AP POLL: How to pay for health overhaul? Tax the rich

[Barrister]

Now I remember why I left the damn place...

The UK has these numbers on top of your personal allowance of £6,475:

0 - £2,440 (savings only)     10 per cent (starting rate for savings)
0 - £37,400    20 per cent (basic rate)
Over £37,400    40 per cent (higher rate)

The numbers for Manitoba are on top of the federal income tax, which is:

15% on the first $40,726 of taxable income, +
22% on the next $40,726 of taxable income (on the portion of taxable income between $40,726 and $81,452), +
26% on the next $44,812 of taxable income (on the portion of taxable income between $81,452 and $126,264), +
29% of taxable income over $126,264.

which would put my marginal rate at 43.4% if I lived in Manitoba.

As compared to 36% in Alberta, and 37.44% in Yukon.  Not to mention no provincial/territorial sales tax (7% in Manitoba).

[Neil]

I will look up some stats for you but I can tell you that back when I took my remuneration as employment income my overall tax bill was about 44-46% of what I earned - from both Federal and Provincial taxes.  I forget the exact percentage as I am trying to repress* the memory and the laughing my accountant did when I first went to her to restructure things for me.

Does that include sales taxes?

[DGuller]

The 'problem' I've heard is that when you remove a significant number of people from paying any taxes whatsoever it encourages an "us against them" mentality, as opposed to "we're all in this together, paying our fair share".

I dont understand that.  Increasing the basic exemption lowers my tax bill also.

Increasing the basic exemption will lead to increases in marginal rates to keep the changes revenue-neutral (unless the changes were meant to be a tax cut).

[Neil]

edit: and you are paying less then me!

Maybe, but he has to work for civil servant peanuts.  Then again, he also gets a gold-plated pension.

[Barrister]

edit: and you are paying less then me!

Maybe, but he has to work for civil servant peanuts.  Then again, he also gets a gold-plated pension.

I also get all kinds of crazy northern tax deductions...

[crazy canuck]

I will look up some stats for you but I can tell you that back when I took my remuneration as employment income my overall tax bill was about 44-46% of what I earned - from both Federal and Provincial taxes.  I forget the exact percentage as I am trying to repress* the memory and the laughing my accountant did when I first went to her to restructure things for me.

Does that include sales taxes?

No, there is some kind of odd surcharge or something that I didnt quite understand.

[crazy canuck]

The 'problem' I've heard is that when you remove a significant number of people from paying any taxes whatsoever it encourages an "us against them" mentality, as opposed to "we're all in this together, paying our fair share".

I dont understand that.  Increasing the basic exemption lowers my tax bill also.

Increasing the basic exemption will lead to increases in marginal rates to keep the changes revenue-neutral (unless the changes were meant to be a tax cut).

That is traditionally what occurs in Canada.  Its has reduced my taxes each time it has been increased.

[Jacob]

You're thinking of withholding.  As Fredo said payroll taxes are the dedicated taxes for Social Security and Medicare/Medicaid.

Ah, ok.

So I'm guessing that would be the equivalent of the CPP and EI that's deducted from our paycheques up here.

[Neil]

edit: and you are paying less then me!

Maybe, but he has to work for civil servant peanuts.  Then again, he also gets a gold-plated pension.

I also get all kinds of crazy northern tax deductions...

I used to get some northern deductions back in my home town.

[Barrister]

edit: and you are paying less then me!

Maybe, but he has to work for civil servant peanuts.  Then again, he also gets a gold-plated pension.

I also get all kinds of crazy northern tax deductions...

I used to get some northern deductions back in my home town.

I used to get them in Peace River as well.  But both of those places are Zone B, whereas Yukon is Zone A, and gets twice as much.

[Neil]

I used to get them in Peace River as well.  But both of those places are Zone B, whereas Yukon is Zone A, and gets twice as much.

When I was young, and doing my first tax returns, I thought about moving into Zone A.  Then I realized:  What would I do with myself?

[Admiral Yi]

I agree, the income gap between rich and poor is absolutely obscene. We can cap the incomes of rich people so they're paying less as a percentage, but for some reason I believe Hans would object. 

I love how people act shocked over basic math.

Like the basic mathematical difference between the percentage of taxes paid by the poorest and the percentage of people who pay no taxes?

[DGuller]

That is traditionally what occurs in Canada.  Its has reduced my taxes each time it has been increased.

Then technically it's two separate actions.  The first ones affects the distribution, and the second one affects the total outcome.

[Iormlund]

I've read similar numbers for Germany.

That's fine though.  What I have problems with is what the situation was in Ireland (I believe they're changing tack now) and possibly the US in which the personal allowance is so high that it effectively removes a large proportion of people from paying tax at all.

What is the problem with that?

The 'problem' I've heard is that when you remove a significant number of people from paying any taxes whatsoever it encourages an "us against them" mentality, as opposed to "we're all in this together, paying our fair share".

Unless you eliminate  sales tax and the aforementioned payroll taxes, the poor are also paying taxes. What changes is simply the composition of taxes different brackets are subjected to. Rich will pay most in income and investment taxes, poor in sales tax or gas tax and so on.

[garbon]

What changes is simply the composition of taxes different brackets are subjected to. Rich will pay most in income and investment taxes, poor in sales tax or gas tax and so on.

Putting it this way is misleading. The rich pay a higher percentage in income tax than the poor and then they still have to pay things like sales taxes (surprise, rich people still buy goods...and they tend to buy more expensive ones!).  End of the day, the rich are getting hosed for a much greater percentage of their income than the poor. And that's the situation already. Now its going to increase in order to pay for the healthcare plan...