From: pelton@ecf.toronto.edu (PELTON MATTHEW ALAN)
Subject: Re: Liberal Party Tax Policy
Organization: University of Toronto, Engineering Computing Facility
Date: Mon, 25 Jan 1993 20:32:21 GMT

In article <1993Jan25.194021.13704@csi.uottawa.ca> cbbrowne@csi.uottawa.ca (Christopher Browne) writes:
>In article <C1F6qD.DBI@ecf.toronto.edu> pelton@ecf.toronto.edu (PELTON MATTHEW ALAN) writes:
>>In article <C1Eoz0.H7I@mach1.wlu.ca> dmccrea6@mach1.wlu.ca (doug mccready F) writes:
>>>It always scares me when parties begin talking about doing away with a tax
>>>like the GST and implementing a single tax or one geared to ability to pay.
>>>Tell me why the GST is not based on ability-to-pay. If I can afford a new
>>>car or whatever, am I not demonstrating ability-to-pay? What happens to new
>>>investment? If it is shot down then we have fewer jobs and then we have
>>>fewer tax payers down the road and the taxes for those still working go up
>>>and they decide to leave and that causes taxes to go up further. I for one
>>>would be one of those leaving and I provide the government with tax funds
>>>every week of the year. Already I can pay less taxes if I move and the
>>>marginal changes in tax rates are casuing me to think along those lines now
>>>let alone with a more reprehensive tax coming from the liberals.
>>
>>  The reason a sales tax or a GST is said no not be based on ability
>>to pay is that it is a regressive rather than a progressive tax.  
>
>Come on - you're contradicting yourself in the same sentence.
>
>OF COURSE GST is "based on ability to pay."
>
>If you have no money, then QED there is no ability to pay GST.  If you
>pay GST, then QED, you have ability to pay.

  Well, it is misleading to say that it's strictly based on ability to pay.
But it's standard politicese by now to call a progressive tax only one that's
based on ability to pay.  It's also something that people can understand.
Most people will tune out as soon as you start talking about progressive and
regressive taxes.

>
>>People with higher incomes pay a larger percentage of their income
>>for income tax;  this progressive system is essential to a mildly
>>socialist state like Canada.
>
>And with a GST, people with higher incomes pay MORE in GST than those
>that have LOWER incomes.

  More in absolute numbers.  A smaller percentage of their overall income. 
That's what differentiates a progressive from a regressive tax system.
>
>>A GST, however, forces everybody, regardless of income, to pay the
>>same amount every time they buy something.  For poorer people, this
>>translates to a higher percentage of their income;  at the very
>>least, disregarding the fact that richer people invest far more than
>>poorer people, it is a flat-rate tax.
>
>And what is the PROBLEM with a flat rate tax?

No problem.  Actually, I support flat rate taxes because of the inefficiency
and ineffectiveness of attempted progressive tax systems.  I was just trying to
explain what makes a sales tax regressive.
>
>Food is sold at a relatively fixed price; so are most commodities,
>modulo some strange taxation situations that tend to cause problems.
>The point is: Why should TAXES be the only thing that "richer people"
>should pay more for?  Based on your argument, I could argue that rich
>people should pay more for a quart of milk than poor people.  And rich
>people should pay higher prices for everything else as well.

Yah, probably.  It's impractical, though.  That's the argument for fixed rate
taxes.
>
>On what specific basis do you justify any PARTICULAR graduated tax
>system?  "Moral" platitudes aren't enough.  On what MORAL basis do you
>choose the NUMBERS?
>
>A moral system that cannot answer PRACTICAL questions isn't the least
>bit useful.  It's immoral to use a system that bears no practical
>resemblence to reality.
>
>In your moral system, what is the "moral" taxation function, T, which
>maps income, I to taxes paid, P?  Please show how your mapping of 
>$$ T: I \rightarrow P$$ expresses correctly the moral system.
>
I wasn't advocating any particular system.  I was just trying to explain.


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