• EmergMemeHologram@startrek.website
    link
    fedilink
    arrow-up
    12
    arrow-down
    2
    ·
    11 months ago

    Billionaires make money off stocks and asset gains, so taxing income higher generally only hurts the upper middle class (i.e. doctors, high earning professionals).

    In Canada the average effective tax rate actually decreases once you hit like $750k (I don’t have exact numbers, it’s been a while since I analyzed this one) because those people stop paying as much employment tax and instead pay capital gains which are taxed at 50%.

    So, if you’re middle class, or upper middle class, you’re paying twice as much as the millionaires and billionaires are per additional dollar made.

    And that’s the best case because the really rich people put their assets under a corporation and continually “reinvest” their gains while harvesting their losses (businesses pay 26.5% tax).

    So Rich people pay a marginal rate of 26.5/26.8%, while the upper middle class pay 53.5% on their income.

      • EmergMemeHologram@startrek.website
        link
        fedilink
        arrow-up
        1
        ·
        11 months ago

        Fair point about marginal vs effective rates. My criticism is two points:

        1. The top tax bracket is still in the employed professional income range, like a doctor or lawyer type job. Those people are wealthy but not problematically so.
        2. The capital gains exemption and incorporation loopholes allow wealthy people to lower their effective taxes by a lot. For example a CEO with a $1 salary – their income is grants of shares and the capital gains on those shares, resulting in a lower effective tax rate than their real earnings should. It gets more nebulous when you incorporate your finances and “reinvest” gains or use other tax loop holes like lending against stock.

        Those are the things where I think just increasing income tax ends up burdening the middle class the most. Adding new brackets would help, updating capital gains based on income like the US does would too, so would closing loop holes and exploring new taxation strategies.

    • Kage520@lemmy.world
      link
      fedilink
      arrow-up
      3
      ·
      11 months ago

      Omg 50% capital gains tax sounds insane. I feel like that would dissuade people from investing. “Okay you invest in this asset. It might go down, which would be bad, but if it goes up you get to keep half of that and pay me the other half!”

            • HopFlop@discuss.tchncs.de
              link
              fedilink
              arrow-up
              1
              ·
              11 months ago

              They wouldnt invest in assets if they didnt get paid for it so by your own definition, they are doing work.

              (And technically if someone loved their job so much that they would do it even if they didnt get the money, then they would not be doing work and still getting paid for it)…

      • EmergMemeHologram@startrek.website
        link
        fedilink
        arrow-up
        5
        ·
        11 months ago

        The capital gains exemption is that you only pay tax on 50% as income.

        So if I make $100k, I pay taxes on $50k, at my marginal tax rate (max of 53% in Ontario, so the effective tax rate on capital gains is at most 26.5%). If I work 9-5 and I make $100k, I’m taxed on the whole thing.

        Plus if you lose money you can apply it 3 years back to get taxes back.