Personal Finance

Income Over $150k To Be Heavily Taxed

  • Last Updated:
  • Sep 15th, 2014 8:25 pm
Tags:
None
Deal Expert
Mar 23, 2009
17015 posts
3870 upvotes
Toronto
It's also comparative taxation across provinces that's important.

But when taxes do increase, after a certain point people balk and vote for somebody else to reign in taxes. We've already seen a big climb in the polls for the provincial PC party which puts them in the lead, despite the fact Hudak himself is the most disliked leader of the three.
Deal Addict
User avatar
May 24, 2008
3211 posts
1107 upvotes
Toronto
florch wrote:
May 6th, 2014 11:03 am
Consider all of the socialist countries in the world. What is their productivity per person? Compare this to all of capitalist countries. Share your results.

We are a compassionate and fair country. We all enjoy the same government services. How do we generate the revenue to pay for these? Does the money come out of thin air?

If you were an individual or corporation and were required to make a move, would tax rate not factor into the decision? What other wonderful but unique opportunities does Ontario offer compared to other provinces? Do you feel that Ontario does not have to concern itself with being competitive because it's just so darn awesome?

Do you have a problem with people earning a high salary? If the vulnerable of your society share the same security do you still feel that it is necessary to prevent the middle class from thriving?
First of all, relax - take a deep breath - exhaaaaaaaaaaale... Now, doesn't that feel better? :)

Secondly, the world has never seen a capitalist country. Neither has there ever been such a thing as a socialist (or communist for that matter) country on this planet. These are theoretical constructs that have never actually been realized. The type of societal/economic system we have in North America is deeply regulated with very little in the form of true free markets. There's taxes, there's consumer protection, there's competition bureaus, there's environmental legislation, there's labour laws, there's protection of intellectual property etc. If anything I would argue that the US and Canada are tilting more towards socialism than capitalism if those are seen as two extremes on a spectrum. What is usually referred to as socialist/communist countries are really nothing more than straight dictatorships and have nothing to do with the actual theory of socialism or communism.

In addition to getting your terminology straight I would urge you to actually read posts before you respond to them. You can for example do that while you're taking that deep breath! :) I never said that tax rate would NOT factor into the decision by a corporation or individual to settle somewhere. What I said is that tax rate or the overall financial package (tax credits for example) is just one of many factors. My point still stands and that is that I have yet to see evidence that tax rate on its own is enough to cause a mass exodus in or out of any economic area - at least for any sustained economic benefit to that area. Ireland used to be the golden child of all right-wingers when they used low tax rates to lure corporations to the fair island, but many of the jobs that were created were low paying, call centre type jobs and as we all know, the entire house of cards soon collapsed spectacularly.

As for some slightly more socialist leaning countries, just look towards Scandinavia and your argument will again take a huge hit. Those are high-tax countries with high social benefits (free university education for example), but you don't see the high tax bracket people leaving those countries in droves.
florch wrote:
May 6th, 2014 11:15 am
High income earners don't take more from society, they give more to society. They earn more because they produce more. They sacrificed and risked more, and if they're successful they earn more. But they take only the same as everyone else. I just stated, I agree with progressive tax, but you have to leave some incentive on the table.

I know dozens of people who have left to the UAE. Anecdotal yes, but they didn't go there for the sun and sand. They are going where they can earn the same amount of money and pay little to no tax. These are some of your most productive people. Of course we can't compete with those resources, put this is the example in the extreme.

I'm arguing a point that doesn't even affect me today. But I aspire to be upper middle class, so I'd like to have my efforts rewarded.
I hate to bring this up, but would you say that Thorsten Heins gave more to society and produced more? I know it's not an original example, but many more can be given. I agree that someone who started out with their two bare hands and worked their way up to create a successful corporation definitely deserve rewards for their incredible drive and hard work. Problem is, those are extremely rare cases. High income earners often come from the financial industry, which has arguably been the cause of most of our current financial problems (without government regulation - nevermind intervention - it would have been much, much worse - so much for the free market...). Also, you will find many high paid corporate officials who never created much themselves, but rather got cushy high-paying jobs due to family relations and influence. Read this book for example.

I am very much in favour of creating a friendly economic environment for start-ups and small businesses, because I think that is where you will truly find hard working people. Some of them will make it into that high-earning club that you speak of. However, most of the ones already there are not self-made, but rather stand on the shoulders of money already made.

Btw, by the statement that you are arguing a point that doesn't affect you today, I assume that you are very young. I used to be young and idealistic as well. I was very much a libertarian, believing in the free market and the good in human nature. As I've read more and experienced more, those views have changed. I have no political affiliations and I lean in no direction, but I like to stay pragmatic and focus on evidence and what works.
florch wrote:
May 6th, 2014 11:17 am
United States.
Czech Republic - middle class earnings and lifestyle there probably doesn't approach lower class in the US.

Go to town.

Government shouldn't burden itself too much with dividing the pie. That seems to take care of itself. A rising tied raises all boats, so what we should be doing is trying to bake a bigger pie, if you follow my mixed metaphors. That helps the working lower class the most.
That is Reaganomics in a nutshell and it has never worked. The only time in history that we had conditions that were close to pure capitalism were during and right after the industrial revolution. Very little government regulation and the results were massive labour exploitation with starving wages and inhuman working conditions. Huge environmental damage as well, but also huge profits. That's your evidence right there. I don't believe for a second that it would be any different today if another experiment with pure capitalism was attempted.
Member
Nov 25, 2011
422 posts
60 upvotes
201-8 Sampson Mews, …
EugW wrote:
May 6th, 2014 12:15 pm
It's also comparative taxation across provinces that's important.

But when taxes do increase, after a certain point people balk and vote for somebody else to reign in taxes. We've already seen a big climb in the polls for the provincial PC party which puts them in the lead, despite the fact Hudak himself is the most disliked leader of the three.
True. However, not everyone is a single, young professional willing to pack up and start a life elsewhere. And people think about taxes waaaay less than in the world of RFD.

Thankfully I can't vote in Canada yet as I have no idea which of these 3 terrible leaders/parties I'd vote for in Ontario...
Deal Addict
User avatar
May 24, 2008
3211 posts
1107 upvotes
Toronto
EugW wrote:
May 6th, 2014 12:15 pm
It's also comparative taxation across provinces that's important.

But when taxes do increase, after a certain point people balk and vote for somebody else to reign in taxes. We've already seen a big climb in the polls for the provincial PC party which puts them in the lead, despite the fact Hudak himself is the most disliked leader of the three.
And you think that is just because of taxes? We don't really know the true correlation here, do we? Besides, that is just one poll early in the campaign. I'd be worried if I were Hudak, because momentum early is usually not a good thing.
Deal Addict
Nov 24, 2004
3858 posts
516 upvotes
Toronto
florch wrote:
May 6th, 2014 11:15 am
High income earners don't take more from society, they give more to society. They earn more because they produce more. They sacrificed and risked more, and if they're successful they earn more. But they take only the same as everyone else.
This kind of statement, like "a rising tide lifts all boats", is pithy but IMO idealistic and easy to refute. The idea that all high-income earners give more to society than they take -- that they produce more, that this is because of sacrifice and risk -- is a blanket statement that may hold true in some cases (e.g., entrepreneurs) but is demonstrably untrue in a huge number of others.
Deal Expert
Mar 23, 2009
17015 posts
3870 upvotes
Toronto
Little Tim wrote:
May 6th, 2014 12:35 pm
And you think that is just because of taxes?
Of course not. But it's undoubtedly a significant component. Some of the centre-right are getting very nervous with Liberals' platform, since it's essentially an NDP platform.

In fact, the right leaning National Post claims the Wynne budget is even more "generous" than Bob Rae's budget back in the day. Whether that's true or not is not certain, but either way, it's an alarm bell that some centrists are going to heed.
Sr. Member
Apr 6, 2007
506 posts
59 upvotes
Little Tim wrote:
May 6th, 2014 12:33 pm
First of all, relax - take a deep breath - exhaaaaaaaaaaale... Now, doesn't that feel better? :)

Secondly, the world has never seen a capitalist country. Neither has there ever been such a thing as a socialist (or communist for that matter) country on this planet. These are theoretical constructs that have never actually been realized. The type of societal/economic system we have in North America is deeply regulated with very little in the form of true free markets. There's taxes, there's consumer protection, there's competition bureaus, there's environmental legislation, there's labour laws, there's protection of intellectual property etc. If anything I would argue that the US and Canada are tilting more towards socialism than capitalism if those are seen as two extremes on a spectrum. What is usually referred to as socialist/communist countries are really nothing more than straight dictatorships and have nothing to do with the actual theory of socialism or communism.

In addition to getting your terminology straight I would urge you to actually read posts before you respond to them. You can for example do that while you're taking that deep breath! :) I never said that tax rate would NOT factor into the decision by a corporation or individual to settle somewhere. What I said is that tax rate or the overall financial package (tax credits for example) is just one of many factors. My point still stands and that is that I have yet to see evidence that tax rate on its own is enough to cause a mass exodus in or out of any economic area - at least for any sustained economic benefit to that area. Ireland used to be the golden child of all right-wingers when they used low tax rates to lure corporations to the fair island, but many of the jobs that were created were low paying, call centre type jobs and as we all know, the entire house of cards soon collapsed spectacularly.

As for some slightly more socialist leaning countries, just look towards Scandinavia and your argument will again take a huge hit. Those are high-tax countries with high social benefits (free university education for example), but you don't see the high tax bracket people leaving those countries in droves.



I hate to bring this up, but would you say that Thorsten Heins gave more to society and produced more? I know it's not an original example, but many more can be given. I agree that someone who started out with their two bare hands and worked their way up to create a successful corporation definitely deserve rewards for their incredible drive and hard work. Problem is, those are extremely rare cases. High income earners often come from the financial industry, which has arguably been the cause of most of our current financial problems (without government regulation - nevermind intervention - it would have been much, much worse - so much for the free market...). Also, you will find many high paid corporate officials who never created much themselves, but rather got cushy high-paying jobs due to family relations and influence. Read this book for example.

I am very much in favour of creating a friendly economic environment for start-ups and small businesses, because I think that is where you will truly find hard working people. Some of them will make it into that high-earning club that you speak of. However, most of the ones already there are not self-made, but rather stand on the shoulders of money already made.

Btw, by the statement that you are arguing a point that doesn't affect you today, I assume that you are very young. I used to be young and idealistic as well. I was very much a libertarian, believing in the free market and the good in human nature. As I've read more and experienced more, those views have changed. I have no political affiliations and I lean in no direction, but I like to stay pragmatic and focus on evidence and what works.



That is Reaganomics in a nutshell and it has never worked. The only time in history that we had conditions that were close to pure capitalism were during and right after the industrial revolution. Very little government regulation and the results were massive labour exploitation with starving wages and inhuman working conditions. Huge environmental damage as well, but also huge profits. That's your evidence right there. I don't believe for a second that it would be any different today if another experiment with pure capitalism was attempted.
Wow, did you ever take me the wrong way. First of all, my pulse never came off the floor. Second, I'm not that young at all, but I've worked from sweeping floors to a position of large responsibility, so don't assume too much about me. I'm middle class, and my ambition to be upper middle class isn't limited by my age. I never asked for pure capitalism, but for your tale of 80's American politics we could also look at any other number of examples where incentive based economics benefit everyone. How is Norway or Alberta's rising tied working out for them? How did 1980's economic policy work in the USSR and whose people are better off today? I consider myself more pragmatic than idealistic, in fact I think that those that think we can all hold hands and sing kumbaya and then everyone goes out and makes the same money and works hard for the greater good is far more idealistic than an incentive based model.

The origin of the discussion was that in an attempt to buy low and middle income voters, the Wynne government attacked the middle class, AGAIN. There, that's the first time I've raised my voice. I felt that they've gone way too far -taking an extra 5.8% of a tax payer's remaining earnings is extreme in my opinion. I think it started with the payroll health tax that started at about $30K of income and peaked at about $70k of income was Dalton's first attack on the middle class and we've had 10 years of more of the same. Factor in massive corruption and waste, and I think we'd all be better off spending the money ourselves rather than trusting them with another dime.

As for the tilt of North American economies, I agree with you, but while we become a softer society, there's also a noticeable abdication of responsibility among regular people as we seek cradle to grave security.
Sr. Member
Apr 6, 2007
506 posts
59 upvotes
JHW wrote:
May 6th, 2014 12:54 pm
This kind of statement, like "a rising tide lifts all boats", is pithy but IMO idealistic and easy to refute. The idea that all high-income earners give more to society than they take -- that they produce more, that this is because of sacrifice and risk -- is a blanket statement that may hold true in some cases (e.g., entrepreneurs) but is demonstrably untrue in a huge number of others.
It's a generality, but a true one. I'm talking in the context of a good economy benefiting everyone, and assuming that a good economy is financially balanced.

What individuals produce and take from society is a different issue. It's not perfect in every example, but in the private sector, employers have to pay more for top talent, and they do it because it's worth it.

Do you have examples of upper middle class salaried workers in the private sector that don't produce more than they take? I'd like to learn from you.
Deal Expert
User avatar
Oct 26, 2003
31329 posts
2758 upvotes
Winnipeg
florch wrote:
May 6th, 2014 2:18 pm
It's a generality, but a true one. I'm talking in the context of a good economy benefiting everyone, and assuming that a good economy is financially balanced.

What individuals produce and take from society is a different issue. It's not perfect in every example, but in the private sector, employers have to pay more for top talent, and they do it because it's worth it.

Do you have examples of upper middle class salaried workers in the private sector that don't produce more than they take? I'd like to learn from you.
private sector is profit driven, therefore such thing would be kept to a minimum if the company is been efficient.
Deal Expert
Mar 23, 2009
17015 posts
3870 upvotes
Toronto
florch wrote:
May 6th, 2014 2:11 pm
The origin of the discussion was that in an attempt to buy low and middle income voters, the Wynne government attacked the middle class, AGAIN. There, that's the first time I've raised my voice. I felt that they've gone way too far -taking an extra 5.8% of a tax payer's remaining earnings is extreme in my opinion. I think it started with the payroll health tax that started at about $30K of income and peaked at about $70k of income was Dalton's first attack on the middle class and we've had 10 years of more of the same. Factor in massive corruption and waste, and I think we'd all be better off spending the money ourselves rather than trusting them with another dime.
Yeah, everyone here should be concerned. That payroll health tax dings most employees, but independent contractors don't pay this.

Technically, it's the employer that pays the EHT, but it's funding that could be used better, including used towards pensions or just as regular pay.
Member
Nov 25, 2011
422 posts
60 upvotes
201-8 Sampson Mews, …
divx wrote:
May 6th, 2014 2:21 pm
private sector is profit driven, therefore such thing would be kept to a minimum if the company is been efficient.
The bold part is where most companies fail. To be fair, it's not their fault. How do you measure the productivity of upper, middle class salaried workers? The number of meetings they attend?

Having worked in finance at many companies, I can tell you that I constantly see companies paying out salaries to people who are contributing very little especially at the top end. In fact I would go as far to say it would be very difficult for someone lower paid to NOT be contributing more than they take (they are easily let go if not). Where as the more you are paid the harder it is and more likely you are not contributing as much as you are being paid.

EDIT: I should clarify. What I am saying is that the farther away from the operations of the business, the harder it is to measure how much you are contributing to productivity (and vice versa). For this reason, higher paid upper middle class salaried workers are generally further away from operations and companies far too easily justify what they pay this level of employee without analysing it in too much detail...
Deal Addict
Jul 11, 2010
2959 posts
137 upvotes
michty6 wrote:
May 6th, 2014 2:34 pm
The bold part is where most companies fail. To be fair, it's not their fault. How do you measure the productivity of upper, middle class salaried workers? The number of meetings they attend?

Having worked in finance at many companies, I can tell you that I constantly see companies paying out salaries to people who are contributing very little especially at the top end. In fact I would go as far to say it would be very difficult for someone lower paid to NOT be contributing more than they take (they are easily let go if not). Where as the more you are paid the harder it is and more likely you are not contributing as much as you are being paid.

EDIT: I should clarify. What I am saying is that the farther away from the operations of the business, the harder it is to measure how much you are contributing to productivity (and vice versa). For this reason, higher paid upper middle class salaried workers are generally further away from operations and companies far too easily justify what they pay this level of employee without analysing it in too much detail...
As long as they're able to manage their drones to meet the bottom line, they've done their job.
Sr. Member
Apr 6, 2007
506 posts
59 upvotes
michty6 wrote:
May 6th, 2014 2:34 pm
The bold part is where most companies fail. To be fair, it's not their fault. How do you measure the productivity of upper, middle class salaried workers? The number of meetings they attend?

Having worked in finance at many companies, I can tell you that I constantly see companies paying out salaries to people who are contributing very little especially at the top end. In fact I would go as far to say it would be very difficult for someone lower paid to NOT be contributing more than they take (they are easily let go if not). Where as the more you are paid the harder it is and more likely you are not contributing as much as you are being paid.

EDIT: I should clarify. What I am saying is that the farther away from the operations of the business, the harder it is to measure how much you are contributing to productivity (and vice versa). For this reason, higher paid upper middle class salaried workers are generally further away from operations and companies far too easily justify what they pay this level of employee without analysing it in too much detail...
They've earned a lot of trust at the upper levels. They have more experience and likely didn't get promoted because they were lazy or dishonest.

A man with a bobcat moves more dirt than a man with a shovel. He produces more for his employer's client in less hours. He didn't work as hard, but he's worth much more per hour than the shovel man. He produces 100 times more than shovel man, but only gets paid twice as much. The bobcat consumes some of the profit. The client get some of the additional benefit in lower cost to get the same work done. The employer makes money by leveraging the man's time, the capital for the bobcat and the effort to put it together. The gov't gets more tax. Everyone wins.

Most companies don't fail just by having high talent employees, as long as they are productive enough to justify their compensation.
Member
Nov 25, 2011
422 posts
60 upvotes
201-8 Sampson Mews, …
florch wrote:
May 6th, 2014 3:48 pm
They've earned a lot of trust at the upper levels. They have more experience and likely didn't get promoted because they were lazy or dishonest.

A man with a bobcat moves more dirt than a man with a shovel. He produces more for his employer's client in less hours. He didn't work as hard, but he's worth much more per hour than the shovel man. He produces 100 times more than shovel man, but only gets paid twice as much. The bobcat consumes some of the profit. The client get some of the additional benefit in lower cost to get the same work done. The employer makes money by leveraging the man's time, the capital for the bobcat and the effort to put it together. The gov't gets more tax. Everyone wins.

Most companies don't fail just by having high talent employees, as long as they are productive enough to justify their compensation.
Just to be clear, I'm not saying every single person at a senior, high paid level in a company is useless and unproductive. It's the sentiment that 'all these guys are super-stars who are so incredibly productive we should pay them completely excessive salaries (and bonuses) and bend over backwards in our tax laws for them - where as lower paid guys are not driving the business forward at all and deserved to be paid very little' that I completely disagree with. There is absolutely no doubt in my mind that a CEO being paid 1,000 times more than the lowest paid worker at his company is almost certainly being overpaid. And I would say the cost in excessive unproductive pay at the top end of the scale far outweighs the cost of unproductive workers at the lower end by a huge margin. Personally I believe that most people (not all) being paid >$400k are likely overpaid and should be contributing more to society (in the form of taxes) for the value they taking out of it...
Sr. Member
Apr 6, 2007
506 posts
59 upvotes
michty6 wrote:
May 6th, 2014 3:59 pm
Just to be clear, I'm not saying every single person at a senior, high paid level in a company is useless and unproductive. It's the sentiment that 'all these guys are super-stars who are so incredibly productive we should pay them completely excessive salaries (and bonuses) and bend over backwards in our tax laws for them - where as lower paid guys are not driving the business forward at all and deserved to be paid very little' that I completely disagree with. There is absolutely no doubt in my mind that a CEO being paid 1,000 times more than the lowest paid worker at his company is almost certainly being overpaid. And I would say the cost in excessive unproductive pay at the top end of the scale far outweighs the cost of unproductive workers at the lower end by a huge margin. Personally I believe that most people (not all) being paid >$400k are likely overpaid and should be contributing more to society (in the form of taxes) for the value they taking out of it...
They already have it taken care of, so we can all sleep easy tonight. You pay 0% for the first $25k or whatever. Over $125k or somewhere near that, people pay 46.4%. The latest shot at the middle class takes it to 49.6% at the top end, but I don't think you'll be happy even with that. I think 46.4% is already more than enough. These people are already paying through the nose, the only bending over backwards in the tax laws is to screw them. I can't speak for CEO's - that's an entirely different realm, way out of our context here. I think that Canada/Ontario are great places for average people to live, but taking shots at the upper middle is just vote buying.

Top