# Flat tax system



## gibor365 (Apr 1, 2011)

Surprisingly flat tax system idea is pretty popular in North America. Below results of tellwut survey. Note, that majority of participants are low and low-middle class



> Flat rate tax is a system of taxation where one tax rate is applied to all income with no deductions. Currently US and Canada have Progressive tax system. Should our countries implement flat rate tax is a system of taxation?
> Yes	| 25.84% | 413 votes
> No	| 26.97% | 431 votes
> Undecided	| 47.18% | 754 votes


http://www.tellwut.com/surveys/busi...t-flat-rate-tax-is-a-system-of-taxation-.html


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## Guban (Jul 5, 2011)

I am not sure about a flat tax, but would definitely like to see a simpler tax code. If the tax code looks understandable, and makes people feel that others are not cheating, then we may have more buy in for paying taxes. There is a lot of resentment because some people feel that there are too many loop holes that they can't exploit, but the rich can and do take advantage of.

Btw, how do you know the "class" of the voters?


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## andrewf (Mar 1, 2010)

Sound great in theory. In practice, the exceptions start to pile up. No deductions for business expenses?

I have never heard of this website before. I think we can rest assured that we can not take this pool as scientific or representative.


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## andrewf (Mar 1, 2010)

For anyone who was wondering, tellwut is a website that attracts people excited at the prospect of earning a penny for answering a poll. Answer one thousand and they will eventually mail you a ten dollar Walmart gift card. In other words, only cranks are responding to those polls.


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## peterk (May 16, 2010)

Progressive tax isn't the problem IMO. That's fine to have, and "fair", sorta.

The problem is that the total taxation way too damn high!

Government spending at all levels should be cut back over 50%. All credits and special deductions should be eliminated.

Instead of -10% to 5% for the poor, 5-40% for the middle class, and 40-50% for the rich, it should look more like:

0-5% for the poor, 5-10% for the middle class, and 10-15% for the rich. Plus a small VAT.


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## sags (May 15, 2010)

Guban said:


> I am not sure about a flat tax, but would definitely like to see a simpler tax code. If the tax code looks understandable, and makes people feel that others are not cheating, then we may have more buy in for paying taxes. There is a lot of resentment because some people feel that there are too many loop holes that they can't exploit, but the rich can and do take advantage of.
> 
> Btw, how do you know the "class" of the voters?


+10


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## RBull (Jan 20, 2013)

Interesting topic, but the survey shown probably has little value based on what andrewf came up with. 

I too am in favour of a much simpler tax system. The flat tax has some appeal but its doubtful that would ever fly.


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## andrewf (Mar 1, 2010)

Progressive tax brackets are not what makes the tax system complex. And a flat tax rate is not inherently fair. We would need to define what fairness means, first. Why not a head tax, where everyone pays the same dollar amount?


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## none (Jan 15, 2013)

peterk said:


> Government spending at all levels should be cut back over 50%. All credits and special deductions should be eliminated.
> 
> Instead of -10% to 5% for the poor, 5-40% for the middle class, and 40-50% for the rich, it should look more like:
> 
> 0-5% for the poor, 5-10% for the middle class, and 10-15% for the rich. Plus a small VAT.


Depends where I guess. I know in our group that we are so ridiculously understaffed that we are starting to ditch projects - people have been retiring and no one to fill them.

It's a choice though, if people don't want decent environmental protection and industry oversight that's fine but when a species goes extinct or a mine dam breaks it's pretty hard to take people who advocated for government cut-backs to then complain about lack of government oversight terribly seriously.

It's a strange dichotomy which is well established. People want a lot of social services they just don't want to pay for them. People are generally math-challenged.


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## andrewf (Mar 1, 2010)

Most people have no clue where governments spend money. For instance, more than 30℅ of Americans think the biggest area of government expense is foreign aid. People are dummies.



http://www.washingtonpost.com/blogs...have-no-idea-how-the-government-spends-money/


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## none (Jan 15, 2013)

One thing that drives me nuts not only as a scientist but especially as a tax payer are these two examples:

1) Admin staff has been slaughtered. That's all well and good until you realize that we are now paying government scientists who make in excess of 100K per year (which is still below market so lets skip over the debate when they are worth it or not) to do brainless admin work. I don't get why we are squandering the expensive talents of these individuals to fill out paper work better suited to someone with a high school diploma.?

2) Getting travel approval is ridiculous. You submit a travel plan and the tickets are $600. The application gets bogged down until 2 days before a meeting and now the ticket is $4000. It's wasteful and stupid. 

That's the problem with some cuts - they can be penny wise pound foolish and it's very obvious to people on the ground. Believe it or not the vast majority of government workers I know find this stuff amazingly frustrating - remember government employees are tax payers too.


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## gibor365 (Apr 1, 2011)

Guban said:


> Btw, how do you know the "class" of the voters?


From researching specific surveys and comments...


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## gibor365 (Apr 1, 2011)

> Interesting topic, but the survey shown probably has little value based on what andrewf came up with.


 obviuosly this is not sientific sutvey, but as far as I know this is the only one where everyone can create survey on any topic and get 2000 voters...it gives at least some indication what regular people are thinking... also some comments are pretty interesting....
On the other hand , who answers "professional" surveys?! - I believe the same people, as those companies (like JD Power) publish surveys on other 3rd party websites like Global Test Market and offers small cash for filling them out! 
Or some survey companies just call some people ....I'm sure that everyone got those calls... and maybe half of them is hidden comercials... Many year ago, when I had time, I agreed to answer some questions... but later just hang up


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## peterk (May 16, 2010)

none said:


> One thing that drives me nuts not only as a scientist but especially as a tax payer are these two examples:
> 
> 1) Admin staff has been slaughtered. That's all well and good until you realize that we are now paying government scientists who make in excess of 100K per year (which is still below market so lets skip over the debate when they are worth it or not) to do brainless admin work. I don't get why we are squandering the expensive talents of these individuals to fill out paper work better suited to someone with a high school diploma.?
> 
> ...


For once we appear to be agreement none 

I would strongly advocate for improved government effectiveness, not improved government appearances (by slashing low cost admins, and increasing bureaucracy). As an university student I worked a semester once for a municipal government and once for the federal government. I only got a taste of what you mention, but no doubt it is there. (not that big corporations are that much better IMO, maybe marginally so)

The bolded above... can you extend that train of though externally to outside the government. If seemingly easy internal tasks can be botched so readily imagine how complex external tasks are handled?

Allow me to change your above quote for demonstration purposes 

"Getting *construction / dam-license / land-use* approval is ridiculous. You submit a *detailed construction plan* and the price and timeline are X. The application gets bogged down until 2 days before the *infrastructure is needed * and now the plan has to be reworked and resubmitted at a cost of 10X. It's wasteful and stupid. [/B]"

As far as environmental protections go, let me provide some examples from the oil sands:

-Seagulls nesting on the shores of a tailings pond. Regulation prevents them from being removed, pond from being raised on-schedule, and results in massive change to the tailings transfer plan, requiring millions of dollars of rework.

-Several hundred ducks die because they land on a tailings pond. Company fined millions of dollars, pays countless other millions in lawyers and PR salaries/fees to address the issue, spends 50 million in comprehensive advanced radar system to detect and prevent future duck landings, and pays salaries to some ~10 employees in perpetuity to maintain said radar/prevention system.

-Construction of a ditch system to transfer water is shut down due to presence of a few sparrows nesting nearby. Independent contractor required to be brought in to canvass the area in search of nests. Due to regulation, contractors cannot assess whether birds are in the area because measured wind-speed is 28km/h, and the required maximum wind speed is 25km/h. Contractor is brought in every day for 2 weeks until wind-speed dies down and birds can be detected. Construction crews on standby for 3 weeks.

- Installation of a filter system is halted because toads are observed in the grass of the proposed construction site. Toads are not to be disturbed. Independent consulted are required to perform toad relocation for 2 week before construction can begin.


That's just a small taste of what happens when "ridiculous, wasteful, stupid" government practices are projected through legislature onto private industry.

I have no doubt that individual government employees such as yourself have the capacity to do good work that is beneficial to the people of Canada. I question whether you are ever allowed to do so due to rules/regulations, and political mandates. Similarly, whether government regulation for industry even allow those industries a chance to do good work, due to egregiously cumbersome approval processes that more often than not stop a project before it can ever start.


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## MRT (Apr 8, 2013)

no, this does not give us "some indication of what regular people are thinking"...because we have no idea who answered this poll!

since the poll is almost certainly not a representative sample of North Americans, the results can't be generalized beyond this particular sample...i.e. the poll tells us NOTHING, other than THOSE particular respondents apparently feel the way they indicated.

it is extremely misleading (and incorrect, really) to suggest that this indicates a flat tax system is "popular". Besides, even if this WAS a representational sample of sufficient size, how is a flat tax popular when HALF of respondents were undecided, and three quarters overall did not say 'yes'?


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## none (Jan 15, 2013)

peterk said:


> That's just a small taste of what happens when "ridiculous, wasteful, stupid" government practices are projected through legislature onto private industry.
> 
> I have no doubt that individual government employees such as yourself have the capacity to do good work that is beneficial to the people of Canada. I question whether you are ever allowed to do so due to rules/regulations, and political mandates. Similarly, whether government regulation for industry even allow those industries a chance to do good work, due to egregiously cumbersome approval processes that more often than not stop a project before it can ever start.


I totally agree and I can all but guarantee that most if not all government employees would agree with you. One problem is there is a disconnect between what is legally required (environmental permitting) and staffing levels. When staffing is insufficient then a line starts to begin. For example, it seems like these policies have the potential to be revisited (moving policy into the real world ALWAYS has bumps, you can really avoid it) but there is likely insufficient staff to do so.

Not to toot my own horn but my master's project was reworking some goverment water quality guideline which has saved the BC mining industry millions of dollars. The issue was that the government person who initially wrote the guidelines was not qualified to do so (b/c of insufficient staffing and inability to hire the right person). Kind of reminds me of 'beware of what you wish for" when people start advocating for small government.


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## gibor365 (Apr 1, 2011)

> THOSE particular respondents apparently feel the way they indicated.


 those are random responders living accross US and Canada, if you think that those surveys tells you nothing - it's your right, imo those survey , gives us much more than similar surveys on CMF with couple of dozen active members.



> how is a flat tax popular when HALF of respondents were undecided,


 on such % some government were selected 
I said "popular" because I estimated maybe 10-15% say 'Yes"


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## sags (May 15, 2010)

On the flip side, had companies operated responsibly in mining and oil extraction, there wouldn't the need to babysit them with all these regulations.

Have a look at the history of mining in Canada. It is a pretty dreary tale of towns springing up around resources and then left abandoned and polluted by the companies.


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## none (Jan 15, 2013)

It's unfortunate but true but that goes for most laws and regulations. For example, we only need police officers to oversee 5% of the population. Just the cost of doing business or society I suppose.


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## OhGreatGuru (May 24, 2009)

gibor said:


> those are random responders living accross US and Canada, if you think that those surveys tells you nothing - it's your right, imo those survey , gives us much more than similar surveys on CMF with couple of dozen active members.


I think you need to do some reading on errors and biases in surveys and research, such as:

http://en.wikipedia.org/wiki/List_of_cognitive_biases
(This article is mind-boggling for the sheer number of defined cognitive biases)

http://en.wikipedia.org/wiki/Total_survey_error

http://blog.cruxresearch.com/2013/08/27/the-top-5-errors-and-biases-in-survey-research/

I read a very good article some years ago defining half a dozen or more types of common sampling errors in surveys - I wish I could find it again.


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## andrewf (Mar 1, 2010)

That poll was not a random sample of the general population. It is a self selected group of fairly eccentric people, just like this forum. If you pulled this forum and asked whether financial sustainability was important, you would get a very different response than what you would observe in the general population.

Gibor, I hope you have better ways to spend your time than responding to polls on that site for a penny a go. I hear you can get two cents for a fifteen minute survey.


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## gibor365 (Apr 1, 2011)

> That poll was not a random sample of the general population. It is a self selected group of fairly eccentric people, just like this forum.


 Whatever you say, that is a random sample of the general population ... the same as on this forum, like much higher participation... I'd say that you are right if this survey wolld've answered on Russian or Indian forum.... For tellwut is interesting as I can see what random poll of people thinks about politica, economics, religion etc


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## uptoolate (Oct 9, 2011)

Perhaps we're not clear on what 'random' means when it comes to 'sampling' a 'population'.


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## dogcom (May 23, 2009)

Gibor now that we have put some thoughts here why don't you start a new thread with a poll to see how the forum really feels about it.

Personally I like the idea of simplifying the tax code but there is a need for deductions like giving to charity. I also think you would need a tax free earnings amount and then go flat above that. I also think there should be no tax on capital gains so we don't have to mess with the paper work from that and just make the flat tax a bit higher to get over that.


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## gibor365 (Apr 1, 2011)

> Gibor now that we have put some thoughts here why don't you start a new thread with a poll to see how the forum really feels about it.


 Don't see point for poll on CMF as maybe we'll get maximum 20-25 , I prefer to get impression on issues on tellwut with 2000 responders


> Personally I like the idea of simplifying the tax code


 this is can be first step...it's ridiculous that we have 50-60 tax forms in Canada (include also all duplicating Releves)


> a need for deductions like giving to charity


 don't think so, there are a lot of loopholes around "charity donations"



> there should be no tax on capital gains so we don't have to mess with the paper work from that and just make the flat tax a bit higher to get over that.


 this is exactly why I don't have cash account in discount brokerage... don't want this paper mess and think that I calculated something wrong and CRA can kick my *** if they wish .
I spend so much time and efforts on filling taxes (for example my bank didn;t send me T5, so i called several times , went 3-4 times to branch manager...until finally I got it and there was wrong SIN on it ). Anyway banks reporting all my contrributions, income (T5) to CRA...so why the hell I need to do it?! I'd ready even to pay same taxes
, but not to spend so much time of filling it.


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## MRT (Apr 8, 2013)

uptoolate said:


> Perhaps we're not clear on what 'random' means when it comes to 'sampling' a 'population'.


clearly not...but how do you educate someone when they dismissively profess to already understand?

*shrugs*


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## Eclectic12 (Oct 20, 2010)

gibor said:


> Whatever you say, that is a random sample of the general population ... the same as on this forum, like much higher participation...


This forum like tellwut is a random sample of the general population?

Then all the writeups about TFSAs not being fully used or that debt is not being paid down is bogus as the number those posting here that they've maxed out their TFSA or have paid off their debts is extremely high. :biggrin:


Cheers

*PS*

I missed adding that just about everyone had a DB pension when one considers the number of "should I commute my DB pension" or "Should I stop contributing to my RRSP" threads.


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## Robillard (Apr 11, 2009)

It is my understanding that despite the progressivity in personal income tax rates, tax incidence is fairly flat across income brackets when you look at the whole system. I haven't looked into this recently though. 

I'm generally a proponent of a flat income personal tax system though. I think progressive taxation exacerbates income inequality, at least when examined with respect to gross pay. It is net take-home pay that matters to workers, not gross pay. The flattening of the marginal personal tax rates can be compensated by giving largeer GST/HST rebates and expanding the working income tax benefit. Mind you, this just trades one set of incentives for another set of incentives.

Also, I think Canada should make stock options and grants of shares deductible by corporations and fully taxable at the grant date fair value in the hands of the option or share recipient. This would give recognition that granting stock options is a business cost that harms the shareholder value like any other expense. I'm less certain about what to do about the treatment of the capital gains income from exercising options though.


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## gardner (Feb 13, 2014)

Robillard said:


> I think Canada should make [...] grants of shares [...] fully taxable at the grant date fair value in the hands of the option or share recipient.


I receive part of my income as shares -- "restricted stock units" -- and as far as I can make out they are treated as 100% pure income. They even sell 40% off the bat at market price at the moment of vesting, just to hand over to the tax man so as to tax-at-source. I am unsure how these things are treated in corporate taxes, but in the employee's hands they don't seem to escape any taxation.


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## JordoR (Aug 20, 2013)

I would support a flat tax system, where everyone pays say ~25-30% of income. I don't understand why we have a system that penalizes people for making a good living and earning a good wage. However, I believe this was already thoroughly discussed in another thread.


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## Eclectic12 (Oct 20, 2010)

none said:


> One thing that drives me nuts not only as a scientist but especially as a tax payer are these two examples:
> 
> 1) Admin staff has been slaughtered. That's all well and good until you realize that we are now paying government scientists who make in excess of 100K per year (which is still below market so lets skip over the debate when they are worth it or not) to do brainless admin work. I don't get why we are squandering the expensive talents of these individuals to fill out paper work better suited to someone with a high school diploma.?


Agreed ... though it is broader than gov't as I can recall a family friend complaining about the same thing in the oil patch twenty years ago. Friends who were traveling consultants marveled at how much time that should have been billable was going into finding/booking flights at a suitable price for the project budget as they had to do it themselves as well. 




none said:


> ... 2) Getting travel approval is ridiculous. You submit a travel plan and the tickets are $600. The application gets bogged down until 2 days before a meeting and now the ticket is $4000. It's wasteful and stupid.


Yes ... though it's been common for me in the private sector for years.




none said:


> ... That's the problem with some cuts - they can be penny wise pound foolish and it's very obvious to people on the ground. Believe it or not the vast majority of government workers I know find this stuff amazingly frustrating - remember government employees are tax payers too.


Question is ... is this the corporate management thinking making it's way into the gov't or is it gov't silliness?
From what I've had friends complain about and my experience in the private corporation world - it sounds more like the former than the latter.




peterk said:


> ... As an university student I worked a semester once for a municipal government and once for the federal government. I only got a taste of what you mention, but no doubt it is there. (not that big corporations are that much better IMO, maybe marginally so) ...


From my experience, it seems more that the idea that "what goes in private companies is good for gov't" is duplicating the private company inefficiencies in gov't.

I can recall thirty plus years ago complaints about the "spend it or lose it next year, when it's needed" type budget methods gov't was using yet every private company I've worked for uses the same method with similar silly spending.

Cheers


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## Cal (Jun 17, 2009)

http://www.theglobeandmail.com/glob...-divided-tax-debate-rages-on/article24554206/


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