How does it feel to get screwed?
A month ago Reuters came out with an article describing the tax legislation being passed in the USA:
Republicans unveil tax cut bill, but the hard work awaits. While I don't particularly care about what happens in the USA, it is symptomatic of the way the people controlling governments do so to further their best interests. I could go into detail about how the tax rates are being dropped to help businesses and rich people but it is a waste of my time to write it and your time to read it. The reason is that people who know about money can pay no taxes.
I did a reply to a person (see reply here) which was a simplified explanation of how Canada handles interest and regular income against how capital gains are treated. The reply went off on a tangent describing what would happen if Warren Buffet was a Canadian. The salient points are:
- Mr Buffet would only need to claim an income of $487,881.
- His income tax would be $226,973
- His real personal income would be in the region of $100,000,000
His real personal worth increased by much more than $100,000,000 but he wouldn't be taxed on it.
Hmmm...take home $100 million dollars but contribute only $200 k to help pay for the government services that the 367,700 employees (Berkshire Hathaway alone) use to help him make that money (infrastructure, healthcare, education, security)? Just get rid of income tax and start using more intelligent means to run societies that do not discriminate against one group of people to the gain of others.
So what's the solution for a better method? Would it be a consumption tax with some way for poorer people to be exempted for necessities? Sorry if this is a stupid question, but you're obviously way ahead of me.
In Canada, Income Tax was introduced 100 years ago to pay the debt for WWI. At the time they raised money via Custom and Excise Taxes (ie imports). Today we have free trade agreements which make those types of taxes impracticable. In the province I live, alcohol can only be purchased through government control outlets. An average can of beer in Michigan costs .78 compared to 1.25 across the border (in Canadian dollars). Beer costs the same to make in both countries (slight variance in cost of production) so a major component has to do with taxation. There is a logic behind this. Beer should be taxed more heavily than milk because of the health and social costs of the commodity. A driver consuming too much milk is less expensive than a driver consuming too much beer. There are other commodities eg cigarettes which should be sold in controlled spaces for the other benefit that they check age identification - so would discourage minors getting into substances not necessarily good for them.
We also have a value added tax harmonized sales tax (HST) which adds on and collects taxes on most products and services for both the federal and provincial governments. While unpopular a sales tax could be programmed to vary to account for a cost to society. Although quite benign a stalk of celery has costs to society such as inspections, road maintenance (trucks delivering to store), environmental costs (due to fertilizers and insecticides) etc.
When a tax is being considered, one of the criteria is that it should be equitable. You could take a flat tax of $5000 for everyone in the country - which equitable in the sense that it would be the same for everyone but would be unfair in the sense that people in the north have higher costs than people in the south. Progressive taxes are problematic. Yes people who earn more have more surplus but it is a disincentive to earn more but it also is an incentive to avoid and sometimes to evade taxes. It is an advantage to the poor and the rich but disadvantages the middle income earners.
Another aspect not discussed in economic courses is that perhaps taxation should be eliminated for the federal level entirely. Consolidating that much power and money with so few people leads to other issues. For instance last year a couple of agencies in the US Government lost $21 trillion dollars (it was unaccounted for). I think in previous years it was about $15 trillion. For some reason when ever the US Auditor General announces his results other news like Harvey Weinstein force it off everyone's radar
It seems politicians are screwing people everywhere nowdays but it is certainly more visible in USA and UK right now. I think we need a completely new system of governance.
Years ago Alvin Toffler described that in the Third Wave that governments will become unnecessary.
We have actually reached that point now in technology. While I don't know a lot about whats going on in UK, I know that recently the mayor of London banned certain advertisements. This is in response to 70,000 signatures about the advertisements. I believe the population is almost 9 million. The role of political parties should be to promote their perspective as a whole about some particular legislation. With today's technology, an anonymous random sample of people could be selected to vote on the proposition. While he said that he was "extremely concerned about this kind of advertising which can demean people" it raises the ugly head of censorship. While this image
might make some people be self conscious, those people did not comment on this billboard:
Okay I know I went off on a tangent. I agree that a change needs to happen and we have the technology to attain it.
After the last election, I worry that we got the government that we deserve. Maybe that's not an entirely bad thing because at least now it's transparent, so nobody can claim they don't know.