Wednesday, March 31, 2010

Flat tax good for Canada too

Did you submit your 2009 income tax form yet?  Do you ever wonder why it is so complex?  And then there is the paradoxical situation where the government gives us tips on how to save income tax and offers "tax breaks" if we perform certain actions then provide proof. Talk about manipulation. That is the carrot-and-stick approach to controlling us that governments in Canada and around the world seem to have perfected. They want, no need your money, as much as possible NOW! But they are willing to play a game with us all and see how clever we  can be at reducing or avoiding payment. Some of us even hire people to avoid payment - doesn't that seem ludicrous?
The income tax in Canada was a temporary measure instituted by the government in 1917 to help finance World War I. It was so easy to put into law and so easy to keep, that here we are 93 years later and it has become a fixture of life. The government even jokes about it on their website.  But most of us never really analyze what we get in return for this huge expense, maybe we should. In almost very other aspect of our lives we carefully shop around for the various goods or services that we use. There is choice, we buy this car not that one, we choose that peanut butter, not the other - choice is everywhere. Not in government "services" - someone else chooses for us but we pay. Of course they must know what they are doing, right?
About this time last year I wrote about the Fraser Institute's flat-tax proposal. You can see the tax form for individuals in the corner. It's just ten lines, simple, no loopholes. But if it were instituted it would destroy the industry built up around tax preparation, CA's, lawyers, publishers, tax boggles the mind. The government would have to bail them out....we don't want to go there do we? You wonder just who is the government working for, who are they protecting?   Is it us?
This week Dan Mitchell of the CATO Institute released a flat tax proposal for the Americans. It's worth a look, it's good for Canada too.


  1. Dear Mr. Small,

    I occasionally stumble across your blog while surfing the internet. I've been wanting to post a comment for some time but could never really be bothered. This post of yours requires a rejoinder.

    Your blog reads like a bad take off of The Onion.

    I watched this dumbass video which was filled with bad logic and lies. Allow me to point them out to you so you can review the video again to see if you agree.

    The guy says 'No Loopholes'. WRONG! The tax post cards he was showing already had loopholes in the forms of deductions and credits, etc. He has already disproven the case he's trying to make. Not only that, but once in place, it's subject change in the years ahead. I guess what he meant was 'No Loopholes At First'.

    He says 'No Double Taxation'. There is no such thing as double taxation. There is deferred taxation. For example, the inheritance tax that your estate may pay after your passing is often thought of as a double tax. It's not. You're paying it later than you would if it had all been paid up front while you're alive. The money is still needed and you're allowed to keep it as long as possible.

    He says it's 'easier to enforce'. How?? You're still going to need the IRS to do audits.

    He presents ONLY perceived benefits of the flat tax. As a bright and an atheist you should be more skeptical. Why doesn't he present the cons to his argument? Could it be because they outway the benefits?

    The 17% he sights as a flat tax rate is too low. It has to be nearer 30% to cover government expenses.

    It's more regressive than what we have now. He's wrong to say Bill Gates should pay 100,000X more than you if he makes 100,000X more than you. It should potentially be 200,000X more than me depending on our respective situations. Please take the time to learn the reasons for and benefits of a progressive taxation scheme.

    For that matter, allowing ourselves to have a complex tax system with loopholes, credits, etc., encourages people to do things like insulate their homes or buy more energy efficient appliances or encourage savings, etc.

    I'd also like to direct your attention to the Fair Tax Fraud website.

    What was it H.L. Mencken said? For every complex problem there is an answer that is clear, simple, and wrong.

  2. Hi Scott, thanks for reading the blog and for the compliment (I think).
    First off you saw the CATO video, so really you need to respond to Dan Mitchell, so here is his link at CATO: - I know he would love to hear from you.
    I'm writing from the Canadian perspective - similar, but certainly not the same. The loopholes - well, the idea is to eliminate tax for the working poor, I don't think that's a loophole.
    17% is too low, maybe you guys need to cut your expenses - too many wars. too many bailouts, too much graft/corruption - Americans need to learn to live within their means. As for the rest, Dan is a good guy, he will do his best to explain his side to you. Happy surfing.


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