Homepage
PR Newswire
08-04-2013, 07:50 PM
A few points to add to the debate on taxes:
a. In an open economy like Singapore, only property, car and GST on necessities cannot be avoided. Increases in other taxes like income, estate duty, company tax and taxes on interest, capital gains and dividends will result in reaction to some extent or other to the changes.
b. Company tax is currently already lower than the highest income tax bracket and hence will be used to offset the latter if it is increased further (like what happens in some other countries).
c. The previous estate duty exemptions favored property over other forms of wealth and hence further skewed investment towards the former for wealth preservation.
d. I wonder why increases to company tax and reinstatement of taxes on dividends have not thus far been suggested. But I do note that company tax and taxes on capital gains and dividends will reduce the return to investors like us.
I also make a distinction between those who have amassed assets in their own lifetime through entrepreneurial or investment activities versus those who inherited it and those who have a very high earned income.
I subscribe to Buffet's views on the "ovarian lottery" for the former.
On the latter, I feel that our Anglo Saxon based capitalistic system where the "Winner Takes All" is broken. Human ability is Gaussian distributed whereas CEO's rewards is distributed by Power Law. The reason why I no longer believe in Singapore's brand of meritocracy is because I see people who are of similar ability as others get paid obscenely more just because of luck or because of the circle of friends they made by say going to elite schools. The latter is most toxic in my view and I would classify it NOT as Meritocracy but as Elitism.
However, I do not advocate increases in the personal tax rate as I do not believe that it will be effective. The salary paid would simply increase to compensate for the higher tax and the shareholders will lose out.
I would instead advocate for a cap on salary paid with the Government, Statutory Boards and GLCs leading the way. I hope that this will be the outcome of the Admin Service Salary Review that is long in coming but I am not holding my breath.
a. In an open economy like Singapore, only property, car and GST on necessities cannot be avoided. Increases in other taxes like income, estate duty, company tax and taxes on interest, capital gains and dividends will result in reaction to some extent or other to the changes.
b. Company tax is currently already lower than the highest income tax bracket and hence will be used to offset the latter if it is increased further (like what happens in some other countries).
c. The previous estate duty exemptions favored property over other forms of wealth and hence further skewed investment towards the former for wealth preservation.
d. I wonder why increases to company tax and reinstatement of taxes on dividends have not thus far been suggested. But I do note that company tax and taxes on capital gains and dividends will reduce the return to investors like us.
I also make a distinction between those who have amassed assets in their own lifetime through entrepreneurial or investment activities versus those who inherited it and those who have a very high earned income.
I subscribe to Buffet's views on the "ovarian lottery" for the former.
On the latter, I feel that our Anglo Saxon based capitalistic system where the "Winner Takes All" is broken. Human ability is Gaussian distributed whereas CEO's rewards is distributed by Power Law. The reason why I no longer believe in Singapore's brand of meritocracy is because I see people who are of similar ability as others get paid obscenely more just because of luck or because of the circle of friends they made by say going to elite schools. The latter is most toxic in my view and I would classify it NOT as Meritocracy but as Elitism.
However, I do not advocate increases in the personal tax rate as I do not believe that it will be effective. The salary paid would simply increase to compensate for the higher tax and the shareholders will lose out.
I would instead advocate for a cap on salary paid with the Government, Statutory Boards and GLCs leading the way. I hope that this will be the outcome of the Admin Service Salary Review that is long in coming but I am not holding my breath.