The Top Pays The Most Taxes—They Must Be Taxed More?

https://grantcoulson.files.wordpress.com/2014/04/incentiveseverywherepicturecorrect1.jpg?w=444&h=288

    This is the distribution, by quintiles (fifths or 20%) of taxpayers, either families or individuals, of tax revevue. These graphs demonstrate that the top 20 per cent. whether families or individuals, pay well over 50 per cent of the taxes. This is “progressive” taxation which punishes success and rewards failure. It ensures you get less success and more failure. Good system.

        Do not think about, write about or deal with  human behavior without determining the effects of incentives. It’s not their money, of course they’ll waste it.

National Post – (Latest Edition)
William Watson
Financial Post

Tax-thanks are due
What about income-tax-paying inequality?

As the days click down to the new May 5 deadline for this year’s income-tax filings, a grateful nation stands as one and thanks the hardy band of its citizens who do the heaviest lifting at tax time, the top fifth of the population, which fords the extra stream, climbs the extra mountain, follows the extra rainbow, writes the extra zeros on its tax cheques, and, well, you get the idea.

Actually, the nation, whether grateful or not, does nothing of the sort. It cashes the cheques as fast as it can and spends the money in the blink of a wink, whether on senators’ expense allowances, new Order of Canada websites, or TV ads for the ruling party, as well as on one or two other things that may actually be worthwhile, and then sets its collective mind to how it can get even more money from the faithful fifth next year. But your loyal correspondent is more than willing to offer a round of appreciation and praise for the much maligned, denigrated and neglected 20 per cent. You know who you are. Nobody else is going to thank you. Take a minute as you try to get your breathing back to normal after the sticker shock at the bottom of your tax forms to pat yourself on the back. Without you the federal and provincial governments would have to close up shop. (Now wait a minute, isn’t that an idea!)

The chart shows the share of total income taxes paid by economic families, defined as two people or more living together in any of several recognized permutations and combinations, and by unattached individuals. The table is meant to be self-explanatory but in case it isn’t, and to dwell on these numbers for a moment, what it says is that the bottom 20 per cent of families paid just 1.2 per cent of all the income taxes, federal and provincial, that were paid by families. The next 20 per cent paid more: 5.8 per cent, which means the bottom 40 per cent of families paid just 7.0 per cent of all family-paid income taxes. By contrast, the top 40 per cent paid 80.5 per cent, with the top 20 per cent contributing fully 57.5 per cent. One-fifth of families paying between a half and two-thirds of taxes. Way to go, top 20 per cent! Thanks for fording, climbing, etc, and sending in those cheques. (In fact, my family is in there so we thank ourselves, too.) You all deserve the Order of Canada. Maybe under the new rules you’ll get it. Maybe everyone will. Isn’t it bad for people’s self-esteem if some Canadians get the Order and others don’t?

In the same way, the chart says that the bottom 20 per cent of unattached individuals paid less than one per cent of all the income taxes paid by unattached individuals. The bottom 40 per cent paid only 2.5 per cent, while the top 40 per cent paid a whopping 88.8 per cent, including almost exactly two-thirds of the total paid by the top 20 per cent.

I say “whopping” but in fact I have no idea whether the allocation of shares pictured in the chart constitutes a morally satisfactory state of affairs, assuming morality and taxation have anything to do with each other. Maybe the bottom 20 per cent are so poorly off they should pay even less income tax than the $900 (for families) and $300 (for individuals) that they averaged. On the other hand, you do sometimes hear it argued that if people aren’t paying taxes, they’re not really invested in the society, so maybe they should have to pay more.

Maybe in the same way the top 20 per cent are so rich that paying only 57.5 or 66.8 per cent of the total isn’t nearly enough. In our house, I must say, we don’t actually feel that rich, especially after losing a third of our income to income taxes, not to mention similar hits from property, consumption, school board and other taxes.

To help make such moral judgments, it would be useful to have the dollar dividing lines for these income quintiles. They must exist but I can’t find them, not even after an hour of searching StatCan’s website, which has got to be the most user-unfriendly in the Western world, maybe the whole world, though I haven’t tried StatChina’s website. Perhaps the numbers I’m looking for are on the charts where you need a special reader (not Adobe) only downloadable to Windows machines. (Canadian macro data I now get from FRED, the data site at the St. Louis Federal Reserve Bank, which is a treat to use.)

Even without the dollar boundary lines, however, we’ve got one-fifth of Canadians paying one-half to two-thirds of all income taxes. My gut reaction, which I admit is partly determined by my (nearby to my gut) pocketbook reaction, is that that’s enough.

In closing, let me report the most satisfying part of this little statistical exercise: When I clicked on the CANSIM url listed on a pdf file I’d saved of the chart my computer asked me: “Security alert: Do you trust gc.ca?” Do I trust gc.ca? That’s material for a dozen more columns. Does anyone trust gc.ca? Especially in an election year.

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     The government, as I mentioned, has misplaced $11,050.00 of the money I’ve sent them. The “progressive” system required me to pay over $36,000.00. I paid it all and then they lost over 30% of it. Do I trust them? You be the judge.

Government Job or Respect–Which’ll It Be?
Cheerio and ttfn,
Grant Coulson, Ph.D.
Author, “Days of Songs and Mirrors: A Jacobite in the ‘45.”
Cui Bono–Cherchez les Contingencies

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