Official (Alberta) Oil Discussion Thread

[Kavvy]

Originally Posted by CliffFletcher

And yet our highest marginal tax rate is far lower than it was 30-50 years ago. Maybe someone needs to look at why the wealthy today are far more resistant to paying taxes than their parents and grandparents were.



(This graph shows U.S. rates, but Canadian tax rates have followed the same trend).

Weird.

I was trying to correlate the chart to recessions and mentally made the connection the the low tax's pre-dated the dirty 30's, the 80's collapse and were also lowered prior to the 2008 collapse....

Boom times with growth had higher taxes on the wealthy....

Now, would someone with actual rescission dates and whom is far less lazy then me quickly prove how wrong I am and how I over simplified the data as I am sure I did?

[Kavvy]

Originally Posted by Enoch Root

Can't give you a number, but I can say that it was significant. Never mind that, like Ryan Coke, I came to Alberta due to the lower taxes and favourable business climate, I will give you a more significant, though still anecdotal, example.

My wife used to recruit internationally for a large firm (still oversees it). Her firm recruited a significant number of people for positions across the country. Her job was to convince some to come to Calgary, which was actually really easy.

Calgary was one of the 3 most attractive cities, along with Toronto and Vancouver. Toronto because people were familiar with it, and Vancouver because it's beautiful. Calgary was the most attractive, usually, because of taxes and the business climate. These weren't oil jobs, they were professionals and upper management. The types of people that can work anywhere.

I can't recall the exact numbers, but I believe the influx to Calgary was something like 30,000 people a year in the mid 2000s. And that wasn't just for oil jobs, it was all kinds of jobs.

A large influx of workers means more housing (construction, as well as many retail spin-offs), infrastructure, retail, small business, etc. etc.

And most importantly, a rapidly growing tax base.

And that's the thing. Having attractive tax rates grows the economy and grows that tax base. Unfortunately, the opposite is also true.

As someone who has spent a significant amount of time in Alberta and in Manitoba, I have seen both sides of this play out for a long time.

There is a reason that Manitobans say that their primary export is good people.

Thanks for the detailed reply.

[Handsome B. Wonderful]

Originally Posted by CliffFletcher

This graph shows U.S. rates

Then it is meaningless in this discussion.

[LanceUppercut]

Note the correlation of skyrocketing tax rates and the two world wars and the Great Depression.

[Resolute 14]

Originally Posted by CliffFletcher

And yet our highest marginal tax rate is far lower than it was 30-50 years ago. Maybe someone needs to look at why the wealthy today are far more resistant to paying taxes than their parents and grandparents were.

In your rush to be judgmental, you got your cause and consequence backwards, I would say. Given the drop in rates over time, it would appear that our parents and grandparents were, in fact, very resistant to paying taxes. That chart is the result.

[Ryan Coke]

Maybe the realization that taxing someone over 90% of their income is insane finally took hold. Especially when it motivated people to do everything in their power to avoid that level of taxation, with the resulting drop in desired tax revenue.

Of course I really don't know, but taxing anyone at a rate over 90% is absolutely crazy, and likely counterproductive.

[Handsome B. Wonderful]

Originally Posted by Resolute 14

In your rush to be judgmental, you got your cause and consequence backwards, I would say. Given the drop in rates over time, it would appear that our parents and grandparents were, in fact, very resistant to paying taxes. That chart is the result.

In his rush to judgement, blatant lies and spurious claims were made by CliffFletcher. I'd like to see actual proof that people at some point in time enjoyed paying taxes, especially more taxes. I also like how he implies that the parents and grandparents of wealthy people earned the same income as their descendants.

Might as well just post a chart of interest rates and claim "And yet our highest interest rate is far lower than it was 30 years ago. Maybe someone needs to look at why people today are far more resistant to paying 18% interest on their mortgage than their parents were."

[Enoch Root]

I would like to see the correlation between tax rates and standards of living

I would guess that the rate at which the SOL increases is negatively correlated with the highest marginal tax rate

[Enoch Root]

Also, the highest marginal tax rate could well be mostly inapplicable, if it was being applied to only the very highest incomes.

If the 90% rate was only applicable over $1M or whatever, then it really has no meaning when comparing to peoples opinions and reactions to tax rates.

Probably better to look at rates that apply to particular income levels (indexed to inflation) or whatever

[Locke]

Originally Posted by Enoch Root

Also, the highest marginal tax rate could well be mostly inapplicable, if it was being applied to only the very highest incomes.

If the 90% rate was only applicable over $1M or whatever, then it really has no meaning when comparing to peoples opinions and reactions to tax rates.

Probably better to look at rates that apply to particular income levels (indexed to inflation) or whatever

Well, I'll admit to spitballing this off the top of my head with my meager recollection of American History but I think that top tax rate, at the time, opnly applied to something like 5 people in the entire country and I vaguely recall mention of the Rockefellers once cutting a cheque to the US Government to pay the National Debt.

But its also important to recognize the economics of it. Those astounding tax rates are a big reason why we have all of these complex and convoluted methods of taxation. Moving funds through companies and investments and tax havens and off-shore accounts, etc.

An entity, like a Government, cant just say: "we need more money so lets raise taxes" because as we see it doesnt really work all that well because these people will find ways of sheltering their funds or they'll just leave.

[CliffFletcher]

The point is that you have to go back 90 years to the Gilded Age to find a better time to be rich. You get to keep more of your money now than ever. You can move your money or yourself anywhere in the world. Capital has beaten down labour and is now curb-stopping it while puffing on a cigar. And few people even suggest this isn't the best way to run the world, let alone incite violent revolutions to overthrow the system and confiscate the property of the rich. So please, let's not pretend the mega-rich are having tough times or are being treated unfairly. Tough times were back when even friendly governments took 70-90 per cent of their income, and powerful political forces called for the violent confiscation of all their property.

“this fear of growing to resemble Europe was part of the reason why the United States in 1910–1920 pioneered a very progressive estate tax on large fortunes, which were deemed to be incompatible with US values, as well as a progressive income tax on incomes thought to be excessive. Perceptions of inequality, redistribution, and national identity changed a great deal over the course of the twentieth century, to put it mildly.”
― Thomas Piketty, Capital in the Twenty-First Century

[CliffFletcher]

Originally Posted by Locke

An entity, like a Government, cant just say: "we need more money so lets raise taxes" because as we see it doesnt really work all that well because these people will find ways of sheltering their funds or they'll just leave.

What happens when tax avoidance filters down to the professional classes? We end up like Greece, where half of people don't pay any taxes, and eventually public finances crumble like a sugar cube dipped in water. Probably unavoidable though [shrug].

[Locke]

Originally Posted by CliffFletcher

The point is that you have to go back 90 years to the Gilded Age to find a better time to be rich. You get to keep more of your money now than ever. You can move your money or yourself anywhere in the world. Capital has beaten down labour and is now curb-stopping it while puffing on a cigar. And few people even suggest this isn't the best way to run the world, let alone incite violent revolutions to overthrow the system and confiscate the property of the rich. So please, let's not pretend the mega-rich are having tough times or are being treated unfairly. Tough times were back when even friendly governments took 70-90 per cent of their income, and powerful political forces called for the violent confiscation of all their property.

“this fear of growing to resemble Europe was part of the reason why the United States in 1910–1920 pioneered a very progressive estate tax on large fortunes, which were deemed to be incompatible with US values, as well as a progressive income tax on incomes thought to be excessive. Perceptions of inequality, redistribution, and national identity changed a great deal over the course of the twentieth century, to put it mildly.”
― Thomas Piketty, Capital in the Twenty-First Century

Originally Posted by CliffFletcher

What happens when tax avoidance filters down to the professional classes? We end up like Greece, where half of people don't pay any taxes, and eventually public finances crumble like a sugar cube dipped in water. Probably unavoidable though [shrug].

Put simply though, especially in reference to the chart you displayed: It doesnt matter.

Now isnt then. We have to deal with the realities of now.

Yes, I understand what you're saying but it essentially boils down to current values.

Take Edwards for example. If you plunked him down in 1910 his ability to move is much more limited, his costs of labour are also a lot lower in relation to his other costs.

But now someone, somewhere is going to make him a better deal, and he might be inclined to take it.

You are talking about shifting values for higher earners to have more of a social conscience, and thats something I fundamentally agree with.

But show me a way to do that that doesnt involve:

- Duct Tape
- Toothpicks
- Audio/Visual Equipment
- A folding chair with a hole in the bottom
- A ball gag
- Length of rope

Put short, I dont know how to change the social conscience of higher income earners in a truly global society, what I do know is that as that conscience changes we're going to have to take care of ourselves.

And we cant keep doing that by 'just raising taxes.'

And further, we cannot keep doing it if we're not all doing it together. This 'Public vs. Private vs. First Nations vs. Francophone vs. Provinces vs. Federal Parties' war has to stop.

I am a big proponent of two things: 'growing taxes' rather than just 'paying taxes' and prudent spending.

By that I mean grow your tax base and keep Government spending in check.

We need to be the first Country ruled by Accountants rather than Lawyers or Teachers.

[heep223]

Originally Posted by Locke

Put simply though, especially in reference to the chart you displayed: It doesnt matter.

Now isnt then. We have to deal with the realities of now.

Yes, I understand what you're saying but it essentially boils down to current values.

Take Edwards for example. If you plunked him down in 1910 his ability to move is much more limited, his costs of labour are also a lot lower in relation to his other costs.

But now someone, somewhere is going to make him a better deal, and he might be inclined to take it.

You are talking about shifting values for higher earners to have more of a social conscience, and thats something I fundamentally agree with.

But show me a way to do that that doesnt involve:

- Duct Tape
- Toothpicks
- Audio/Visual Equipment
- A folding chair with a hole in the bottom
- A ball gag
- Length of rope

Put short, I dont know how to change the social conscience of higher income earners in a truly global society, what I do know is that as that conscience changes we're going to have to take care of ourselves.

And we cant keep doing that by 'just raising taxes.'

And further, we cannot keep doing it if we're not all doing it together. This 'Public vs. Private vs. First Nations vs. Francophone vs. Provinces vs. Federal Parties' war has to stop.

I am a big proponent of two things: 'growing taxes' rather than just 'paying taxes' and prudent spending.

By that I mean grow your tax base and keep Government spending in check.

We need to be the first Country ruled by Accountants rather than Lawyers or Teachers.

Great post until your last sentence

Clearly it needs to be run by CFA charterholders.

Our accountants sometimes are annoyed by capital gains. "We need more losses!" lol

[peter12]

Well, it certainly doesn't need to be run by marketing and business development consultants.

[IliketoPuck]

Originally Posted by peter12

Well, it certainly doesn't need to be run by marketing and business development consultants.

Or drama teachers with a minor in tour guidery......

[PsYcNeT]

Originally Posted by IliketoPuck

Or drama teachers with a minor in tour guidery......

If only more people voted for the mail clerk.

[peter12]

That would actually be pretty good.

[Azure]

Does a favorable business climate and a low tax rate go hand in hand, or can you have one and not the other?

[Resolute 14]

All other things being equal, a lower tax rate would inherently create a more favourable business climate. But you can still raise the tax rate if other factors act to support business. Our problem is that pretty much everything - including NDP taxation policy - is creating an increasingly hostile business climate.