-by Bill Moses

In the present day it appears that we do not have enough jobs to go around – or, to put it another way, - income disparity. Part of this problem is because people hang on to their jobs long after their basic lifetime financial needs are met. They build million dollar homes and travel to exotic locales to soak up the excess - and I have no problem with that. However, I do have a suggestion.

At the present moment income tax on employment (T4 income) is based on annual income. However, what if it was based on lifetime income? To give a simple example, no income tax on the first $500,000 of lifetime employment income earnings, 10% on the next $500,000, 20% on the next $500,000 and so on perhaps going up to a 90% level at some point. Past employment income earnings would have to be indexed for inflation and people would receive an annual statement telling them where they stand. With this method one would think that at some point people would say they were tired of "working for thegovernment" and choose to retire earlier than they might have. This might free up a lot of "good" jobs for young people entering the workforce. Of course as with all tax systems people will immediately start to scheme of ways to avoid paying. As well there will be the problem of how to introduce a completely new system. Finally, there is the fine tuning required to make the system fair.

Let us first look at how people might react to this system.

· Some people might well carry on in the same way they do now.

· Some people might plan their lives around a more modest lifestyle which would certainly be good for the environment.

· Some people might move to another country where the tax rate is less onerous than Canada's. In my view, as long as they are willing to give up their Canadian citizenship, we should give them a going away party.

· Some people might switch from employment to working under contract (basically becoming self employed). As long as these are short term contracts (six months, renewable if both sides agree), no problem. Since this is business income it would be taxed at a different (and almost certainly lower) rate, but it would give others a chance to compete for the contracts.

Example: Let's look at firefighters. Either they would pay a higher rate of income tax for a permanent job or a lower rate for a contract position. People qualified as firefighters could decide in a competition how much they would be willing to work for. If a government felt that firefighting wages were getting out of hand, they could train more firefighters (for free!) and still come out ahead. (I apologize for picking on firefighters by the way – and to their unions.)

Next we can look at how to introduce this new system.

· Statistics Canada and Revenue Canada would have to step in at this point and tell us what is possible and what isn't. I would think that between the two of them they could go back a long way in providing information that would help to set this up. (Therefore, any further points that I may make will be predicated on whether it is possible for these two government bodies to set it up.)

· We could make this new system voluntary. How do you want your employment income taxed in the future? Or we could switch everybody over to the new system based on past income records. Of course such a major shift in either case would have to be approved via an election promise or a referendum.

· An added bonus might be if a broader portion of the electorate (more than the 60% who bother to vote currently) become engaged. They might see that there is a real reason to vote.

Now to the fine tuning.

· I do not believe there should have to be too much of fine tuning needs to be done in the beginning. Two high income earners living together would continue to be taxed separately (as they are now).

· Raising children should be encouraged. This should probably be done by compensating people to have children. We all profit from maintaining population levels and should perhaps share in the costs to encourage this to happen.

Of course any drastic change requires careful consideration. I have not been able to find any information on the internet to support or undermine this method of taxing employment income. Any further light on this idea would be welcomed.