September 12, 2010

Should Millionaires pay more Taxes?

POLITICS - Billionaire British novelist J.K. Rowling (the creator of Harry Potter) doesn't mind giving half of her income to income taxes. She and a growing number of wealthy people actually WANT higher income taxes for the rich and wealthy.

“I wanted my children to grow up where I grew up, to have proper roots … in a real country, not free-floating ex-pats, living in the limbo of some tax haven and associating only with the children of similarly greedy tax exiles,” says J.K. Rowling.

Despite her wealth and fame Rowling has stayed in the U.K. where the top tax bracket is 50% for anyone earning more than $240,000 per year.

In contrast if you go to Ontario, Canada our biggest tax bracket is 46.41% for people earning over $127,000.

The debate in North America is how much taxes should rich people pay? ie. Should we have a new tax bracket?

The proposal a number of people (including the rich!) is to add a new tax bracket of $300,000 and make it 50%. For the millionaires and billionaires it will effect it means 3.6% less money in their pocket... but that is pocket change to the super rich!

Linda McQuaig, a prolific author and newspaper columnist, and law professor Neil Brooks recently published a new book: "The Trouble With Billionaires". Its really not about billionaires... its about coddled elite in the United States and how little taxes they pay and yet still manage to pack away millions and billions of dollars in bank accounts which often sit there doing nothing...

FACT: A strong economy is based on money moving from hand to hand quickly. Hoarding money in banks actually HURTS the economy because it takes money out of circulation.

Sure some rich people like gold magnate Peter Munk and others donate some of their wealth and charitable tax credits and get university buildings and grants named after themselves... but the vast majority of millionaires have a tendency to just sit on their money and not use it.

Some people prefer the light touch to taxing the rich, because rich people often have powerful allies and can hurt a politicians political career. Canadian Prime Minister Brian Mulroney during the late 1980s for example cut taxes on the rich and then introduced the 7% GST (goods and services sales tax).

And then to prove how friendly he was with the super rich Brian Mulroney accepted money from suspected German bribemeister Karlheinz Schreiber in the Airbus scandal...

McQuaig and Brooks also talk about former finance minister Michael Wilson and how much he knew about wealthy clients being lured to place billions in secret offshore accounts. And then they talk about Frank Stronach and auto parts behemoth Magna International Inc. and the billion + he was paid to give up ownership of the company.

What it boils down to is that fact that these well-to-do rich people have a lot more than the rest of us, and that their wealth is the result of all the poor workers being extorted... so why not tax the rich another 3.6% and use that money to help everyone?

The rich would still continue flying and spending as much as they want and the minor drop in the amount of money they are hoarding will be no big whoop in the long run.

Canada for example has 55 people who make over a billion dollars each every year. From their pockets alone that is at least $36 million. And then there's the millionaires (tens of thousands of them) and anyone else who makes more $300,000. The potential windfall is enough to balance Canada's budget and leave a chunk left over to boost the economy and pay off Canada's national debt.

McQuaig and Brooks don't stop there either. They propose upping it to a 60% tax on people making more than $300,000 / year... and 70% for people making more than $2.5 million... which is historically still less than the amount rich people were paying in the 1950s.

You see, historically, 60 years ago tax revenues were split roughly 70% from rich people and corporations and 30% from the general population. In the decades since then its been slowly flip flopped until now the sources of government coffers are over 70% from the general population and less than 30% from the rich and corporations. All we'd be doing is going back to an older way of taxing the rich.

We think its a fabulous idea. Its put more money back into the economy and cuts down on hoarding. Let rich people pay more taxes. They can certainly afford it.

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