Post by Souriquois on Sept 14, 2017 10:26:53 GMT -4
Reducing income inequality is a thing I am passionate about, not just as somebody with a background in economics, but as a human being, but it's hard to do...
Here is an op-ed about the backlash in Canada.
www.cbc.ca/news/business/tax-changes-inquality-1.4285436
Here's the thing: all their talking points are wrong
Since the first wave of Trudeau's tax reforms, the Canadian economy grew 4.5%, that is economic growth unheard of in the Western world for, oh I'd say a good 20 years. And this is with oil prices low, especially on heavy crude, which has a detrimental effect on the Canadian economy. I'd say if oil prices were not so low, you'd probably see economic growth of about 6 to 8 %... that is "emerging markets" level economic growth, like you see in Asia and Africa, where living standards have risen dramatically in recent years.
The growth in the Canadian economy has also coincided the same with the reduction in income inequality. Less income inequality = more economic growth. You shouldn't have to be a rocket scientist to see this. The working class masses spending is better for the economy overall than a few rich people spending, because there is more of them. Why the recovery has been so slow since the 2008 recession is because the poor are not spending, since all they can afford is the necessities of survival (and not even that in some instances). Economies, both capitalist and socialist, need the majority of people consuming in order to function, this is an undeniable truth. It's basically supply and demand, when income inequality is high, demand is low, slowing the economy. Reduce income inequality, demand rises, businesses have to keep up supply to meet the demand, they hire more people, who then make money and spend money. I don't know how rich people do not understand this, it's blatantly obvious. Reducing income inequality would be in their best interest.
The only thing that surprised me was how quick it happened (I was expecting recovery to take years). Basically, the Canadian economy now is the best it has been in 30 years, and income inequality is the lowest it has been since the 1990s. It's still there, but the gap is slowly closing, and the economy is growing as the gap closes.
I voted knowing my taxes would go up, I am in higher income bracket (not bragging, actually have gratitude because I believe I have been blessed and try to give back), I get paid the big bucks because I know this stuff.
I am also a human being, though, so I don't want people in poverty (I grew up poor too, it sucks).... it just so happens that my personal moral views happen to coincide with the cold hard facts of how economies work. Poverty and income inequality are bad for economies. Always have, always will be. Hell, even the stocks of companies with unionized workforces, who pay their employees as living wage, perform better on the markets.
This is why for much of history, noblesse oblige was taken seriously. If the rich don't share their wealth, the torches and pitchforks come out. They will lose too eventually. Wealth trickles up, so does poverty.
Raising taxes on the rich is not a class war. If the rich keep hording money like Ebeneezer Scrooge while the masses suffer, you will eventually have a real class war, and it won't be pretty. We saw this in Europe with the rise of fascism, Russia with the Bolshevik Revolution, Cuba with their revolution, all which were bloody. I think we are on the start of it, with Trump being elected President of the US and the rise of right-wing populism in Europe. Not to mention, Dickens wrote about this extensively in his fictional works.
Why don't people see this?
I guess it's the same with people who deny climate change, when the evidence is right in front of them.
Here is an op-ed about the backlash in Canada.
Backlash against tax changes shows how hard it is to promote equality
Reducing economic inequality is a popular idea — provided a government doesn't actually try to do it
If you can believe Finance Minister Bill Morneau, his latest proposed changes to the tax system are intended to fulfil an election promise to make sure poorer Canadians share in the wealth.
"Our overall goal is to make sure that our system is working, that it's fair, that we don't have tax advantages that are going to the wealthy," Morneau told Anna Maria Tremonti on The Current.
In the segment, which also included opposition critics, Morneau insisted it was not an attack on small businesses.
The backlash, however, has been intense.
'Class War'
People like doctors and farmers, whom we don't typically think of as the super-rich, are fearful of losing various tax breaks. They're angry.
The Canadian Federation of Independent Business has weighed in against the changes saying they directly target small business in three costly ways.
Critics, including a well-known national columnist, have described the move as "class war."
New income data from Statistics Canada out Wednesday indicate the split between rich and poor in Canada has not been fixed.
It is a quite valid political position to criticize Morneau's plan. Some of those who accuse the government of "class war" may believe inequality motivates the poor to try harder and justly rewards the rich for their hard work.
But the proposed changes show the government is worried about a sharp rise in the number of better-off Canadians using income sprinkling, passive investments and business capital gains breaks to reduce the taxes they pay.
More than anything, the reaction is reminiscent of the outrage that faced the late Conservative finance minister Jim Flaherty when, as a trick or treat on Halloween 2006, he eliminated the tax break on income trusts.
For those who don't remember, back then a relatively innocent tax break for certain kinds of investment income grew to become a monster threatening to swallow the entire financial system. Even large corporations such as BCE and Telus had announced they were converting to income trusts, forcing Flaherty's hand to protect future tax revenue.
Flaherty and the Conservatives faced howls of indignation from those who had been benefiting from the tax breaks. And as usual those howls were not from the poor.
In the dying days of the Harper government there seemed to be a groundswell in favour of greater equality and the Liberals won the next election with economic equality as one of the pillars of their campaign.
'Detrimental to growth'
People like French economist Thomas Piketty, with his 2013 bestseller Capital in the Twenty-First Century, advanced the view that modern capitalism could not survive endless polarization between rich and poor.
"The trouble is, when inequality gets too extreme, it can actually be detrimental to growth," said Piketty. "It can reduce mobility, makes it more difficult for new groups to make the right investment to enter the economic game."
You would think the political chaos in the U.S. would be enough of a warning about the dangers of growing inequality. Statistics show poor people, especially uneducated white men of the type who support Donald Trump in large numbers, are falling into despair.
But changing the rules in favour of equality is a difficult political task.
Swiss cheese
Our tax system, superficially intended to make sure the rich pay a greater share of the bill, is actually a Swiss cheese of exceptions.
Turning yourself into a company is nothing new. I have journalist friends who have done it, insisting that they be paid as freelancers and thereby able to claim everything from computers to cars to babysitting as before-tax business expenses. The difference, according to Morneau, is that to take advantage of the additional tax provisions he is trying to eliminate, incomes must be more than three times the national average.
A good accountant is clearly an advantage for those who can afford one.
Even if you are not incorporated, well-managed tax planning offers large advantages to people with money.
The wealthy and the accountants who represent them point out that complex tax avoidance schemes are completely legal, but even garden-variety tax breaks favour the rich.
Dividend tax credits are unknown to the majority who don't own shares. People who can't afford to save don't get the advantages of tax-free savings accounts and RRSPs.
Giving a tax break is easy
One of the most glaring tax breaks for the rich is the one that allows you to escape capital gains taxes on your principal residence. For those with multimillion-dollar homes, the recent rise in asset prices has been an enormous tax windfall that renters will never see.
Just imagine the backlash if the government tried to change those rules.
It is a well-known principal of policy economics that giving out tax breaks is easy but — as Flaherty found, and now Morneau — taking them away is hard.
It is not strange that Canadians are anxious to protect their wealth and try to preserve the perks that keep them comfortable. Trying to get richer and trying to stay that way are two of the driving forces of human survival.
If, as Morneau says, the government wants to cut tax loopholes for the wealthy, it will repeatedly find itself battling those vested interests.
Reducing economic inequality is a popular idea — provided a government doesn't actually try to do it
If you can believe Finance Minister Bill Morneau, his latest proposed changes to the tax system are intended to fulfil an election promise to make sure poorer Canadians share in the wealth.
"Our overall goal is to make sure that our system is working, that it's fair, that we don't have tax advantages that are going to the wealthy," Morneau told Anna Maria Tremonti on The Current.
In the segment, which also included opposition critics, Morneau insisted it was not an attack on small businesses.
The backlash, however, has been intense.
'Class War'
People like doctors and farmers, whom we don't typically think of as the super-rich, are fearful of losing various tax breaks. They're angry.
The Canadian Federation of Independent Business has weighed in against the changes saying they directly target small business in three costly ways.
Critics, including a well-known national columnist, have described the move as "class war."
New income data from Statistics Canada out Wednesday indicate the split between rich and poor in Canada has not been fixed.
It is a quite valid political position to criticize Morneau's plan. Some of those who accuse the government of "class war" may believe inequality motivates the poor to try harder and justly rewards the rich for their hard work.
But the proposed changes show the government is worried about a sharp rise in the number of better-off Canadians using income sprinkling, passive investments and business capital gains breaks to reduce the taxes they pay.
More than anything, the reaction is reminiscent of the outrage that faced the late Conservative finance minister Jim Flaherty when, as a trick or treat on Halloween 2006, he eliminated the tax break on income trusts.
For those who don't remember, back then a relatively innocent tax break for certain kinds of investment income grew to become a monster threatening to swallow the entire financial system. Even large corporations such as BCE and Telus had announced they were converting to income trusts, forcing Flaherty's hand to protect future tax revenue.
Flaherty and the Conservatives faced howls of indignation from those who had been benefiting from the tax breaks. And as usual those howls were not from the poor.
In the dying days of the Harper government there seemed to be a groundswell in favour of greater equality and the Liberals won the next election with economic equality as one of the pillars of their campaign.
'Detrimental to growth'
People like French economist Thomas Piketty, with his 2013 bestseller Capital in the Twenty-First Century, advanced the view that modern capitalism could not survive endless polarization between rich and poor.
"The trouble is, when inequality gets too extreme, it can actually be detrimental to growth," said Piketty. "It can reduce mobility, makes it more difficult for new groups to make the right investment to enter the economic game."
You would think the political chaos in the U.S. would be enough of a warning about the dangers of growing inequality. Statistics show poor people, especially uneducated white men of the type who support Donald Trump in large numbers, are falling into despair.
But changing the rules in favour of equality is a difficult political task.
Swiss cheese
Our tax system, superficially intended to make sure the rich pay a greater share of the bill, is actually a Swiss cheese of exceptions.
Turning yourself into a company is nothing new. I have journalist friends who have done it, insisting that they be paid as freelancers and thereby able to claim everything from computers to cars to babysitting as before-tax business expenses. The difference, according to Morneau, is that to take advantage of the additional tax provisions he is trying to eliminate, incomes must be more than three times the national average.
A good accountant is clearly an advantage for those who can afford one.
Even if you are not incorporated, well-managed tax planning offers large advantages to people with money.
The wealthy and the accountants who represent them point out that complex tax avoidance schemes are completely legal, but even garden-variety tax breaks favour the rich.
Dividend tax credits are unknown to the majority who don't own shares. People who can't afford to save don't get the advantages of tax-free savings accounts and RRSPs.
Giving a tax break is easy
One of the most glaring tax breaks for the rich is the one that allows you to escape capital gains taxes on your principal residence. For those with multimillion-dollar homes, the recent rise in asset prices has been an enormous tax windfall that renters will never see.
Just imagine the backlash if the government tried to change those rules.
It is a well-known principal of policy economics that giving out tax breaks is easy but — as Flaherty found, and now Morneau — taking them away is hard.
It is not strange that Canadians are anxious to protect their wealth and try to preserve the perks that keep them comfortable. Trying to get richer and trying to stay that way are two of the driving forces of human survival.
If, as Morneau says, the government wants to cut tax loopholes for the wealthy, it will repeatedly find itself battling those vested interests.
www.cbc.ca/news/business/tax-changes-inquality-1.4285436
Here's the thing: all their talking points are wrong
Since the first wave of Trudeau's tax reforms, the Canadian economy grew 4.5%, that is economic growth unheard of in the Western world for, oh I'd say a good 20 years. And this is with oil prices low, especially on heavy crude, which has a detrimental effect on the Canadian economy. I'd say if oil prices were not so low, you'd probably see economic growth of about 6 to 8 %... that is "emerging markets" level economic growth, like you see in Asia and Africa, where living standards have risen dramatically in recent years.
The growth in the Canadian economy has also coincided the same with the reduction in income inequality. Less income inequality = more economic growth. You shouldn't have to be a rocket scientist to see this. The working class masses spending is better for the economy overall than a few rich people spending, because there is more of them. Why the recovery has been so slow since the 2008 recession is because the poor are not spending, since all they can afford is the necessities of survival (and not even that in some instances). Economies, both capitalist and socialist, need the majority of people consuming in order to function, this is an undeniable truth. It's basically supply and demand, when income inequality is high, demand is low, slowing the economy. Reduce income inequality, demand rises, businesses have to keep up supply to meet the demand, they hire more people, who then make money and spend money. I don't know how rich people do not understand this, it's blatantly obvious. Reducing income inequality would be in their best interest.
The only thing that surprised me was how quick it happened (I was expecting recovery to take years). Basically, the Canadian economy now is the best it has been in 30 years, and income inequality is the lowest it has been since the 1990s. It's still there, but the gap is slowly closing, and the economy is growing as the gap closes.
I voted knowing my taxes would go up, I am in higher income bracket (not bragging, actually have gratitude because I believe I have been blessed and try to give back), I get paid the big bucks because I know this stuff.
I am also a human being, though, so I don't want people in poverty (I grew up poor too, it sucks).... it just so happens that my personal moral views happen to coincide with the cold hard facts of how economies work. Poverty and income inequality are bad for economies. Always have, always will be. Hell, even the stocks of companies with unionized workforces, who pay their employees as living wage, perform better on the markets.
This is why for much of history, noblesse oblige was taken seriously. If the rich don't share their wealth, the torches and pitchforks come out. They will lose too eventually. Wealth trickles up, so does poverty.
Raising taxes on the rich is not a class war. If the rich keep hording money like Ebeneezer Scrooge while the masses suffer, you will eventually have a real class war, and it won't be pretty. We saw this in Europe with the rise of fascism, Russia with the Bolshevik Revolution, Cuba with their revolution, all which were bloody. I think we are on the start of it, with Trump being elected President of the US and the rise of right-wing populism in Europe. Not to mention, Dickens wrote about this extensively in his fictional works.
Why don't people see this?
I guess it's the same with people who deny climate change, when the evidence is right in front of them.