Second, how would we save money? If we all had a flat tax, with no deductions, how would a business be affected? They wouldn’t be able to deduct the cost of doing business (they are subject to the same flat tax). So if their operating costs were equal to 25% of their gross income, and they cannot claim those costs as deductions, how would they make up for the lost deductions. I would assume they would have to raise their prices by their operating cost, or 25%.

A point was made about how this works in Alberta. First, Alberta doesn’t receive transfer payments like Ontario, so they are a “have” province. They are also very resource dependent where Ontario is dependent on manufacturing. Two very different industries that should be taxed very differently.

Resources are finite and can be measured like a bond. If I know I have a billion barrels of oil in the ground and it takes me a year to take 100 million barrels out of the ground, I can assume I have 10 years of oil. Then, if I look at the costs of getting that oil out of the ground (infrastructure and people) I can project my costs over those 10 years and apply a straightforward flat tax to that resource. I have fixed costs and fixed resources. *(Of course, Alberta ran into problems because they found ways to separate sand and oil which changed all the projections….but that’s another topic. )

With Ontario, a manufacturing and refining economy, we are not measurable. Our capacity is infinite and it also increases and decreases from year to year. Thus our revenues and expenses also fluctuate (infrastructure and people). We need a tax that makes sure it’s responsive in great economic times (when people make more money) and gentle in poor economic times (like now). If someone is making $100K in 2007, they should pay more tax so that in 2009 when they make only $40K we’ve stored some extra in reserves somewhere.

Of course this is simplifying things and in reality both Ontario and Alberta have a progressive tax system. Alberta hides it’s system behind a 10% flat tax with an income exemption (which does create a real progressive tax) and Ontario has a progressive income tax but charges a flat tax on goods (the 8% provincial sales tax…which will soon be the 13%HST). And of course both these systems work within the progressive Federal tax system which negates any type of flat tax by redistributing wealth directly to lower and middle income families and indirectly through provincial funding and equalization payments.

All this to say, unless all the taxation in Canada (federal, provincial, and municipal) and all the user fees in Canada (water, waste, toll roads, etc) are replaced by one single flat tax system, we will always be subject to some sort of tax system that is a blend of progressive and flat tax system.

Have a good long weekend.

Especially when it’s wedged between :

“We need govt. services, we need social nets, roads, schools and hospitals, pools and libraries.”

and

“However, compared to a lot of other families, we’re doing great. This is reality.”

ioana, I took the “We had to live on a shoe string. I got back 2000 from the gov’t because the tax credit went to our lower income earner. It sucked.” as complaining about the way taxes work for dual income families. I guess your ‘shoe string’ is probably a lot different than my shoe string considering the day care payment.

Not complaining at all.

Where the heck are those 7k daycares for two kids? I’d like to know. How does that work? Are you in Quebec?

Also, why is it my job to support your 5 kids when I stopped at two? What about people who decide not to have kids, why do they have to support your kids just because you want 5?

You already get the CCTB, UUCB, a deduction for child care if you earned income (which is a deduction, and not a credit), and the child tax credit (which can be claimed by either spouse, but it works out the same since it’s a credit so I don’t know why you mentioned it) . . . why are you complaining about all that?