What It Takes to Be in the 1% Around the World

[Fore and Aft]

Wyb2 I beg to differ that the economy should "work for a large number of people, not just a select few of work-ethic-and-grit super heros" If you want to party your money away then like Joli says that's your decision. But if I decide to work 3 jobs uphill (Don't forget the snow and bare feet) and live below my means then why should I not be rewarded later in life? My first year boat building apprenticeship in 1991 paid $12,500pa. You can plug that into an inflation computer but I can tell you comrade that covered a room in an apartment and all my living expenses. Things were tight that's for sure. It certainly made me hungry for all the over time I could get.
Cheers

[Mike OReilly]

Just wanted to point out that we DO "...send a tax bill to a homeowner when their home value increase." Heck, we do it every year regardless of increase or decrease. It's called property taxes.

A home is the principle way most middle-class people generate wealth in Canada and the USA. And yet this wealth is taxed every year. Why shouldn't other wealth be treated the same?

[Anders]

Originally Posted by Mike OReilly

Just wanted to point out that we DO "...send a tax bill to a homeowner when their home value increase." Heck, we do it every year regardless of increase or decrease. It's called property taxes.

A home is the principle way most middle-class people generate wealth in Canada and the USA. And yet this wealth is taxed every year. Why shouldn't other wealth be treated the same?

So if the value of your house goes up they will increase your property taxes?
How do they determine if your house gone up in value?

[Mike OReilly]

Originally Posted by Anders

So if the value of your house goes up they will increase your property taxes?
How do they determine if your house gone up in value?

In Canada, all real estate within organized municipalities are assessed for value using provincial assessment organizations. I assume there are similar assessment mechanisms everywhere property tax is used.

If your assessed value goes up your property tax bill also goes up. And this tax is paid every year. It's quite simple.

[Anders]

Originally Posted by Mike OReilly

In Canada, all real estate within organized municipalities are assessed for value using provincial assessment organizations. I assume there are similar assessment mechanisms everywhere property tax is used.

If your assessed value goes up your property tax bill also goes up. And this tax is paid every year. It's quite simple.

If your neighbours sell their houses for higher price your tax bill goes up? It's still the same house!

[Mike OReilly]

Originally Posted by Anders

If your neighbours sell their houses for higher price your tax bill goes up? It's still the same house!

Guess you've never owned a house... . Yes, average sale prices of neighbouring homes is one major component of property valuation.

[Anders]

Originally Posted by Mike OReilly

Guess you've never owned a house... . Yes, average sale prices of neighbouring homes is one major component of property valuation.

I own a house now but the council tax is based on what is was worth in 1991. I would not want to pay more tax if the neighbours sell theirs for more money!

[Mike OReilly]

Originally Posted by Anders

I own a house now but the council tax is based on what is was worth in 1991. I would not want to pay more tax if the neighbours sell theirs for more money!

How does this system of property tax keep up with inflation? Your "council" would face ever-decreasing revenue without some method of tracking inflation and increasing the tax collected.

BTW, this is why I said "Canada and the USA." I'm not familiar with other jurisdictions.

[Anders]

Originally Posted by Mike OReilly

How does this system of property tax keep up with inflation? Your "council" would face ever-decreasing revenue without some method of tracking inflation and increasing the tax collected.

BTW, this is why I said "Canada and the USA." I'm not familiar with other jurisdictions.

The tax bands stays the same regardless of the value of your house. The rates in the band can be increased subject to a cap of I belive 2%. If they want to increase the rates more than the cap there has to be a local referendum. Only been one referendum and not surprisingly it failed.

[Mike OReilly]

Originally Posted by Anders

The tax bands stays the same regardless of the value of your house. The rates in the band can be increased subject to a cap of I belive 2%. If they want to increase the rates more than the cap there has to be a local referendum. Only been one referendum and not surprisingly it failed.

In Canada, municipal taxes are based on property value multiplied by the band rate (mill rate). Either can go up, or down, although going down is rare. Mill rates are set by elected officials. Property values are determined by independent assessment organizations.

So it sounds like your Council taxes have only one factor; the band rate, which I guess is our mill rate. I assume that's how they keep up with inflation.

Regardless, the point is that middle class (and lower) folks mostly hold their wealth in their homes. This wealth is taxed continually, and at least in Canada and the USA, as value increases so does your tax bill.

We don't treat other forms of wealth this way; forms that are more typically used by the richer classes. Why?

[wyb2]

Originally Posted by Fore and Aft

Wyb2 I beg to differ that the economy should "work for a large number of people, not just a select few of work-ethic-and-grit super heros" If you want to party your money away then like Joli says that's your decision. But if I decide to work 3 jobs uphill (Don't forget the snow and bare feet) and live below my means then why should I not be rewarded later in life?

You should be, and still would be under more equitable tax structure.

Originally Posted by Fore and Aft

My first year boat building apprenticeship in 1991 paid $12,500pa. You can plug that into an inflation computer

$25,400 is the answer. Or an hourly wage of a little over $12/hr.

Originally Posted by Fore and Aft

but I can tell you comrade

In the post war boom of the 50’s the top marginal tax rate was 91%, I guess the US was just a bunch of lousy commies back then? Through the bulk of the Cold War (when communism was an actual threat, not just a political boogeyman) it was 70%, going down the 50% in ‘82, and finally modern levels (38%, then 28%) in ‘87.

Originally Posted by Fore and Aft

that covered a room in an apartment and all my living expenses. Things were tight that's for sure. It certainly made me hungry for all the over time I could get.
Cheers

Exactly, it covered all your living expenses. Now imagine making barely more than half that (current federal minimum wage compared to your inflation adjusted wage). Would it still have covered those expenses? Now factor in that rent increases have outpaced overall inflation, so you are making 40% less and that room costs 20% more. If things were tight then, how do they look now?

[MicHughV]

I once read somewhere, that were every person on this planet be gifted with a million dollars, within a very short period of time it would all be in the hands of a few.

[danstanford]

Originally Posted by wyb2

Nope. Does that invalidate my points?

Seriously though, I don’t think I said anything positive or negative about starting a business. The only thing I said was eliminating all of the complexities of our tax code would take away business asset depreciation.

This whole point of depreciation is a red herring. You can only depreciate your asset if you were not able to expense (write off) the asset when you bought it. If your true position is that business should have to buy their assets without any tax credit for the purchase you will have a distinct chill on innovation and production improvement which will just raise prices to the consumer. This will make the products of the domestic manufacturer more expensive than those from a nation having these normal tax processes.

Having consumption taxes as a solution will have the exact opposite effect that most proponents desire. Currently the more you make the higher percentage of tax you pay which is intended to move more of the burden to those who can pay. If you moved to more consumption taxes your taxes would rise due to a higher tax on all the items you purchase. There would be a disproportionate shift of taxes paid to the lower income earners.

Virtually all the complications in the tax codes are intended, and are largely successful, to create the fairest tax environment which inspires investment and retains taxpayers who will continue to fund the system we rely on.

[Paul L]

Originally Posted by danstanford

This.....

Virtually all the complications in the tax codes are intended, and are largely successful, to create the fairest tax environment which inspires investment and retains taxpayers who will continue to fund the system we rely on.

That's a bit of a stretch. I used to work for a very profitable, Silicon Valley, chip company. All the IP of the company was owned by subsidiaries in places like Bermuda and Macao, just paper companies with no employees. The result was the company paid virtually no US taxes each year.
This fact had zero bearing on how innovative and forward looking the company was. It just made the CFO look good investors.

[Mike OReilly]

Originally Posted by danstanford

Having consumption taxes as a solution will have the exact opposite effect that most proponents desire. Currently the more you make the higher percentage of tax you pay which is intended to move more of the burden to those who can pay. If you moved to more consumption taxes your taxes would rise due to a higher tax on all the items you purchase. There would be a disproportionate shift of taxes paid to the lower income earners.

Agreed. This is why consumption taxes, and indeed all flat-taxes including user fees and tolls, are regressive in nature. It's why lower income folks tend to pay proportionally more in total taxes than their wealthy counterparts, even without paying a lot of income tax (again, because they don't have a lot of income).