There are certain things that a society needs in order to function properly: Infrastructure (roads, utilities, water), Healthcare (hospitals, medicines), Education (schools, research funding), Security (fire departments, policing, military). It is problematic when the power to decide these things are put into the hands of a couple hundred people representing millions of people. In Canada "someone" decided that it would be a good idea to spend billions of dollars to upgrade our military equipment of the next several years. While I am fully committed to support our Service members in salaries, healthcare and to make us paramount in disaster assistance and even in the roles of peace keepers, I am less interested in buying ships, airplanes and increasing the standing army just to appease the USA wanting us to waste our money or a few government bureaucrats wanting to play with toy solders.
Fortunately in Canada digital currencies are considered Capital Gains. As I live in the province of Ontario, I will illustrate what happens here. The minimum wage is $11.25 CAD ($23,400) per year.
Using the handy dandy tax calculator I arrive at a tax liability on employment income of $3,349. Cashing out digital currencies are taken in as Capital Gains which give a tax liability of $87. Let me attempt a little table here:
| Wage | Income Tax | Capital Gains Tax |
|---|---|---|
| Minimum Wage - $23,400 | $ 3,349 | $ 87 |
| Minimum Wage * 2 - $46,800 | $ 9,508 | $ 2,433 |
| Minimum Wage * 3 - $70,200 | $ 16,841 | $ 4,779 |
| Minimum Wage * 10 - $234,000 | $ 91,071 | $ 32,311 |
| Minimum Wage * 20 - $468,000 | $ 216,330 | $ 88,625 |
In Canada the last line $468,000 is roughly the average of the top 1%. While Warren Buffet is not Canadian (I assume USA taxes similar to Canadian) consider how much he was paid in 2016. Buffett made $487,881 last year, up 6% from 2015. This included all compensation as defined by the SEC. Among the components are base salary, cash bonuses, stock awards, stock options, retirement payments and perks.
Imagine he took a minimum wage as base salary (he needs pocket change) but the rest as stock option. The price of Berkshire Hathaway is around $294,385 while a stock option is around $196. He probably would get around 2000 stock options. Between 2015 to 2016 Berkshire Hathaway increased in value of $50,000. His capital gains would be $100,000,000. I repeat based on his roughly 1/2 million dollars of salary his real salary was closer to $100 million dollars... and his tax bill would be around $220,000 in Ontario. Even if he cashed out the full amount (to buy a small country), he would save roughly $25 million in taxes.
Interest earned is treated the same way as regular income in Canada which is hilarious because if you receive a tax refund you will receive interest on it ... meaning you will have to pay taxes on that interest.
The interesting thing about Warren Buffet is that he even said that it found it unfair that he paid less of a percentage of his income in taxes than his assistant did. I assume his assistant makes a decent salary but doesn't enjoy an income close to Bufftet's.
Thanks, this was a really good contribution to this post, IMO.
That is why that I suggest printing money to pay for governments service (actually I suggest going to a cryptocurrency but that is another topic). It devalues the holdings of the people who have the most. Doubling the money supply divides the purchasing power of holdings in half.
Warren 1000 >>> 500
Employee 10 >>> 5
It then is in the best interest of the people who have a lot of money to insure that the government limits its spending. Having the government borrow money to pay for expenses means paying the people with the money.
I never thought about it like this before. I need to think about this a little more. This must be why certain in our parties in our government want to limit spending but all my economic professors in college didn't think spending or the deficit was a big deal. Somehow this never clicked in my head before. Thanks!
Consider each year all citizens were sent a number of coins which could be spent into the agency that they would like and they could adjust their spending preference as follows:
It might be possible for people to buy/sell their preferences (haven't given that much thought)
As it would be on a public ledger, the citizens should actually be able to trace how each of their coins are spent. Employees and vendors would exchange the coins they would receive (banks would need to accept them) with the government issuing fiat to the banks. The coins would then be programmed to return to the original wallets on an annual basis.
This would mean that a citizen might allocate their spending preferences once and it then be handled automatically after that or each year would modify it in time to affect the budgets for the succeeding year.
This would take part of the decision making process out of the hands of the few.