National Economy

[WarrenC12]

Originally Posted by Acajack

Think of all the huge mansions (quite common in Greater Vancouver) where the residents have zero dollars in reported income for tax purposes.

Asset taxation and inheritance taxation would help that a lot. Good luck getting them on the books though.

[Innsertnamehere]

Originally Posted by WarrenC12

I'm not too familiar with the SS system, other than I've heard what you're saying before. Is it paying big money to people who already have big incomes (like OAS) or is it a lifeline for those who'd be homeless otherwise?

Overall I think the US has more of a revenue problem than a spending problem. Although I'm sure the military could take a few cuts.

SS from my understanding is "self funded", but it's not funded in the same way CPP is.


CPP operates like a pension plan, a dedicated fund which has to be set up to make payments for a minimum period (right now it's funded into the 2070's or something). There is no risk to taxpayers to have to make up the difference.

SS is direct funded - payments made to beneficiaries are directly funded from payments made that same year by contributors. If there is a gap between the two (i.e. beneficiaries need more money than there are contributions), the federal government has to make up the difference. SS does have a fund to make up differences from previous years of surpluses of collections - but it has begun to draw on these funds and will likely drain them over the coming years, leaving the federal government liable to make up the difference.

This is closer to how OAS operates - a direct liability to the government. Most of SS is funded through payroll deductions sort of like CPP, a sort of indirect tax, but the general tax fund is liable for it as well.

As of today, SS accounts for nearly 1/4 of all US federal government spending.

SS also is actually far worse than OAS in that its income cut offs are much higher and its payouts much larger. The average SS payment is almost triple that of CPP., and max contributions top out at over $170,000 USD - nearly $250,000 CAD.

OAS is worse in that it's actually costing the Canadian federal government a ton of money *today*. SS is more of a future liability for the US fed, but one which will be a much more expensive, larger problem, if changes aren't made.

If PP does one thing federally to fix the budget, it will be to fix OAS. Reduce the income cutoff, eliminate the 10% bonus for those over 75, and roll back eligibility to 67 again like Harper did. That will fill an absolutely massive hole in the federal budget.

[WarrenC12]

Originally Posted by P'tit Renard

It's more like CPP in that it's a payroll deduction. The problem is that by law the Social Security administration must invest in US debt, and they can't function independently like CPPIB. The low interest environment since GFC has absolutely devastated social security's balance sheet.

They're one of the biggest causalities of this low interest mania.

So the promised payouts for SS are too high? It should still be self funded even if the investment gains are weak.

CPP is definitely a solid system and beefing it up is one of the better things the JT government has done.

[WarrenC12]

Originally Posted by Innsertnamehere

SS also is actually far worse than OAS in that its income cut offs are much higher and its payouts much larger. The average SS payment is almost triple that of CPP., and max contributions top out at over $170,000 USD - nearly $250,000 CAD.

OAS is worse in that it's actually costing the Canadian federal government a ton of money *today*. SS is more of a future liability for the US fed, but one which will be a much more expensive, larger problem, if changes aren't made.

If PP does one thing federally to fix the budget, it will be to fix OAS. Reduce the income cutoff, eliminate the 10% bonus for those over 75, and roll back eligibility to 67 again like Harper did. That will fill an absolutely massive hole in the federal budget.

Understandably SS is a lot harder to change because people are paying into it and feel they are owed (rightly).

Yes OAS needs at least a clawback income level freeze over the next 10-20 years to let inflation do the hard work.

I would rather not change the 65 year mark but stop paying it to people who are already wealthy in their old age.

[P'tit Renard]

Originally Posted by WarrenC12

So the promised payouts for SS are too high? It should still be self funded even if the investment gains are weak.

Yes the payouts for SS are definitely way too high, eventually the gap will have to be filled with general revenue if there's no serious reform. Ironically it's the Republicans who are hunkering to reform it and Dems keep punting the ball.

CPP is definitely a solid system and beefing it up is one of the better things the JT government has done.

I would think Chretien and Paul Martin would give him a serious thrashing if JT dared to screw up CPP. Paul Martin is the mastermind behind setting us today's successful CPP system.

[niwell]

Originally Posted by 1overcosc

That's actually not true. Income taxes are much more administratively complex. At least the way we implement in North America.

Yes, good point on North America. That is largely by choice / various pressures and not an inherent characteristic.

Really, both types of taxes can be overly complicated in the ways they are currently administered. The Third Way / neoliberal urge to 🞵🞵🞵🞵 around with the margins is very strong.

[lio45]

Originally Posted by Acajack

I am also not sure about income tax being less regressive than consumption tax.

A lot of passive wealth escapes real or at least fair taxation or is taxed very lightly (13-15% in Canada in general) when that money is actually used.

Think of all the huge mansions (quite common in Greater Vancouver) where the residents have zero dollars in reported income for tax purposes.

Income-wise, I’m below the poverty line. (For yearly personal income.) I have no reason to have my company pay me more than what I need to live per year. (I’m not even that useful, I spend way too much time on SSP instead of working I don’t deserve more than a low wage.)

Taxing wealth is better than taxing income, but it’s also much more difficult. I would likely switch my wealth to another format, should any given jurisdiction I’m involved in become too rapacious.

[Build.It]

1. I was using "social security" as blanket term for combined retirement, and was referring to both Canada and the US.

2. Pension/OAS needs to be capped at $50K per year (or some number in that range) - if you're retired and your taxable income the previous year was less than $50K, then you get a top up. If your income was more, then you're on your own.

3. Qualifying age needs to be increased to 70.

4. I also don't see why OAS/Pension can't be privatized - ie have private funds invest and distribute the funds, just like they do for rich people. (this might already be the case, but I'm not sure)

5. It is critically important that kids learn personal finance in school, every year from grade 4 until graduation - a mandatory subject. They need to learn how to manage their money so that they don't need to rely on the government when they become adults. Wealth creation is a skill that can be taught to anyone. (Some still will, but we need reduce that as much as possible)

6. The federal government's responsibility should be limited to protecting the border and conducting international relations. Everything else (including all social programs) can be downloaded to the provinces.

Basically, where I'm headed with this is that the system needs to be built so that anyone with an IQ over 80 can take care of themselves once they turn 18, versus what we have now (where numerous people with 120+ IQs, and degrees rely on social assistance to get by).

A nation of independently wealthy citizens won't need as many social programs (since they'd be able to pay for it themselves), and that is how you get taxes down.

[Build.It]

Originally Posted by WarrenC12

Asset taxation and inheritance taxation would help that a lot. Good luck getting them on the books though.

How would you tax an unrealized gain? It's basically impossible to do so at scale without it resulting in capital flight and brain drain.

I get that you want to reduce wealth inequality (so do I), but you need to realize that there are no shortcuts to solve this problem.

The only way out of this mess that would actually be sustainable is to make sure every young person gets a proper education so they can take full responsibility for themselves.

[MolsonExport]

Originally Posted by lio45

Income-wise, I’m below the poverty line. (For yearly personal income.) I have no reason to have my company pay me more than what I need to live per year. (I’m not even that useful, I spend way too much time on SSP instead of working I don’t deserve more than a low wage.)

Taxing wealth is better than taxing income, but it’s also much more difficult. I would likely switch my wealth to another format, should any given jurisdiction I’m involved in become too rapacious.

you don't receive income as a landlord?

by your bizarre accounting, income wise, almost all children are below the poverty line. almost all seniors are below the poverty line.

are there any goalposts you won't move?

[Acajack]

Originally Posted by lio45

Income-wise, I’m below the poverty line. (For yearly personal income.) I have no reason to have my company pay me more than what I need to live per year. (I’m not even that useful, I spend way too much time on SSP instead of working I don’t deserve more than a low wage.)

Taxing wealth is better than taxing income, but it’s also much more difficult. I would likely switch my wealth to another format, should any given jurisdiction I’m involved in become too rapacious.

Wealth that's just sitting there is difficult to tax. It's when it starts to move and be used that you can tax it, like for the purchase of luxury items.

[MolsonExport]

Basically, where I'm headed with this is that the system needs to be built so that anyone with an IQ over 80 can take care of themselves once they turn 18,

-single moms with multiple children by deadbeat/dead dads?
-people with severe physical disabilities?
-people with debilitating mental illness?
-people with debilitating substance abuse issues?
-maimed veterans?
-people suffering from progressive diseases?
-people living in places where the backbone of the economy suddenly gets wiped out through no fault of their own (e.g., the cod fishery in Newfoundland in the 1990s)?
-people laid off due to global recessions?
-people suddenly losing their livelihood due to weather/climate and natural disasters, including pandemics, earthquakes?
-people losing their employment due to geopolitical developments (e.g. Trump's boneheaded 25% tariff threat)?

No thanks, I would not want to live in your vision of Canada. Bootstraps do not solve most employment problems.

[YOWetal]

Originally Posted by Build.It

1. I was using "social security" as blanket term for combined retirement, and was referring to both Canada and the US.

2. Pension/OAS needs to be capped at $50K per year (or some number in that range) - if you're retired and your taxable income the previous year was less than $50K, then you get a top up. If your income was more, then you're on your own.

3. Qualifying age needs to be increased to 70.

4. I also don't see why OAS/Pension can't be privatized - ie have private funds invest and distribute the funds, just like they do for rich people. (this might already be the case, but I'm not sure)

5. It is critically important that kids learn personal finance in school, every year from grade 4 until graduation - a mandatory subject. They need to learn how to manage their money so that they don't need to rely on the government when they become adults. Wealth creation is a skill that can be taught to anyone. (Some still will, but we need reduce that as much as possible)

6. The federal government's responsibility should be limited to protecting the border and conducting international relations. Everything else (including all social programs) can be downloaded to the provinces.

Basically, where I'm headed with this is that the system needs to be built so that anyone with an IQ over 80 can take care of themselves once they turn 18, versus what we have now (where numerous people with 120+ IQs, and degrees rely on social assistance to get by).

A nation of independently wealthy citizens won't need as many social programs (since they'd be able to pay for it themselves), and that is how you get taxes down.

I can see a lot of surface logic to your program when you lay it out like this but you need to think deeper.

Pensions and caps and privatization will leave some people (and I accept mostly irresponsible people) in real trouble. Old people used to have to eat catfood and without large families even more old people would be in dire straits now.

I think it's hard for conservatives to accept just how hopeless a lot of people are. An IQ of 80 makes life extremely difficult. They are nearly unemployable. Here's commentary from someone you probably trust:
https://www.youtube.com/watch?v=HPmaAE3jq6I

Same with habits such as personal finance and general conscientiousness which while not as inherited as IQ certainly are related to upbringing but regardless blaming them doens't solve the problem that 1/3 to 1/2 of people will save nothing for retirement, nothing for their kids education etc.

Downloading to the provinces sounds great but doesn't really solve the budget problem except the provinces borrow at higher rates. And many things would be difficult for example does PEI now needs a Air Accident investigation unit? I guess you would get rid of equalization which makes Quebec separate and the Maritimes destitute. Sure Alberta can enjoy lower income tax rates and no sales tax with similar services but Canada will be finished.

[Build.It]

Originally Posted by MolsonExport

you don't receive income as a landlord?

by your bizarre accounting, income wise, almost all children are below the poverty line. almost all seniors are below the poverty line.

are there any goalposts you won't move?

He has a corporation...

[YOWetal]

Originally Posted by Build.It

How would you tax an unrealized gain? It's basically impossible to do so at scale without it resulting in capital flight and brain drain.

I get that you want to reduce wealth inequality (so do I), but you need to realize that there are no shortcuts to solve this problem.

The only way out of this mess that would actually be sustainable is to make sure every young person gets a proper education so they can take full responsibility for themselves.

Certainly you'd need a very high threshold to tax unrealized gains. The Liberals came after these individual corps enough already that it's not a big issues.

Tax capital gains as income does phased in would encourage a lot of people to take the gains now. But otherwise in Canada the tax man eventually gets it. There is no death step up loop hole like the US. We tax these gains on death which is actually more effective than an inheritance tax (and more fair)

I agree focusing on education is great but you want to get rid of federal student loans, scholarships and education funding. How does that square with your world view?

[Wigs]

Originally Posted by Build.It

He has a corporation...

And on that day we learned Lio Inc. was a thing

[Acajack]

And on this day I was surprised to learn that so many intelligent people are unaware that business people use creative accounting and set-ups in order to pay less tax.

There is a difference between tax avoidance (legal) and tax evasion (illegal).

[WarrenC12]

Originally Posted by Build.It

How would you tax an unrealized gain? It's basically impossible to do so at scale without it resulting in capital flight and brain drain.

I get that you want to reduce wealth inequality (so do I), but you need to realize that there are no shortcuts to solve this problem.

The only way out of this mess that would actually be sustainable is to make sure every young person gets a proper education so they can take full responsibility for themselves.

I didn't say unrealized gains. I said assets. Think property taxes. Anything can get taxed annually based on value at a relatively low level.

[Build.It]

Originally Posted by YOWetal

I can see a lot of surface logic to your program when you lay it out like this but you need to think deeper.

I have thought quite deeply about this actually (for years as a matter of fact).

Originally Posted by YOWetal

Pensions and caps and privatization will leave some people (and I accept mostly irresponsible people) in real trouble. Old people used to have to eat catfood and without large families even more old people would be in dire straits now.

You misunderstood me. Every worker contributes to the fund. The fund as a whole gets partitioned to say 10 investment firms who are responsible to invest and grow their portion of the funds. I'm not saying each citizen gets their individual contributions invested privately - I was talking about the total CPP collected.

Originally Posted by YOWetal

I think it's hard for conservatives to accept just how hopeless a lot of people are. An IQ of 80 makes life extremely difficult. They are nearly unemployable. Here's commentary from someone you probably trust:
https://www.youtube.com/watch?v=HPmaAE3jq6I

I'm not saying that their life is not harder, but it's a LOT harder for low IQ people to be independent today than it was in the 90s. In the 90s a regular warehouse worker could easily afford to house themselves. Today they can't. This is solved by deregulation (discussed to great length on this forum already).

Originally Posted by YOWetal

Same with habits such as personal finance and general conscientiousness which while not as inherited as IQ certainly are related to upbringing but regardless blaming them doens't solve the problem that 1/3 to 1/2 of people will save nothing for retirement, nothing for their kids education etc.

If they don't save they'll be guaranteed an income of around $50K so they don't have to eat cat food.

Originally Posted by YOWetal

Downloading to the provinces sounds great but doesn't really solve the budget problem except the provinces borrow at higher rates. And many things would be difficult for example does PEI now needs a Air Accident investigation unit? I guess you would get rid of equalization which makes Quebec separate and the Maritimes destitute. Sure Alberta can enjoy lower income tax rates and no sales tax with similar services but Canada will be finished.

Yes.

[WarrenC12]

Originally Posted by Acajack

And on this day I was surprised to learn that so many intelligent people are unaware that business people use creative accounting and set-ups in order to pay less tax.

There is a difference between tax avoidance (legal) and tax evasion (illegal).

Of course. The wealthier the corporation (or the individual), the more they can take advantage of these things and pay for more expensive tax accountants.

Nobody seems to be willing to fix the tax code. At least some governments are in favor of loading up the CRA and auditing more people.