Originally Posted by
teddybear
How about the following situation that happened in Singapore:
Rich men and high-income earners are getting better deal with below policies:
1) Income tax reduced from 33% to 20% and corporate tax reduced from 30% to 17%
2) Estate duties abolished
3) GST implemented and increased to 7% to make up for the short-falls due to (1) & (2).
Now, assuming a high-income earners (or businessmen) earning $10m a year.
Because of (1) above, he saved $1.3 MILLIONs a year in income taxes.
Because of (2), his wealth will not be taxed when he passed on to his children (contrary to what our minister saying that the way forward is to tax "wealth", and yet they removed the very grandfather scheme, i.e. estate duty, that really tax wealth!).
Now, people will say, rich people pay more GSTs wah. Well, they earn $10m a year, but there is a limit to what they can consume. So, most likely they only spend $1m a year on family expenses (say they do so before GST of 7% implemented), and after 7% GST they pay GST of $70k.
Wow, because of (1) & (3), the RICH have a net savings of $1.23 MILLIONs in taxes!
Oh my, I have not even mentioned that they will not even spend all $1m in Singapore, so the GST they pay is even less!
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Next, we compare to the middle-income earner, say earning $100k a year.
Because of (1), they probably save 1% in tax or $1k a year.
They don't benefit from (2).
Now, with 7% GST, how much they pay in taxes for GST? Most middle income earners spent most of their money on living, most likely about $70k a year on their family expenses (say before GST implemented). After GST implemented, they will need to pay GST taxes of $4900 a year.
Wow! The poor middle income earners are now slapped with additional taxes of $3900 a year!
So, as we see, over the past few years, the tax changes actually favoured the rich and made them save more taxes vs the poor middle income earners who are made to pay more taxes!
Did the middle income earners earning $100k a year get back rebates to offset the additional taxes they paid?
If they do, then who is paying for the drop in income taxes of the rich?????
These short-fall in government tax revenue don't drop from the sky right? As far as we know, it has been more than made up by GST collections! Who pay more taxes than? Well, everybody, including the babies, the poor, the sick, the disabled, the retirees etc who don't even earn an income (not to mention the lower middle-income and middle income group)!