Taxes - should there be a limit?

[Spidey]

Canadians now use nearly 42 per cent of their average $69,175 household income to pay taxes -- income, sales, property, liquor, tobacco -- compared to about a third of their $5,000 income in 1961.

Niels Veldhuis, the study's co-author, said the tax take amounted to $28,878 in 2009, compared with $1,675 in 1961.

"The increase in the tax bill outstrips the increase in all other expenditures," the director of fiscal studies at the Fraser Institute said.

The report by the fiscally conservative think-tank showed the total tax bill of the average Canadian family has increased 1,624 per cent since 1961, while expenditures on housing rose 1,198 per cent, food by 559 per cent and clothing by 526 per cent.

Read more: http://www.calgaryherald.com/business/Taxes+take+biggest+toll/2927051/story.html#ixzz0ldlO6yon

The average family pays 42% of income in taxes. Where do you figure the limit for maximum total taxes should be? Is 42% about right? Should it be 50%? Even higher? Or should it be less?

[MoneyGal]

I have to read the study to really comment (the linked article didn't provide enough info for me) but I gotta tell you, a household that is spending 42% of its income on taxes needs to spend less.

[brad]

The average family pays 42% of income in taxes. Where do you figure the limit for maximum total taxes should be? Is 42% about right? Should it be 50%? Even higher? Or should it be less?

I don't see how you can limit it, because it depends on people's consumption. We already have a system of tax brackets in place to ensure that lower-income people pay proportionately less income tax, but beyond income and property taxes, the amount you pay in tax depends on your spending habits.

Besides, establishing a limit would provide an incentive for overconsumption: hey, if I purchase $20,000 worth of food, clothing, and non-essentialls, I can start buying stuff tax-free!

Apart from property tax, we all have a certain degree of control over how much tax we pay every year. I'm in the highest marginal income tax bracket in Canada, and yet according to the tax statement I just got from my accountant, my average income tax rate (tax paid divided by income) was 20%. I can live with that. I didn't do anything special to reduce my tax burden except contribute to my RRSP and make some charitable donations. Property taxes were a tiny additional percentage. For the rest of the taxes I pay (sales tax, alcohol tax), I have a lot of control based on how frugal I choose to be.

[Spidey]

I have to read the study to really comment (the linked article didn't provide enough info for me) but I gotta tell you, a household that is spending 42% of its income on taxes needs to spend less.


It probably wouldn't be very hard to get to the 42% level without being an extremely heavy spender. Income taxes alone probably account for 30-35%. Then property taxes probably add another 5-7%. Throw in gas taxes everytime they fill up their car. Add on sin taxes if the couple enjoys the odd glass of beer or wine. Then there are user-fee type taxes such as airport tax if the couple has the money to travel. And top it all off with the GST/HST.

[Sampson]

With essential public services like healthcare grossly underfunded (or one could argue, gross inefficient), I don't think caps on taxation are a good thing.

I don't want to start a healthcare debate, but looking at many european nations, our taxation rates aren't really that high - heck even the mecca of free market capitalism has moved towards government provided healthcare.

Back to the point, even if our taxation rates rose to 70% - if we expect the government to provide set services, then we got to pay, the actual % is somewhat meaningless.

[MoneyGal]

Only a teeny, tiny fragment of the population would actually pay 35% (or even 30%) of their income in income taxes -- that would be people who earn in excess of about $130K and who make no offsetting tax deductions (i.e., RRSP contributions, charitable donations, etc.).

Here (http://www.ey.com/CA/en/Services/Tax/Tax-Calculators-2009-Personal-Tax)'s a calculator from Ernst and Young to make my point. I can only get income tax rates of 35% by putting in taxable income of $150K in most provinces.

[Spidey]

Yes. You're right. The highest is about 28% in Quebec (it feels like more). I suspect that things like sales taxes on vehicles and other large purchases account for much of the difference. Perhaps some of it is due to over-spending.

[CuriousReader]

Back to the point, even if our taxation rates rose to 70% - if we expect the government to provide set services, then we got to pay, the actual % is somewhat meaningless.

I would like to see a study where they breakdown where every cents of tax go ... something like ... x% MPs salary, y% MPs allowable expenses, z% unions salary, m% overtime salary for union members, n% EI payout, p% welfare payout ... etc, of course the breakdown have to be even more detailed eg. dont clump unions together.

It's probably impossible to have such accountability, but if it can be done, I am sure we can see A LOT of places where more efficiencies can be applied. It's not about cutting back services, it's about cutting back wasteful spending.

[the-royal-mail]

1. What about the Health Care Premium, which added about $700 to your annual tax bill?
2. Annual property taxes in the GTA were costing me $1700 (for a small condo in a tower)
3. Fuel taxes, who knows.
4. GST and PST add about 15% to my purchases of most things, essential or not.
5. red light and speed cameras, fines, speeding tickets, yes yes I know everyone will tell me not to speed (I rarely do) but it's well documented that these are merely speed traps and have more to do with taxation rather than safety.
6. Numerous new city "fees" for things like too many garbage bags, using a city pool, toll routes (think of hwy 407)
7. airport and other vehicle registration taxes and fees
8. taxes and fees whenever you get something shipped across the border to you
9. ever-increasing transit fares
10. ever-increasing cigarette and booze taxes
11. more and more casinos and lottery tickets all the time
12+. fill in the blank

As you can see, the % of tax we pay is a lot more than just our income tax rate and really has little to do with poor money management. We're being eaten alive by taxes (now called "fees") in this country.

[MoneyGal]

:D

I personally am not being eaten alive by taxes on fuel, cigarettes, lottery tickets, casinos, the purchase of new cars, having things shipped to me, garbage bag tag fees, airport taxes and fees, or toll roads. Or even income taxes, for that matter.

I do take the TTC but relate to the fare as a (tax-creditable) fee for service, not a tax. And once my knee is healed again, I'll be back on my bike - I am a year-round cyclist to work.

This is one of those no-winnable arguments (and I'm not really arguing with you, TRM!). My point, though, is that consumption taxes can be avoided - by consuming less. It doesn't make sense to me to complain about a tax (or something else) which, it seems to me, can be easily avoided. Or, if it can't be avoided, should be factored into your decisions - and then not viewed as a source of lingering complaint.

Perhaps I'm feeling optimistic and generous. I just had knee surgery from a world-class surgeon (he is the Raptors surgeon, as he will tell anyone who gets within a few feet of him), at an estimated cost of $25K (the woman who was in the bed next to me, and who had the same surgery, is a physiotherapist who often consults on similar surgeries carried out in the U.S.) at no charge to me. Now, I've paid more than $25K in taxes over my lifetime, for sure! but I received a direct and beneficial result for those taxes paid, and I am grateful.

[brad]

I would like to see a study where they breakdown where every cents of tax go

I imagine it's been done for Canada; I've seen it for the US. There, defense, Social Security, and Medicare account for 62% of the budget; discretionary spending accounts for about 12%. I haven't been able to find a similar breakdown for Canada but there must be one somewhere.

[the-royal-mail]

You could probably just look at the annual provincial budget documents to get the figures. Last I heard, healthcare accounts for 50% of the budget in some provinces. QC for instance was projecting that this would account for 2/3rds of their budget by 2030 or thereabouts.

[MoneyGal]

Here (http://www40.statcan.gc.ca/l01/cst01/govt48b-eng.htm) you go. There is TONS more information, including extremely detailed information, available on this topic from multiple sources.

[MoneyGal]

Oh, pshaw. I've now read the report (http://www.fraserinstitute.org/researchandpublications/publications/7282.aspx) (such as it is) on the Fraser Institute site and have serious questions about how they define what a tax is.

They say the average family in Canada pays $1,757 in tobacco and liquor taxes per year. They include CPP and EI premiums as "social services taxes." (I agree that there is a debate about whether those payments are taxes or not. However, I think the case is by no means settled that these are taxes.) They have an ambigous, undefined "profits" tax of $2,484.

In addition, they assume average sales taxes paid in a year of $4259 which implies over $30,000 of taxable spending (in my province anyways). (Remember, this does not include your mortgage payment or rent, daycare, groceries -- all the "big ticket" items in my own household.) That's $2,500 a month in sales-taxable spending!

I'm back where I started. If you have an average household income of $70K (from their study) and that's your tax bill, you have problems which are bigger than how much tax you pay, and they are related to how you are spending your money.

[brad]

Wow, talk about spin! I wonder what sources they used to develop their assumptions, or whether they simply developed assumptions that would produce the conclusions they were looking for. ;)

[Spidey]

In their defence, they often make country to country comparisons so if they didn't consider all our government obligations as taxes, they would probably face an impossible job of dissecting different international tax policy. I do agree that the sales and liquor taxes appear very high, even considering that a chunk of the sales tax would be on gasoline. If I cut the sales and liquor tax in half the obligation comes out to about 37%. However, I think the study does, at least, show a trend of increasing payments to various governments over the last few decades.

[CanadianCapitalist]

Oh, pshaw. I've now read the report (http://www.fraserinstitute.org/researchandpublications/publications/7282.aspx) (such as it is) on the Fraser Institute site and have serious questions about how they define what a tax is.


In addition to what is a tax and what isn't a tax, the Fraser Institute seems to confuse "median" with the "average".

http://www.canadiancapitalist.com/the-fraser-institute-and-average-canadian-family/

[andrewf]

I'll be charitable and try to avoid calling the Fraser Institute a pack of liars. They certainly are duplicitous, and take liberties with truth in order to make a political point. As mentioned, they choose base years to maximize the base effect for their % growths. The mix median and mean statistics, banking on the fact that Canadians are unsophisticated. They take liberties with how they classify costs as taxes, but don't add back in an offsetting benefit.

Let's start with their main point. They are contrasting growth in tax revenue as compared to food, housing, etc. since 1961. Assuming their definition of tax is reasonable, there are other issues. For instance, the amount of food Canadians each eat has not increased significantly (perhaps more meat than before, but let's keep it simple). However, that tax is funding a government that provides much more services, including EI, health care, higher education, etc. that were not provided to Canadians to the same extent in their base year. To get a fair comparison, you'd have to figure in saved costs by using public goods (health insurance, CPP, EI, university tuition etc.) rather than purchasing these privately.

The Fraser Institute is not a think tank, but rather a political action group. They do not provide well-reasoned, impartial policy analysis. They start with their conclusions and abuse the facts and their analysis of them to get there. It appalls me that they get so much play without people calling them on their bullshit more often.

[CanadianCapitalist]

I'll be charitable and try to avoid calling the Fraser Institute a pack of liars. They certainly are duplicitous, and take liberties with truth in order to make a political point. As mentioned, they choose base years to maximize the base effect for their % growths. The mix median and mean statistics, banking on the fact that Canadians are unsophisticated. They take liberties with how they classify costs as taxes, but don't add back in an offsetting benefit.

Let's start with their main point. They are contrasting growth in tax revenue as compared to food, housing, etc. since 1961. Assuming their definition of tax is reasonable, there are other issues. For instance, the amount of food Canadians each eat has not increased significantly (perhaps more meat than before, but let's keep it simple). However, that tax is funding a government that provides much more services, including EI, health care, higher education, etc. that were not provided to Canadians to the same extent in their base year. To get a fair comparison, you'd have to figure in saved costs by using public goods (health insurance, CPP, EI, university tuition etc.) rather than purchasing these privately.

The Fraser Institute is not a think tank, but rather a political action group. They do not provide well-reasoned, impartial policy analysis. They start with their conclusions and abuse the facts and their analysis of them to get there. It appalls me that they get so much play without people calling them on their bullshit more often.

Well put. One more point: I don't know what fraction of cash income was transfer payments back in the 1960s but I'd guess that it was probably much lower than today.

One person's transfer payment is another's tax and this can give rise to some strange results. Let's say there are two persons: Peter and Paul. Peter makes $100,000 and Paul earns no income. Peter pays $25,000 in tax. Now let's say the Government decides to provide Paul with a transfer payment of $20K funded by jacking up Peter's tax to $45,000. Paul still pays no tax.

Along comes the Fraser Institute and reports that average incomes (Peter's income + Paul's income / 2) are up 20% but average taxes are up 80%. Oh, the horror! In reality, income has simply been redistributed. It makes no sense to look just at taxes in a vacuum without any mention anywhere that maybe, just maybe, Governments provide more services in return for higher taxes.

[the-royal-mail]

> In reality, income has simply been redistributed.

And you don't see a problem with that? Ever read the Ant and the Grasshopper?

[CanadianCapitalist]

> In reality, income has simply been redistributed.

And you don't see a problem with that? Ever read the Ant and the Grasshopper?

No, I don't. I have no problems with some Government assistance for the poor and needy sections of our society. I have no problems when a single mom raising two kids on her own gets a baby bonus and/or a GST rebate. Or that senior citizen living down the street who is receiving GIS and OAS. Yes, my taxes are paying for their transfer payments and I'm okay with that. YMMV.

[brad]

> In reality, income has simply been redistributed.

And you don't see a problem with that? Ever read the Ant and the Grasshopper?

It's only a problem if the person receiving the redistributed income is simply an idle, lazy grasshopper. If there's a good reason why that person doesn't earn any income, do they deserve to starve?

Here's some food for thought; more in the vein of charitable giving, but it also speaks to the broader issue of income redistribution:

http://www.utilitarian.net/singer/by/20061217.htm

[the-royal-mail]

Too many people living off the system and expecting the gov't take care of them while they continue producing illegitimate children. Seems no one wants to work anymore, so the remaining few who do believe in working HARD keep paying more for an ever-expanding list of social cases. It just never seems to end. Someone showed a link with a mother with 8 children and on social assistance because it paid more than for her to work! When those children hit their teen years the cycle continues.

I'm all for helping out when hardworking, sincere people hit a few roadbumps along the way in life. What I'm opposed to is the ant and grasshopper scenario that plays out far too often in this country. There are VERY few cases that qualify as a "good reason" for someone not earning income. My heart does not bleed for such. Work for what you want. Go to school, get a student loan, work your way up in life, buy your own things and stop depending on everyone else to pay your bills. It's what I did and what every responsible, respectable human needs to do.

[Spidey]

I want to see the most disadvantaged given a helping hand but I don't think we can automatically assume that all taxes are going in that direction. There is a lot of waste at all levels of government. My wife, who is extremely frugal and responsible by nature, is constantly jumping through hoops in order that planning is done in such a way that money is not wasted. Simple things like scheduling tasks together so workmen come once instead of twice (as they are more used to doing), which generally costs twice the money. She was recently hired a couple of years ago and after 20-plus years of working in the private industry and can easily see the difference in attitude. Then there are programs at all levels of government that are of questionable merit. For example the Ontario provincial government just wasted approximately 1 billion trying to reinvent the wheel with the failed e-health project. And while full day kindergarten for 4-year-olds must be a god-send for new parents, we have to ask if what may be considered "gold-plated social programs" are appropriate during times of 20 billion dollar provincial deficits and during a time where we're still not sure of the health of the global financial community. And, of course, there seems to be a fair share of waste at municipal levels of government as well. In the city of Ottawa, property taxes have been consistently rising above levels of inflation. It only stands to reason that if property taxes continue to rise at these rates, one day we will hit a wall.

So yes, I'll agree that like many other groups, The Fraser Institute isn't totally impartial (they are a privately funded group after all), but just as we need advocates for the other side of the equation (eg. the poor, the homeless) we also need advocates who are looking out for the interests of the taxpayer.

[CuriousReader]

No, I don't. I have no problems with some Government assistance for the poor and needy sections of our society.

I have no problem with government assistance too - but what we often see is that these people (not all) just become lazy and rely solely on welfare or other "help" from government without even trying to be a productive member of society.

And we are not just talking about money being spent on EI / welfare / etc ... part of taxes or other kind of fees are also being used to pay for public workers, especially unions, which we've seen again and again, how unions are not much different from thugs.

There's a difference between helping those in need and throwing taxpayers money to the hands of people who dont deserve it.

[andrewf]

I want to see the most disadvantaged given a helping hand but I don't think we can automatically assume that all taxes are going in that direction. There is a lot of waste at all levels of government. My wife, who is extremely frugal and responsible by nature, is constantly jumping through hoops in order that planning is done in such a way that money is not wasted. Simple things like scheduling tasks together so workmen come once instead of twice (as they are more used to doing), which generally costs twice the money. She was recently hired a couple of years ago and after 20-plus years of working in the private industry and can easily see the difference in attitude. Then there are programs at all levels of government that are of questionable merit. For example the Ontario provincial government just wasted approximately 1 billion trying to reinvent the wheel with the failed e-health project. And while full day kindergarten for 4-year-olds must be a god-send for new parents, we have to ask if what may be considered "gold-plated social programs" are appropriate during times of 20 billion dollar provincial deficits and during a time where we're still not sure of the health of the global financial community. And, of course, there seems to be a fair share of waste at municipal levels of government as well. In the city of Ottawa, property taxes have been consistently rising above levels of inflation. It only stands to reason that if property taxes continue to rise at these rates, one day we will hit a wall.

So yes, I'll agree that like many other groups, The Fraser Institute isn't totally impartial (they are a privately funded group after all), but just as we need advocates for the other side of the equation (eg. the poor, the homeless) we also need advocates who are looking out for the interests of the taxpayer.

We already have a histrionic, rabidly anti-tax organization, the Canadian Taxpayers Federation. No need for an organization to dress itself up as an impartial policy analysis organization when it doesn't do anything of the sort. The purpose of the Fraser Institute is to manufacture plausible-sounding lies to further their ideological goals.

[CanadianCapitalist]

This discussion can get pretty political, pretty fast. I don't deny that there is waste in Government and as voters, we need to hold the feet of Governments of all stripes to the fire. We need to demand responsibility with the public purse and when it isn't there boot the bums out. I also don't have a problem when think tanks put out reports on Govt. waste or how better to design policy.

But as far as I can tell, the Fraser Institute puts out reports of two types that tend to be more sensational than serious:

1. Variations of the theme: "We pay y% in taxes".
2. Give us more RRSP room. 34% would be nice.

[MoneyGal]

CC: thanks for that link to your blog post, and thanks for the blog post itself.

I don't think I have the ... (I'm not sure what. Gumption? Chutzpah? Some other strange word?) to take on the Fraser Institute.

Thanks for taking the time to think through, challenge and post about the assumptions in their report. I know you blog in addition to a "regular" full-time job and other responsibilities of life...Just want to let you know I appreciate it.

[Berubeland]

Many years ago now when I was around 16 or so I fell very seriously off the beaten track. I was in a very abusive relationship and have used many of the social services that are talked about. I personally have used during this time in my life more than a few battered women's shelters which are funded by our government I have also used social assistance and our fine government put me through school.

I can assure you that the grinding poverty this way of life provides is in no way enviable. It's kind of hard not to be a grasshopper when you get a whole $100 per month to spend on food, transportation and entertainment.

In any case at that time I had many friends who were in the same position, living off the system etc. In the last few months I started a facebook account and reconnected with them. With no exception they are all now working. I was actually very surprised by this. So even though it seems that they are lazy good for nothing and it can take years for them to reestablish themselves it does happen and pretty consistently.

I can also add that in my work I have worked with a lot of people some of whom are on assistance of different kinds. Africa not withstanding there are plenty of people right here in Canada that need our help. It is extremely easy to pass judgement on others.

That single mother with 8 kids, she needs help and lots of it. Last year I was looking for a subsidized day care spot for my son for a while before we decided to keep him at home. No one will give you a daycare spot to look for work, and then once you get a job you have to apply and wait for approval and then wait for a spot at the daycare. This while you are still working. In the meantime you will have to pay a minimum of $500 per month per child to be in daycare. Plus your transportation, clothes etc. It's also unlikely that one daycare would have more than one spot available at any given time so just the logistics of getting 8 kids dressed and to daycare or school likely without a car and then getting yourself to work on time. My point is that some people especially single mothers faced significant barriers to employment that we would not really see at first glance. I personally have never met a woman who deliberately set out to have kids just to get welfare.

They may have made bad choices but at one point in time they did have a spouse or mate that they were committed to. They did have some kind of expectation that things would work out. Relationships break up for all sorts of reasons.

In any case I am grateful that our government is committed to taking care of all its citizens even the ones who are not respectable. A society can be judged by the quality of care received by the weakest among us, the disabled, the indigent, the mentally ill, the single mothers and the children. I am proud to live in Canada and I am proud of our government for the care they provided me when I was unable to care for myself.

My fondest wish for all of you and myself is to never have to rely on any government services of any kind, I would never want you to be that down and out or tread the long path back from there. Some things are better left unlearned. Cherish your ignorance of destitution.

When I first came to Toronto I met a man named Neil who had at the age of 42 developed psychiatric problems. Previous to his hospitalizations for his illness he had a wife and a nice big house and 2 kids who were almost fully raised. He had a great paying job. His wife divorced him and he lost his job and he was in a group home on assistance. I used to help him buy eggs. It can happen to anyone, we take for granted our health, our brains, work and our good fortune.

During the course of our busy lives it is easy to ignore the reasons behind the lazy grasshoppers upon further investigation it is usually a broken ant. People need time to heal.

[brad]

Getting back to the ant and the grasshopper: the key flaw in this analogy is that, in the fable, the ant is 100% responsible for generating its own wealth (the store of food it has amassed to last the winter).

In reality, an ant (like a human) is part of a society that makes wealth possible. As Warren Buffet once said, "If you stick me down in the middle of Bangladesh or Peru, you’ll find out how much this talent is going to produce in the wrong kind of soil."

We may think that our work is responsible for our wealth and that we earn our salaries, but if you took our daily work out of the context of the society in which we operate, we'd probably be paupers. It takes an awful lot to run a society that can allow people like Warren Buffett to become billionaires. The economist Herbert Simon estimates that our work is directly responsible for only about 10% of our wealth. The rest is effectively generated by overhead.

Every system and organization has overhead costs -- they're the costs that keep everything running and allow the system to function.When I worked at a university, we charged an overhead rate of 68% for grants and contracts. In contrast, the much lower "overhead" that we pay in taxes seems like a good deal.

Sure, there will always be some free riders who take advantage of the system. Sure, there are inefficiencies in government. But the stories of fraud and waste make the news precisely because they are news -- the daily boring workings of the government are actually pretty effective and efficient.

[Spidey]

I for one, have no problem seeing my tax dollars supporting single mothers (or fathers) with very young children or helping the disadvantaged in society. I think what I would like to see among governments is more efficiency and priorities. What are they involved in that is really the jurisdiction of another level of government? What are the involved in that perhaps would be much better handled by the private sector (nothing to say that government still couldn't set the criteria/regulation and pay the bill)? What are they involved in that perhaps doesn't even need to be done (eg. bilingualism in some, but not all, instances)?Are they respecting the effort required by the taxpayer to generate those tax dollars and giving those dollars the same respect they would if it was their own money? If taxpayers, were getting the sense that most of those things were happening, I think we would see far fewer complaints.

[CanadianCapitalist]

I'm a bit baffled with the widespread belief that the private sector is efficient and the Government is wasteful. We hear about Government waste all the time because it tends to be widely reported. In the private sector, reports of waste tend to stay, well, private.

If you had worked in, let's say, technology in the late 1990s, you would have seen waste of biblical proportions. Of course, when it comes to the private sector, waste should be a concern for shareholders, not the general public but the point is that I simply don't agree that the private sector is somehow super efficient and it is only the Government that is wasteful. Like brad says, every organization will have overhead costs and some of those costs will be waste. It's just the reality.

[andrewf]

I guess organizations are as wasteful as they can get away with. Unfortunately, government can get away with a lot.

[brad]

I guess organizations are as wasteful as they can get away with. Unfortunately, government can get away with a lot.

I dunno about that: there are systems of audits and oversight to catch waste and inefficiencies. My experience with this in Canada is limited, but I've spent the past 15 years working as a contractor to federal agencies in the US, and you get the feeling you're always working under a spotlight. Programs are evaluated regularly, and have to justify their continued existence and funding in every budget cycle. All my clients have been very concerned about using their resources efficiently and effectively. Budgets are watched closely.

It's not perfect, of course, and we all read about examples of waste and fraud, but as I said earlier it's the exception rather than the rule.

[the-royal-mail]

I think a lot of this is about perception, accurate or not, which in time gets spun into fact. I won't say where I work, but I will say that brad's latest post rings true from where I sit.

One example of this inaccurate perception has to do with Ontario eHealth and the alleged mismanagement of funds. Two often-heard examples are the muffins for contractors and the pay rates for contractors. Anyone who works in a white collar environment, private or public, knows that at big meetings you need to bring coffee, sugar, napkins and yes donuts. You see it everywhere. Contractor rates? Again, they are what they are because contractors do not receive benefits like full time people do. I could go on and on but I think a lot of the public perceptions are out of touch with reality. And the media magnifies the effect.

[Spidey]

I'm a bit baffled with the widespread belief that the private sector is efficient and the Government is wasteful. We hear about Government waste all the time because it tends to be widely reported. In the private sector, reports of waste tend to stay, well, private.

If you had worked in, let's say, technology in the late 1990s, you would have seen waste of biblical proportions. Of course, when it comes to the private sector, waste should be a concern for shareholders, not the general public but the point is that I simply don't agree that the private sector is somehow super efficient and it is only the Government that is wasteful. Like brad says, every organization will have overhead costs and some of those costs will be waste. It's just the reality.

The difference is that if private industry is overly wastefull they won't be in business for long, as your example with high tech demonstrates. I'm sure we can site some examples of wasteful private-sector companies but people I know that have worked in both sectors, tell me there is the world of difference. Just to throw out one example; Would private industry ever pay thousands of dollars to send an English-speaking manager, who is a couple of years from retirement(and furthermore refuses to speak French), for bilingual training?

[the-royal-mail]

I'm with you on the bilingual thing, spider. Apparently about $60 billion has been spent on this monster in the past 45 years. Just to appease isolationist quebecers, who in their own house outlawed bilingualism over 35 years ago.

[Cal]

I've often wondered why Canada doesn't simply figure out a tax rate, that everyone should pay for personal taxes, that brings them in the same revenue from income taxes. I think Czech Republic and a few other countries do it this way. It sure would make filing a tax return simpler. I am not saying for sure that would be the way to go, but the current tax filing process sure is far from simple.

[CuriousReader]

Just to have circular reference ...

I guess those free riders are getting what they are entitled to

When government benefits go to far... (http://www.canadianmoneyforum.com/showthread.php?p=22071#post22071)

[ghostryder]

The report by the fiscally conservative think-tank showed the total tax bill of the average Canadian family has increased 1,624 per cent since 1961, while expenditures on housing rose 1,198 per cent, food by 559 per cent and clothing by 526 per cent.


1624% ???

What does that work out to? About 5.5% per year? Not much more than the average inflation rate over the last 50 years?

But that sounds less horrifying than 1624%

[ghostryder]

I imagine it's been done for Canada; I've seen it for the US. There, defense, Social Security, and Medicare account for 62% of the budget; discretionary spending accounts for about 12%. I haven't been able to find a similar breakdown for Canada but there must be one somewhere.


http://www.fin.gc.ca/taxdollar/09/index-eng.asp




They say the average family in Canada pays $1,757 in tobacco and liquor taxes per year. They include CPP and EI premiums as "social services taxes." (I agree that there is a debate about whether those payments are taxes or not. However, I think the case is by no means settled that these are taxes.) They have an ambigous, undefined "profits" tax of $2,484.


The debate over whether or not CPP & EI are "taxes" is really irrelevant. The real problem is that Fraser calls what you pay into these as "taxes" but does not include the payments from these as income.

tax/income = % tax

When you inflate the numerator and suppress the denominator.....


If this "study" is anything like their "tax freedom day" calculations it is seriously fudged.

Another example is that for "TFD" they count all government revenue as "taxes" that are paid for by Canadians, regardless of who paid.

They include all corporate income taxes as paid by Canadians on the presumption that corp income tax is embedded in the cost of goods and services. Which makes sense to a point. If I buy a Honda Civic built in Canada, part of the cost of that car is the embedded cost of the corp taxes Honda has to pay. But if that car gets exported to the US, that embedded cost is not being paid for by a Canadian. Yet Fraser includes it as if it was. More inflating the numerator.

[MoneyGal]

Two responses to the Fraser Institute report:

From the Canadian Centre for Policy Alternatives (http://www.policyalternatives.ca/publications/commentary/fraser-intitutes-consumer-tax-index-grossly-misrepresents-reality):

Fraser Institute Tax Index: Half a Century of Fuzzy Math - Overstates average taxes and ignores the introduction of new public services during the past half-century.

From the B.C. office (http://www.policyalternatives.ca/publications/commentary/have-taxes-changed-all-much-over-past-half-century) of the Canadian Centre for Policy Alternatives:

The share of income going to taxes rose quite fast in the 1960s and in the decade between 1976 and 1985 but has hovered around 45% ever since. This graph clearly demonstrates that the latest Fraser Institute report is much ado about nothing – the effective tax rate as a share of average family income has been stable over the past quarter century.

The Fraser Institute’s alarm over tax increases captures the tax increase over the 1960s, when many of Canada’s core social programs, such as Medicare, were first established.

No news here, folks, unless you are interested in picking up some tricks on how to present statistics in a way that makes the growth of a spending item of your choice appear larger than it really is.

[andrewf]

The BC CCPA is being too polite. "present statistics in a way that makes the growth of a spending item of your choice appear larger than it really is." is a verbose way of saying "lie". And this, folks, is why you never take anything from the Fraser Institute at face value. They may have some good points from time to time, but I view that as entirely coincidental. Their work should be treated as suspect until proven veracious.