Is Canadian Income Tax Unconstitutional? (Hint: No)

One thing that seems to cheer up my American skeptical friends is when they discover Canadians have their fair share of wingnuts and loonies. I gather many Americans view Canadians as reasonable people and not given to the nastiness that has emerged from the so-called Culture War. So when Americans find out Canadians are as bonkers, it gives them hope that maybe the inmates are not in charge of the insane asylum.

One of the odder claims by some is the idea that income tax is unconstitutional. Wesley Snipes’ problems with the IRS have brought some larger media attention to the notion that some people have the odd view they can ditch out on paying income tax by simply asserting income tax is unconstitutional. This ghost-shirt type tax dodge strikes me as wholly silly. Sure you can direct people to things like the 16th Amendment but at the end of the day I think the most powerful argument that there is nothing to this claim is the fact that no major law firm has ever, ever, ever taken up a class action lawsuit. You would think if the unconstitutionality was so obvious and clear cut to a B-list movie actor and people who mint their own gold currency that it would be as clear cut to big time law firms always hungry for the next big money class action suit. That no group of powerful lawyers have ever, ever, ever taken up such a suit in the last 40 years, won, collected a 40% cut, and then bought France with the proceeds indicates to me that most sane, rational legal minds fully understand income tax passes constitutional muster.

International Intrigue, Swiss-German Style

An otherwise quiet government organization in Europe is attempting to buy secret cross-border bank account data. The unknown organization that has the data is asking $3.5 million for it. Authorities from two countries are trying to negotiate with the data hostage taker. Sound like a plot for a James Bond movie? Actually, this is exactly the dilemma faced by German and Swiss authorities right now! First, a brief background.

Can you afford the subway increase?

Toronto has a subway system. It used to be a pretty decent subway system. Clean, modern, fast, and reasonably priced. These days it’s dirty, has not kept pace with Toronto’s expansion, break downs are common, and the fare box price has been seeing big jumps in price, well above annual inflation rates. When prices jump way above inflation, that sounds pretty counter intuitive.

The subway only gets you about half way across the city these days

What’s going on?

Tax it out of existence

I was thinking about scotch the other day. My brother recently got married and during the reception my brother came by our table and mentioned to my father and my uncle that the open bar was offering a single malt scotch. My father and uncle seemed to be very much into this beverage, given the rapidity with which they made their way to the bar. If two of my kindred are heading in a direction quickly, as a middle child, I find it hard not to follow. I’m not much of a drinker, enjoying the occasional beer, but I decided in the sprit of the event I would imbibe this spirit along side my father and uncle. That’s what the scotch ads tell me to do, in any regard. The bartender immediately handed them a glass with scotch poured over top ice cubes. “Scotch on the rocks” might be the term. My father and uncle were aghast and they requested their scotch with only a bit of water. Since I had no experience with scotch, this scotch-on-the-rocks offering couldn’t have offended me so I volunteered to take that glass and not let it go to waste.

The future is California – without the great weather.

California is the most heavily taxed state by most measures according to a recent L.A. Times story. According to the article, the marginal rate on taxable income over $1 million will rise to 10.55% from 10.3%.  The next-highest tax rate, which starts at $94,110 for a married couple filing jointly, will rise to 9.55% from 9.3%. Sales taxes were just increased a full point from 7.25% to 8.25% plus whatever the local municipality tacks on. Here in Santa Clara County the sales tax is 9.25%.

Tax-and-Spend Democrats, Small Government Republicans and other Myths

A few years ago, I attended an industry meeting at which TJ Rogers, CEO of Cypress, gave the keynote speech. Shortly after dessert was served, a color guard complete with blaring bagpipes followed a kilted TJ Rogers up to the podium. That night, TJ turned my beliefs about the fiscal policies of Democrats and Republicans upside down. I dedicate this posting not to TJ though, but to his former corporate controller, who claims he did the work.

Here are a few facts for your amazement and amusement.

Congress denies itself a raise

I’m a posting roll right now, so here is more outrage for you: a headline describing the $410 billion spending bill just passed the Senate caught my eye. Looking into some of the provisions, I see that Congress increased its own budget by 10%. Ten percent is a whopping increase. Last I checked, the number of people and employees in Congress didn’t change much, let alone by 10%. You really have to wonder where that money goes.

“Double Taxation”

Inspired by the comments after the Death Taxes post, I checked a couple of sources about “double taxation”. Although we use this term rather loosely, it actually refers to a very specific situation occurring when taxes are paid twice on the same source of income. There are only two solid examples of this.

The first example involves the taxation of dividends. A corporation earns profit which is taxed as income. If that corporation decides to pay a dividend to shareholders, the shareholder receiving the dividend must also pay tax on the dividend as income. The profits of the company are thus taxed twice- first as corporate income and secondly when paid to the owner despite being the exact same source of income. This is as if you picked up your paycheck at work net of taxes and then took it to the bank to cash. The bank then withheld even more taxes from your already shrunken check for the privalege of taking the money home from work.

Death Taxes

Yes the dreaded “death tax”.  You even have to pay a tax to die, how distasteful! Obama has indicated he wants to keep the tax at current levels rather than letting it expire next year as was intended under the Bush tax cuts. Of course, the “death tax” is really the “estate tax” and is far more complicated than most realize.