corporate tax rate and higher dividend rates. Essentially, you solve the problem of wealth exodus while ensuring the investors pay their share. It made a lot of sense to me.
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Old 09-22-2021, 11:52 AM   #78
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So this site pretty much proves my point. The effective tax rate for the non 1% is on average 12%, while the effective tax rate for 1% earners is 31%. If anything, it's even higher than my hypothetical example.
Not really, because that includes all tax fillers. Many who have little or no income. If we want to live in a functioning society, those who earn more will always have to pay more. And they should recognize those earnings are on the backs of the regular earners that their taxes then go to support. Unless you feel they are actually worth 100x what we get paid? In the end, they still take home more in a year than most people make in a lifetime. No one is proposing to tax them down to the level their income matches the average.


It's always baffling to me why people who will never be in these incredibly high earning ranges are so quick to defend the consolidation of wealth, while our services suffer and taxes go up.
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Old 09-22-2021, 11:56 AM   #79
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The question with that data is what does the top 1% of filers include. Does it include doctors making a few hundred thousand bucks a year? Because those people aren't the ones driving wealth inequality.
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Old 09-22-2021, 12:00 PM   #80
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Not really, because that includes all tax fillers. Many who have little or no income. If we want to live in a functioning society, those who earn more will always have to pay more. And they should recognize those earnings are on the backs of the regular earners that their taxes then go to support. Unless you feel they are actually worth 100x what we get paid? In the end, they still take home more in a year than most people make in a lifetime. No one is proposing to tax them down to the level their income matches the average.


It's always baffling to me why people who will never be in these incredibly high earning ranges are so quick to defend the consolidation of wealth, while our services suffer and taxes go up.
All I'm ever saying in my arguments is that we already tax the rich disproportionately. There has been no evidence to suggest otherwise. It's easy to always trot out the "tax the rich!" for the average person because they realize they're not the "rich", so everyone just wants more of someone else paying for things.
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