Taxing Thoughts: Is Progressive Taxation Truly a Fair Share?
Let me begin by first reiterating what the propaganda is about: The government gives tax breaks for wealthy individuals making millions/billions through acquisitions. In contrast, middle-class Canadians are heavily taxed on every cent of their wage income despite struggling to pay mortgages. Welcome to Canada’s progressive tax system.
Advocates of progressive taxation contend that imposing higher taxes on affluent individuals as a “fair share” will result in a substantial increase in revenue, as in taxing five wealthy people to generate more revenue than taxing 500 poor individuals.
They [the advocates] believe this is the way to be fair. However, there is also a standpoint that supports the idea of progressive
taxation. [They] argued that the wealthy should be taxed more since they have more to lose and more to protect, a necessary evil in the utilization of public resources, roads, research, and social services.
Nonetheless, a 2018 survey of over 2,000 Canada Revenue Agency employees agreed that the current tax system makes it easier for the rich to skip out on taxes compared to the average Canadian.
Say, if a billionaire wants to transfer wealth to children without paying taxes, Canada provides an excellent avenue for doing so.
In the case of Tobias Lutke, Shopify founder, now one of the wealthiest billionaires in Canada, with an estimated net worth of $8.4 billion, under Canada’s progressive tax system, his estate wouldn’t have to pay any tax even if he gave all his money to charity.
What a way to keep taxes off the agenda! A phalanx of lawyers, accountants, and economists are quick to boot all attempts to raise taxes on the rich. Hope it got us thinking: should we sensibly demand a progressive tax rather than silently fretting in rage?
About the contention: Firstly, a progressive tax is but a camouflaged routine of expropriation and confiscation, a violation of the right of individuals and companies to complete freedom with the proceeds of a free market.
Secondly, taxpayers at both ends of the income spectrum can avoid taxes or get undue benefits from noncompliance. Sure,
low-income taxpayers may inappropriately claim the ineligible credits and disallowed deductions, but studies suggest that overall recalcitrance disproportionately profits the wealthiest, reducing the tax system’s progressivity.
But how?
[High-income taxpayers] have more money at stake, which can justify more significant expenditures on noncompliance. Now, the absence of information reporting and withholding allows [them] to hide their income more efficiently — for instance, pass- through entities, subchapter S corporations, tax-indifferent parties like trusts, and tax-exempt entities — often used to conceal income.
Sane Anwer: No. The concept of progressive taxation has been called into question about its alignment with the philosophical principle of fairness in burdening the more affluent to support the common good. While a logical assertion, the intricacies of tax deductions, credits, and loopholes have been empirically known to exacerbate a new set of inequalities.
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