(These thoughts are purely the blunt, no nonsense personal opinions of the author and are not intended to provide personal or financial advice).

Past posts on this blog have shown how financial  formulas that do not include net worth and assets in the formulation promote financial discrimination of singles and the poor.

In past posts financial profiles from the Financial Post have been used to show reasons why and how singles are financially discriminated against.  The editor of the Financial Post profiles Andrew Allentuck, published an interesting article on November 9, 2011 “The rich not an easy target for the taxman” (financialpost).

The idea of taxing the rich is back in fashion.  Advocates for hitting wealthy people with extra taxes argue that it would add to national or provincial revenues and counter the maldistribution of wealth in Canada….

Taxing wealth by taxing income is bad economics.  Wealth is a stock while income is a flow, notes Fred O’Riordan, national advisor for tax services with Ernst & Young in Ottawa.  People can be wealthy, but if they are not employed or if they are retired, they may have modest incomes,  In turn, there are people with high incomes who are spendthrifts and do not build up much wealth.  Advocates for taxing the rich have to aim for the right target….

Today, wealth taxes (in Canada) continue to exist at low rates charged as probate fees when estates are wound up.  (These low fees have helped stop flow of monies out of the country as experienced by countries with high probate fees)…..

The problem, Mr. O’Riordan notes, is that wealth is more portable than income and is easily moved by the living. Money can be electronically zipped around the world in seconds.  Moreover, if the wealthy can see special levies coming, they can shift their wealth away from tax assessor’s hands.

Even if a country or a state or a province were to decide to tax wealth, hurdles would be substantial.  Mansions and lavish condos are immovable and therefore easy to tax. Financial assets like stocks and bonds, mutual funds and bank accounts are registered in various places and therefore also are relatively easy to tax.

Wealth taxation gets harder when the target is art hanging on walls, collections of comic books and baseball cards, all of which are subject to tests of authenticity and changing fashions.  When it comes to buried treasure, such as jewels or gold in safe deposit boxes, merely finding assets would be challenging…..

The difficulty of assessing the value of art, furs, jewels and other trappings of wealth would push tax authorities to focus on easy targets.  Houses and condos are a large component of most people’s wealth.  Yet taxes on homes would be regressive, Mr. O’Riordan says.  “Middle-class people would have a higher proportion of their net worth in houses than do the very rich.  Moreover, home equity rises with age as mortgage are paid off.  So a tax on easily measured home prices or values would hit the middle classes and the middle-aged and the elderly harder than they would young families or young people or who have little equity in their houses or condos”, he argues.

Intellectual property like copyrights and patents are even harder to value.  The value of the most powerful form of wealth, human capital, would be a tax appraiser’s nightmare….

Finally, there are questions of how much tax is too much tax.  Income is already taxed via annual returns, then retaxed when spent via sales taxes and the GST or HST, real estate taxes and sin taxes….To tax it again when unspent as wealthy might be widely resisted. Moreover, a tax on savings or, as some might see it, on thrift itself, could drive down national savings.  Businesses needing loans would be driven to borrow abroad.  Rising foreign debt would weaken the dollar.  As Leonard Loboda, a business advisor in Winnipeg explains, “soaking the rich historically defeats investment.”


These comments are in reference to multiple benefits doled out by politicians, government and businesses without regard to net worth and assets.  To do nothing in assessing net worth and assets when handing out benefits is a blatant disregard of and promotes financial discrimination of singles and poor families.  An example of this is past post on family tax credits (program).

“People can be wealthy, but if they are not employed or if they are retired, they may have modest incomes,  In turn, there are people with high incomes who are spendthrifts and do not build up much wealth”.  Really???  Just because wealthy people may not be employed or have modest incomes or are retired does not mean they should receive more benefits than those who are gainfully employed with low incomes and less wealth (example:  family tax credits given in full amount to wealthy families who have low income and many children).  For those with high income who are spendthrifts, isn’t that their problem for being financially irresponsible?   It is also irresponsible for politicians and government to give benefits to this group.  (Family tax credits are only partially doing the right thing by using graduated income levels to reduce benefits for those with higher incomes).

Irresponsible financial behaviours on the part of those holding the wealth–it is irresponsible for those with wealth (applies to all persons regardless of marital status) to seek financial assistance when they have the means to use up some of their net worth and assets.  If persons can’t afford to pay house taxes or afford to  live, but have huge expensive houses, they should sell their homes and move to less expensive dwellings.

Upside down financing–net worth and assets of the wealthy where they often pay less in taxes, but get more in benefits is perpetuated by upside down financing initiated by the wealthy, politicians and government (housing is just one example) (finances).

Financial analysts and think tanks perpetuate financial advice that benefits mostly wealthy and those with more net worth and assets.  True facts about what it costs singles to live is often under-reported.  All the extra benefits given to married or coupled family units are not looked at in one big picture, but rather in isolated statements. Some financial analysts and think tanks do not treat home equity as a retirement asset.  (They believe that replacement rate analysis has as its objective an income that allows one to enjoy a lifestyle comparable to that which existed pre-retirement. They do not include home equity because they accept that the pre-retirement lifestyle for many middle-and moderate-income Canadians include continued homeownership). (financial).  In other words, those who have never been able to afford homeownership deserve to live a lesser lifestyle throughout their lives and into retirement.

When politicians, government and the wealthy continue to perpetuate myths that net worth and assets are too difficult to calculate or should not be included in financial formulas, this continues to make it possible for the wealthy to maintain their wealth and impossible for singles and the poor to maintain or increase their financial well-being thus resulting in financial discrimination for these groups.

(This blog is of a general nature about financial discrimination of individuals/singles.  It is not intended to provide personal or financial advice).

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