There are at least a billion (not even close, but let’s go with it) old posts in my archives, and nobody ever bothers to read them. They get lonely all tucked away down there. So every Friday afternoon, you’re all going to be treated to a blast from the past. Take it away, guy who used to be me.
First off, a disclaimer before we start. Well, sort of.
I really don’t care for finance blog posts that get political. There’s a couple of reasons for this. First off, I’m pretty apolitical. My beliefs don’t really resonate with any of Canada’s political parties, so I usually don’t bother to care about politics. Besides, it doesn’t really matter what I think, if many other people aren’t on the same page as I am. And secondly, I don’t want the comment section to turn into a right wing vs. left wing debate. Other blogs can have that, I’ll pass. So, hopefully this post doesn’t get too politically charged. I’ll try to stick with just numbers.
With that out of the way, join me on a little thought exercise.
The fine folks from Control Your Cash hail from Las Vegas, Nevada. That’s right kids, Sin City. You know, that place you go where you drink too much, gamble too much, and pay a stripper too much to grind against your junk. Because of your overindulgence, all citizens of that fine state pay no income taxes. They do have a sales tax, and they do have to (obviously) pay their federal taxes. In short, it’s an attractive place to live, at least from a taxation perspective.
Compare that to Nova Scotia, the most heavily taxed province in Canada. Over 30% of the GDP of the province gets paid back to various levels of government. They have a 10% provincial sales tax (since rolled into the national sales tax to form the Harmonized Sales Tax- of 15%). They also have one of the highest provincial tax rates in Canada.
What’s the point of this? There are people investing and creating wealth in both Nevada and Nova Scotia. These people do it because they want to get ahead. They want to get to the point where they can not have to worry about work anymore, because financial independence is probably better than a threesome with a couple of those hot blogger chicks I write about. (Ed. note: IT WORKED. I GOT ONE.) I hope it’s the reason why you keep coming back multiple times a day, since the jokes are clearly lame.
Every single jurisdiction in North America has slightly different tax burdens on their citizens. Some, because of rich natural resource deposits, can make revenue charging companies for the stuff they take out of the ground. Others don’t have this advantage, so they have to get the revenue from somewhere else, which could include the earnings of the people who live there.
And yet, everywhere in North America, we have people who are working to get ahead, taxes be dammed.
There are actually Americans who don’t want to make over $200,000 per year, because they don’t want to pay 35% tax on that money, instead of the 33% they pay on earnings above $150,000(ish). I cannot believe that there are people who make $200k per year that are this shortsighted. For every dollar you make, you keep 65 cents compared to 67. Sure, it’s kind of a bummer, BUT YOU STILL KEEP 65 CENTS. Just take the 65 cents and accept the fact that you had to pay taxes, which are simply a cost of creating wealth. You’ve heard of the expression “spending money to make money,” right?
Let’s face it. In the United States (and Canada) higher taxes are all but a certainty in the future. We have all sorts of entitlement programs that aren’t going away anytime soon with a shaky economy and an aging population. Sure, governments can reduce revenue, but raising taxes will also have to be part of the equation. No aspiring capitalist likes that. So what’s the smarter thing to do? Create wealth anyway, and give a bigger piece of it to the government? Or pout and not create any at all?
I’m not sure what you and I can do about taxation policy. Sure, we can bitch and moan, and even join organizations that push for lower taxes. And hell, this might even work to lower our taxes slightly. But who cares! Instead of wasting your time debating someone on some online forum about the difference between a 33% and 35% top marginal tax rate, why not spend your time making enough money to ACTUALLY PAY THAT TAX RATE.
Even with a shaky economy, opportunities are plentiful to create wealth. Can you believe I’m actually making a halfway decent sideline income weakly connecting penis jokes to personal finance? I focus on making extra money, both actively and passively. The only time I even think about taxes is when I put interest bearing investments inside my RRSP, and dividend/capital gains plays in taxable accounts. Taxes don’t even enter my mind a full 99.9% of the time. You know why? Because I’m too busy making money.
Whining about taxes is the worst reason why you shouldn’t try to get ahead. I’d rather you just admit you’re too lazy to bother. You can debate tax policy all day long. The people who create wealth are too busy to care.