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January 06, 2022

Should the ultra-rich pay more taxes?

Okay, forget this post’s title for a second.

169849_tax Because, to sit here and ask if the rich should pay more taxes is kind of a loaded question. It’d be like wondering, “Does Stephen Harper have a helmet for a head of hair?” or “Should the Russian World Junior squad hire its own team orthodontist?” Doesn’t really promote an honest, thorough discussion.

Yet, surprisingly, there’s one to be had here. On paper, it makes sense to charge the rich through the nose on taxes, but is that the way the world should really work? Let’s look through each side of this:

As you might recall, super-investor Warren Buffett came out near the end of 2010 and said, flatly, that he should be paying more in income taxes.

“I think that people at the high end, people like myself, should be paying a lot more in taxes,” he told ABC News. “We have it better than we’ve ever had it.”

Indeed, the compensation gap between the ultra-rich and average consumer has rarely been larger, but is it in the public’s best interest to raise tax rates at the highest level to squeeze more dollars for government programs?

Your gut reaction: of course it is! Who needs to be paid $24.2 million per year when the national employment rate hovers around eight per cent? Tax the fat cats and pave a road or two, for crying out loud.

The flip side, though, at least has to be acknowledged. The thinking among the rich appears to be, Be careful over-taxing us. When we’re left at a regular tax rate, the more we spend and the more dough trickles down to the rest of consumers. (Buffett, however, dismisses this notion: “That has not worked the last 10 years, and I hope the … public is catching on.”)

Further, the argument goes, raising tax rates among the rich and their corporations is a sure-fire way to scare North American industry into packing up shop and moving to the Indias and the Chinas of the world. You think unemployment is bad now, big companies appear to be saying, watch what happens when we leave.

Do those latter points hold any weight? Do you see any real negative – any genuine reason of caution – to raising tax rates for the super-rich?

By Jason Buckland, MSN Money



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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...

Jason BucklandJason Buckland

The modern-day MC Hammer of money, Jason can often be seen spending cash that isn’t his with the efficiency of a Wilt Chamberlain first date. After cutting his teeth as a reporter for the Toronto Sun, he joined the MSN Money team with...