Main menu:

History of RPE Thought

Posts by Tag

RSS New from the CCPA

  • A critical look at BC’s new tax breaks and subsidies for LNG May 7, 2019
    The BC government has offered much more to the LNG industry than the previous government. Read the report by senior economist Marc Lee.  
    Canadian Centre for Policy Alternatives
  • The 2019 living wage for Metro Vancouver April 30, 2019
    The 2019 living wage for Metro Vancouver is $19.50/hour. This is the amount needed for a family of four with each of two parents working full-time at this hourly rate to pay for necessities, support the healthy development of their children, escape severe financial stress and participate in the social, civic and cultural lives of […]
    Canadian Centre for Policy Alternatives
  • Time to regulate gas prices in BC and stop industry gouging April 29, 2019
    Drivers in Metro Vancouver are reeling from record high gas prices, and many commentators are blaming taxes. But it’s not taxes causing pain at the pump — it’s industry gouging. Our latest research shows that gas prices have gone up by 55 cents per litre since 2016 — and the vast majority of that increase […]
    Canadian Centre for Policy Alternatives
  • CCPA welcomes Randy Robinson as new Ontario Director March 27, 2019
    The Canadian Centre for Policy Alternatives is pleased to announce the appointment of Randy Robinson as the new Director of our Ontario Office.  Randy’s areas of expertise include public sector finance, the gendered rise of precarious work, neoliberalism, and labour rights. He has extensive experience in communications and research, and has been engaged in Ontario’s […]
    Canadian Centre for Policy Alternatives
  • 2019 Federal Budget Analysis February 27, 2019
    Watch this space for response and analysis of the federal budget from CCPA staff and our Alternative Federal Budget partners. More information will be added as it is available. Commentary and Analysis  Aim high, spend low: Federal budget 2019 by David MacDonald (CCPA) Budget 2019 fiddles while climate crisis looms by Hadrian Mertins-Kirkwood (CCPA) Budget hints at priorities for upcoming […]
    Canadian Centre for Policy Alternatives
Progressive Bloggers

Meta

Recent Blog Posts

Posts by Author

Recent Blog Comments

The Progressive Economics Forum

Adam Smith and progressive taxation

Some of the knee-jerk commentary in response to my paper has been about what an ideal, or fair, tax system should really look like. These people question progressive taxation. To them, I quote Adam Smith from The Wealth of Nations (from Wikipedia):

The necessaries of life occasion the great expense of the poor. They find it difficult to get food, and the greater part of their little revenue is spent in getting it. The luxuries and vanities of life occasion the principal expense of the rich, and a magnificent house embellishes and sets off to the best advantage all the other luxuries and vanities which they possess. A tax upon house-rents, therefore, would in general fall heaviest upon the rich; and in this sort of inequality there would not, perhaps, be anything very unreasonable. It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.

Enjoy and share:

Comments

Comment from ALW
Time: November 9, 2007, 6:41 am

My criticism of your study isn’t with its assertion of what constitutes fairness (although I do disagree with your view) but rather your sneaky manipulation of statistics to cull out numbers that suit your presumably predetermined conclusions.

Also, even if we grant that some form of progressivity in the taxation system is fair or desirable, you don’t provide any framework for how we determine when this progressivity would become “too steep” nor do you seem to entertain the possibility that progressive taxation of the wealthy might have other deleterious impacts on the economy as a whole. Water drains downhill for a reason. So too with money pooling in certain places. If we interfere with natural processes that occur out of the free choices made by individuals because we happen to see social ills elsewhere, there are bound to be some consequences. You seem to brush these all aside in the name of helping the poor. That’s all fine and well, but the road to hell is paved with good intentions.

Comment from Marc Lee
Time: November 9, 2007, 9:41 am

Hi Aaron,

Thanks for engaging in your blog on my paper. Unfortunately you do not allow comments on yours the way we do here.

What you call “statistical manipulation” is my breaking down of the top decile into subgroups. I disagree that it is problematic to compare the rates for the top 1% with the rest of the distribution. In fact, much of the action is within the top 1%, and if you read Saez and Veall, or Brian Murphy’s latest paper, the action is even higher than that. In 2005, the top 1% was family income of about $265 K or more so I think that is a fair cut-off (I’m not calling $80,000 professionals “rich”).

I felt limited by the ability of Statistics Canada’s Social Planning Simulation Database and Model to carve out higher quantiles than the top 1%, but if I did you would find that tax rates way up there are even lower.

Ultimately, this is an empirical paper of the sort pioneered by Irwin Gillespie, and my assumptions are defensible based on the literature and even somewhat conservative. I could have chosen assumptions like greater capital mobility that would have made the whole distribution more regressive but stuck pretty much where the literature is (for example, see Kesselman and Cheung’s literature review or the original VGV paper, both of which are cited in the references.

Comment from Kabeer Sayeed
Time: September 12, 2015, 7:37 pm

Some fundamental principles of taxation:

1. The tax system should be simple, efficient, and fair.

2. The tax system should level the playing field between the rich and the not-so-rich entities,

3. All other taxes, levies, tolls, and methods of obtaining revenue should be completely abolished except penalties for committing crimes and other offences such as polluting the environment.

The above, in a nutshell, should be the fundamental principles that a tax system should be based on.

A tax system based on the above principles will result in a tax system in which the the tax RATE will be based SOLELY on the ability to pay as measured by the revenue (gross earnings) of the entity being taxed. In other words, we will be applying a progressive tax on revenue and no deductions for expenses of any form will be allowed.

In fine, we will have only one tax, namely, a Revenue Tax as opposed to a plethora of taxes such as income tax (note that in this piece we define Income as follows: Income = Revenue – Expenses), property tax, sales tax, value added tax, road tolls, motor vehicles registration tax, business tax, driving licence tax, and payroll deductions.

Kabeer Ahmed Sayeed

Write a comment





Related articles