Some feel we shouldn’t increase taxes on upper-income folks. After all, people know best how to spend their money, whereas the government will only waste it on needless activities.
Well then, I humbly submit the following Top 10 list of reasons for upper-income tax increases (in descending order).
#10: Ridiculous real estate.
Check out Vancouver’s 40 most expensive listings. West Vancouver currently has a property listed for just under $40 million. Indeed, the top six properties all list for over $20 million. The top property includes
a main house featuring “6 bedrooms, negative edge pool, hot tub, indoor and outdoor ponds, 3 waterfalls, billiards room, movie theatre, wine cellar, gym, massage room, and 15-car garage.” And then there is the “7,000 square feet guest house and 2,580 square feet combination maids’ quarters and office.”
#9: Canada’s top 100 CEOs pocketed an average $8.38 million in 2010.
That was a 27 percent increase over 2009, and 189 times more than Canadians earning the average wage. For more, see the CCPA report here.
#8: A “Super-Yacht” with a functioning volcano.
I kid you not. See here.
#7: A $2 million diamond handbag.
Really? Yup. See here
#6: Out-of-control weddings.
Weddings have always been big business. But clearly, some people need to be saved from themselves.
#5: Oh, just look at this.
LXRY Magazine (Luxury) is a Canadian online magazine focusing on comfort and extravagant living. Got 30,000 bucks for a pair of gold earrings or $200,000 for a car?
#4: The maximum RRSP deduction for 2011 is a whopping $22,450.
That’s the ceiling for an annual contribution (for which people receive an extremely generous tax deduction — comes right off one’s taxable income) and does not include any unused room from previous years. Who the hell has $22K in extra income to tuck into this highly publicly-subsidized savings plan? A minimum-wage earner working full-time all year would have an entire annual income of only $19,798. The RRSP is one of the most expensive and inequitable social programs in Canada. The program costs the public treasury about $10 billion a year in foregone revenues. Yet, according to the CCPA’s Alternative Federal Budget, while more than two-thirds of those making over $100,000 a year contribute to RRSPs, less than a quarter of those making less than $50,000 find themselves able to contribute.
#3: The ultra rich are growing, according to Canada’s banks, so the 99% of us should follow the money. See here.
#2: Am I the only one who finds the “driving” section of almost any newspaper really annoying?
And the #1 reason for tax increases…
Weddings for dogs! Yes, it’s true.
“You can spend anything from $400 to $10,000,” says Doggie wedding planner Scott Rinehart. Doggie I Do’s, a Canadian company that coordinates “puptials” “for mutts in love,” offers basic wedding packages for 25 guests starting around $4000.
For more see here.
And you wanted proof that the free market rationally allocates scarce resources?
Clearly some people are under-taxed. Couldn’t and shouldn’t some of that disposable income be put to better use?
Having a little of fun at the expense of the very rich is, well, fun. But on a more serious note, extensive research in a variety of fields (most comprehensively documented by epidemiologists Richard Wilkinson and Kate Pickett in their book, The Spirit Level) shows that out-of-control wealth and extreme inequality are actually bad for everyone — for our communities, our health, our democracy, our environment, and our personal wellbeing. Taxes are one of the ways we can reduce inequality, and create a more fair society for everyone. And that’s the real #1 reason we need tax increases for the wealthy.
J Buck // Jan 17, 2012 at 11:16 pm
Brilliant! Where did you find all this stuff? Had a good laugh reading this… but now I’m suddenly wishing for my own super yacht with functioning volcano…
Ernie King // Jan 18, 2012 at 9:45 am
As much as I agree with making the tax system more progressive, focusing in on the lifestyles of the rich and famous only invites accusations of envy, and shifts the focus of the debate away from the strength of such policies (i.e., how it positively impacts impacts the majority) towards its weakness (how it negatively impacts the minority).
Carl // Jan 18, 2012 at 10:32 am
I agree with Ernie King – this feels like the inverse of the poor bashing crap we see from Sun/Fox et al and doesn’t add value to the grown-up talk about taxes we need to have.
Jewel // Jan 18, 2012 at 11:05 am
I don’t read this as ‘rich-bashing’ at all. It does a great job of spotlighting how untrue the claims are that if the government ‘leaves us alone’ and stops ‘taking’ our money, we will spend it responsibly and generously.
Shannon Daub // Jan 18, 2012 at 11:45 am
With respect to those who are uncomfortable with this piece, inequality has become far too extreme and damaging for us to not be outraged. Excessive wealth and consumption are paraded in front of our collective noses every day, all the time — in magazines, in tv shows and movies, in advertizing, in our daily lives as we notice that some people around us have a great deal, while others are struggling or in serious distress. Excessive wealth is naturalized, presented as the desirable and correct (as in morally right) outcome of hard work (and/or celebrity). And it has real and serious consequences for us as a society — indeed it DOES breed envy, competitiveness, insecurity, materialism, and mistrust (these consequences have been extensively documented by psychologists, sociologists and political scientists such as Tim Kasser, Robert Putnam, and Eric Ulsaner, and this overall body of research is well summarized in The Spirit Level by Wilkinson & Pickett). Drawing attention to — and having a sense of humour about — excessive wealth and extreme inequality is not going to fuel envy. Inequality already has that effect. What it can do is help sustain public discussion and debate over the issue. Recent research by a couple of profs at Duke and Harvard showed that the vast majority of Americans significantly underestimate the extent of inequality in the US, despite being concerned about the issue. Indeed, most indicate they would prefer a much more equal society than they have. I’m not aware of any comparable Canadian studies, but based on my own work in public engagement around inequality, I’m willing to bet most Canadians, while concerned about growing inequality, do not know the full extent of the problem. Meanwhile, efforts to have an “adult” conversation about taxes continue to face claims that requiring the wealthy and corporations to pay a fair share will lead to economic ruin (for example, see the provincial government’s interactive budget calculator, which builds in such messages). It’s time to turn malaise about inequality and the deteriorating economic security that the majority of people have experienced in recent decades into greater awareness and demand for solutions.
The Island Guy // Jan 18, 2012 at 11:58 am
I understand but why penalize those who chose to become succesful? Yes, chose. You are suggesting that we take more from people who work very hard and sacrifice a lot to acheive success. Doesn’t make sense. Why don’t you focus on educating and providing jobs for people..maybe they will enjoy being succesful?
Carl // Jan 18, 2012 at 3:42 pm
Odd that you’d seek to counter the argument the “job creators” shouldn’t be taxed for fear of “economic ruin” with descriptions of how some rich people spend their wealth in stupid ways [or very likely how some people accrue unsupportable debt spending on stupid things]. Spending on relatively expensive indulgences isn’t limited to the rich – ask any child who has watched their parent spend the last $10 of the month on a lottery ticket instead of buying food. Yes, I know that’s a dangerous stereotype.
Wilkinson et al have very elegantly described how corrosive gross inequality is within societies. Surely we can find ways to stand on their shoulders, to engage in the debate with passion without tapping into baser sentiments. I find it hard to believe it contributes possitively to the debate to tap into existing “envy, competitiveness, insecurity, materialism, and mistrust” by pandering to it.
The argument that higher taxes on the wealthiest leads to “economic ruin”, while couched in the argot of business writers and economists, can and should be challenged from the same place. Much is available supporting the argument for a progressive tax structure steep enough to generate the revenue needed to support good quality, accessible public services, but here’s one recently published example: http://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.25.4.165 . It’s wonderful to watch people like Armine Yalnizyan speak this truth in a calm and persuasive way on the Lang and O’Leary show, for example. Or Adrian Dix address it in more populist terms without resorting to caricature of the rich.
So, I appreciate the effort, but come here for thoughtful discussion. I go to The Tyee for titillation.
David Chudnovsky // Jan 18, 2012 at 3:40 pm
The argument that the rich work harder is just silly. Let’s, for instance, ask ourselves who works harder: a millionaire whose wealth derives entirely from investments, or a farm worker in the Fraser Valley who picks our vegetables and risks her health – both from pesticides and from unsafe transport to and from work.
If wealth were determined by hard work the world would be very different. Peasants and workers in the global south would be rich and most of us in the developed countries would be poor.
As for bashing the rich, that’s not what is being suggested at all. Some of my best friends are wealthy. Nevertheless, I think we should make no apologies for bashing – as hard as we can and as often as we can – the obscene and widening gap in wealth between the privileged and the poor.
Bob Y. Uncle // Jan 19, 2012 at 10:23 am
This article is beneath my expectations of the CCPA. Who is to say what one ought to spend their money on? Whether a BMW or a $300 special anniversary dinner? And taxes have nothing to do with what one spends money on, unless you truly believe in a big brother govt that approves anything and everything in the marketplace (I know some intelligent people who believe in this idea) or that tax rates should be set based on how your spend your money. Taxes have everything to do with the level of civilization that we wish to purchase. Regulation has everything to do with how we are to envision that civilization, and how much we believe in the We versus the I (e.g. how tax bills for each are determined; how much concentration of wealth/control/ownership is permitted). But, if I have $5 to spend, are you going to tell me I can spend it on a Happy Meal but not on a birthday card? If I have $500,000 to spend, are you going to tell me that I can use it to buy a Vancouver condo but not a purse? Sure we can roll our eyes at human nature — such as that displayed by sports fans in various cities or conspicuous consumption — but, please.
Angela Browne // Jan 19, 2012 at 2:30 pm
… Island Guy, and your proof that the super rich work harder than the average person is …????
I know many wealthy families, and I can count the number of those on my left hand where there was actually any sweat involved in gaining what they did.
guanolad // Jan 23, 2012 at 10:38 am
Interesting reactions to this great piece. Those who reply that the article is motivated by “envy” are missing the tone entirely: this is about outrage, justified outrage.
But aren’t these examples just “choices” made by the rich, who should be allowed their freedom like the rest of us? The answer is that we don’t live in a world of unlimited choices. You can’t choose to dump your garbage in your neighbour’s yard. You can’t choose to drive your car on the sidewalk. And if someone “chooses” to take all the cookies in the jar for themselves, or budge in front of the line for the bus, we react with outrage – justified outrage. The top 1% – and more particularly, the top 0.1% and 0.01% – have taken all the cookies, not by dint of harder work or smarts or superior character (though many of these people are intelligent, hard working, etc.) – but because of a system that is skewed in their favour, that governments have actively skewed in their favour.
As much as the CCPA properly focuses on “the facts,” and does a fantastic job at it, these deeper feelings of outrage are part of being human too. The waste of resources on dog weddings and super-yachts and solid gold Christmas trees (http://tinyurl.com/855f6lo) makes no rational sense in a world where one in seven people live at the edge of starvation (http://www.wfp.org/hunger/stats), and it also makes no emotional “sense.” For many of us, our reaction is disgust. Why ignore these feelings or assume that they are somehow a lesser reaction than cold, rational calculation? Why not recognize that our emotional desire for justice, fair dealing, equal treatment and so on is an important backdrop to our quest for better public policy? The right-wing recognize it, which is why they harp on about rights, choice, freedom, and so on. Seth’s article, especially in the context of years of great fact-based analyses, is a more than justified expression of outrage.
Ken Panton // Jan 24, 2012 at 5:56 am
Guanolad, you missed the point in BYU’s post.
1. Who is to decide what is an acceptable purchase? Ought TVs larger than 30″ (40? 50? ??) be banned from the marketplace? How big a screen does one need, after all? Rationality can come into question at a much smaller scale than Seth’s outrageous examples of opulence/waste/inequality.
2. You will note that the SS Volcano was merely a computer design and not actually constructed or bought or sold. Are you suggesting that we censor imagination or thought or expression? Maybe it will get built, maybe it won’t. Yes, I am aware of the existence of mega-yachts so why not choose one that isn’t a figment of imagination? As for $20 million properties, that money can equally be used to buy a much larger chunk of property – say hundreds/thousands(?) of acres of forest or farmland with, perhaps, more severe consequences. Which is better or worse?
3. I stole a cookie jar once (and ran to the living room), and the lovely owner was quite miffed that I would do such a thing
I gave it back. She still mentions it!
4. You finally got around to some points that made more sense to me. But… so many of the answers come from that same notion of influence, but influence over the values we hold in society.
So we need to influence the values of a large number of people. It is much more foundational. Pointing out examples of how we are broken is fine but we need more effort on the envisioned solutions and values changing.
Starting, I think, with money in politics; i.e. get it out. Step 1: publicly fund elections.
guanolad // Jan 24, 2012 at 10:13 am
I appreciate the response, Ken. But I don’t think I’ve completely missed BYU’s point. The examples of extreme spending in Seth’s original post are NOT analogous to, as BYU suggested, a BMW or a $300 dinner, nor to a 50-inch TV screen as you suggest. This is not an argument about “excess” at a small scale. We are talking about many orders of magnitude larger.
And the response suggested is not to “ban” $2 million handbags, but to call into question the system that creates a top .01% that can freely spend on this sort of thing. (I think we agree on that). The main goal is to rebuild a progressive tax system. And yes, that means talking about values, but why not recognize that our values are often properly expressed through emotions like disgust and outrage?
Ken Panton // Jan 24, 2012 at 4:54 pm
BYU and I have a Vulcan mind meld thing going on…
But I think the 2+1/2 of us all share a basic sensibility. Where we differ, perhaps, is in how we articulate that sensibility in terms of reasoning to a conclusion.
The title of the piece was “Top 10 Reasons for Upper-Income Tax Increases”. The piece chose to then look, mostly, at how some things that some (beyond) rich people might spend their $$ on. I argue that if taxes should be increased, it shouldn’t be because of what a taxpayer spends their dough on; that’s a mugs game, I believe. Just come at it from a different angle is all. Progressive taxation, sure. But there has to be more to it than that.
Aside #1: in the US, some try to buy — with their own money! — the presidency and governorships; now that’s outrageous!
To be fair, of course, Seth did mention other things such as CEO pay (more outrageous examples from the US, of course) and RRSP limits. One might add the TFSA which I think is regressive in that it is not equitably available and merely allows those with more $$ to lower their tax bill. One might also add the entire tax structure and taxation of labour, say, vs capital and all that. Just get away from ‘you must pay more tax because you (have $$ to) buy things that are outrageous.’
Aside #2: I wonder the income distribution of purchasers of that luxury mag that Seth included. One might add The Robb Report and others.
Ken Panton // Jan 24, 2012 at 4:56 pm
ps. My disgust and outrage can be bought for much less than $20M
Seth Klein // Jan 25, 2012 at 11:42 am
Thought I’d finally weigh in on this fascinating exchange. I must say, I never thought this piece would generate so much heat. I mostly write pretty dry and serious stuff (as Bob and Carl like), but just wanted to have a little fun with this post.
That said, I was trying to make some serious points (such as the points about RRSP limits and CEO pay). And in particular, I wanted to poke some fun at the notion — fundamental to neoliberal thought — that the private sector allocates resources more rationally than we would choose to do so collectively through our governments. And I was trying to highlight (playfully) that we have reason to revisit our upper-income tax regime.
Ken Panton // Jan 25, 2012 at 9:44 pm
I appreciate your effort to inject some humour!
Carl // Jan 25, 2012 at 11:53 am
Communications expert and blogger Rob Cottingham posted on Obama’s speech last night, singling out this statement for its plainly spoken effectiveness [ http://robcottingham.ca/2012/01/state-of-the-union-high-point/ ]:
“We don’t begrudge financial success in this country. We admire it. When Americans talk about folks like me paying my fair share of taxes, it’s not because they envy the rich. It’s because they understand that when I get tax breaks I don’t need and the country can’t afford, it either adds to the deficit, or somebody else has to make up the difference – like a senior on a fixed income; or a student trying to get through school; or a family trying to make ends meet. That’s not right.”
Lillian // Jan 26, 2012 at 9:36 am
At the risk of inviting the ire of everyone… isn’t there property tax on #1, and consumer taxes applicable to #8, 6, 5, and1? And also, don’t the corperations and businesses these guys own also pay tax & property tax?
I’m not completely dissing the idea of taxing the ridiculously rich even more, I’m just saying it’s not as simple as you seem to think.
I do support a ‘stupidity tax’ for the volcano on the yacht and the dog weddings though.
John Alexander // Jan 26, 2012 at 3:28 pm
Lillian,
Sales taxes are demonstrably the least fair to the poorest in society. Incomes taxes on those at the very highest strata are usually greatly reduced through many more tax avoidance strategies like stock options, hence Warren Buffet’s recent staement about his secretary being taxed at a higher rate than he. And there are thousands more instances, albeit of a lesser scale, though no less inequitable
Dave Atkins // Jan 27, 2012 at 12:36 pm
It seems to me that the problem is not so much what they spend their money on, but the fact that they have that much in a “democratic” society. Money is power and people with money buy the people who set the rules so that they can keep their money. Greed and power are normal human characteristics, and when the controls are removed people indulge them. I think that the only real control that will work will be a revolution. Painful but true. When people realize that then maybe a little sense will return, but don’t bet on it. What was the Arab spring all about? Maybe time for an American Spring.