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Tech Talent and Real Estate

11/30/2019

 
Canadian tech workers & real estate
CLICK GRAPHIC TO ENLARGE
​The CBRE Group, Inc. trading on the New York Stock Exchange under the symbol “CBRE.” is the world’s largest commercial real estate services (2018). Their recently released study "Scoring Canadian Tech Talent" provide insights into how the growth in demand for tech talent is impacting cities and real estate markets across Canada.
​
CBRE Report Snippets
  • Record commercial and residential real
    estate demand and an office construction boom in several markets.
  • High-Tech sector GDP growth = 3x the pace of the overall economy over last 5 years.
  • Tech industry accounts for 17.1% of major office leasing activity since start of 2018.
  • Immigration policies have produced an abundant, accessible source of tech talent. 
  • Top Canadian universities produce highly educated tech workers in specialized fields eg: AI research and multimedia production. 
  • U.S. companies can tap into high quality talent at a less prohibitive cost when accounting for the discounted CAD$. 

For years I have been highlighting the demand in Canada for tech workers. The October 2019 employment data is typical of the obvious trend: Professional, Scientific and Technical Services employment is up +7.4% Y/Y while Service Producing is up 3% Y/Y and Goods Producing is up 0.1% Y/Y. 

Yes, the information revolution is producing new data consumption markets at the corporate level, but what about our social contract and our environmental needs? We need to direct capital and labour towards complex issues like e
nvironmental remediation, infrastructure, education, health, wellness, and electoral and taxation reform.

Tax reform should be taken on by the tech sector, because the political institutional approach towards taxation is built upon generations of carrot and stick incentives which end up benefiting one voting constituency over another.

If we are to take on the the greatest challenges to our well being, the Automated Payment Tax developed by Edgar L. Feige, Professor of Economics Emeritus at the University of Wisconsin-Madison would indeed kick start stubborn 20th century institutional thinking into a progressive 21st century that the new tech sector generation dreams of. How?

The APT (Automated Payment Tax) is a micro tax taken at every financial transaction where each side of the transaction gets debited a small amount of capital that is credited to the government in a revenue neutral algorithm. Professor Feige's team modeled the U.S. economy from late 1990's data and realized that it would take less than 2% of every financial transaction to produce a revenue neutral state where all the government's fiscal objectives were met.

The APT would eliminate the need to file tax or information returns. That in itself should provide enough incentive to read the 41 page PDF study by Feige.

The foundations of the APT tax proposal—a small, uniform tax on all economic transactions—involve simplification, base broadening, reductions in marginal tax rates, the elimination of tax and information returns and the automatic collection of tax revenues at the payment source. The APT approach would extend the tax base from income, consumption and wealth to all transactions.
Think about the desirability and feasibility of replacing the present system of personal and corporate income, sales, excise, capital gains, import and export duties, gift and estate taxes with a single comprehensive revenue neutral Automated Payment Transaction (APT) tax.

In its simplest form, the APT tax consists of a flat tax levied on all transactions. The tax is automatically assessed and collected when transactions are settled through the electronic technology of the banking/ payments system.

The APT tax introduces progressivity through the tax base since the volume of final payments includes exchanges of titles to property and is therefore more highly skewed than the conventional income or consumption tax base.

The wealthy carry out a disproportionate share of total transactions and therefore bear a disproportionate burden of the tax despite its flat rate structure.

The automated recording of all APT tax payments by firms and individuals creates a degree of transparency and perceived fairness that induces greater tax compliance. Also, the tax has lower administrative and compliance cost.

If we want to take on the challenges of the 21st century, ie: the urgent generational "moonshots" facing us, then tech sector - take on the challenge of tax reform. 

​Simon J. Thorpe agrees in his 12 page PDF:
A Flat Rate Financial Transaction Tax to replace all taxes?

​What an excellent idea! Shame that more people didn't take notice - there are just 17 citations to his (Edgar Feige's) paper in Google Scholar. It's about time he got the recognition he deserved- and about time his forward thinking ideas got taken seriously.

Advantages of a Flat Rate FTT (Financial Transaction Tax) October 2010 by:
Simon J. Thorpe, CNRS Research Director (DRCE), CerCo (CNRS-UT3), TMBI (Univ. Toulouse), BrainChip Inc 

  • A Flat Rate FTT is fair.
  • A Flat Rate FTT is cheap to implement.
  • A Flat Rate FTT would be virtually impossible to avoid.
  • Removing conventional taxes would make tax havens largely irrelevant.
  • A Flat Rate FTT would provide a level playing field.
  • A Flat Rate FTT taxes those actors in the economy who can pay.
  • The abolition of taxes on profits would be a major incentive to the economy.
  • Increased incentives to short production supply chains.
  • Increased incentives for local exchanges.

Read the full argument.
"The global financial crime wave is no accident Financial crime is a feature of our global financial system not a bug." said pioneering economist Susan Strange. ​November 28, 2018 by Naomi Fowler
Financial Secrecy Index - 2018 Results

Canada ranks 21 out of 112 jurisdictions after Switzerland (1), the USA (2) and the Cayman Islands (3).


​“Canada and the U.S. are the two most lax jurisdictions in the world when it comes to the rules for preventing the incorporation of anonymous shell companies. What’s more, corporate service providers operating in those two countries are less compliant than those operating in Ghana, Lithuania, or Barbados, and follow laxer rules than those in Malaysia or the Cayman Islands.”

The Automated Payment Transaction Tax

1/11/2012

 
APT TAX

​The Automated Payment Transaction Tax

By capitalizing on financial data processing technology, it is possible to create a tax code for the 21st century that is astonishingly easy for all citizens to understand and administer because it eliminates the need to file tax or information returns.​

The foundations of the APT tax proposal—a small, uniform tax on all economic transactions—involve simplification, base broadening, reductions in marginal tax rates, the elimination of tax and information returns and the automatic collection of tax revenues at the payment source. The APT approach would extend the tax base from income, consumption and wealth to all transactions. (Wikipedia)
The system known as the APT or Automated Payments Transaction Tax (41 Page PDF with charts) was developed by Edgar L. Feige, Professor of Economics Emeritus at the University of Wisconsin-Madison. 

DREAMING OUT LOUD One Tiny Little Tax By Daniel Akst, The New York Times, February 2, 2003

OFF-THE-BOOKS-WORK and a $500 Billion Tax Gap: An Interview with Edgar Feige By Steve Lawrence, The Gail Fosler Group, July 30, 2013.

Ramifications of Implementing the APT

As with any major change what is viewed as positive for one group may be considered a negative for another. These are listed in accord with the expected majority point of view.

Think about the desirability and feasibility of replacing the present system of personal and corporate income, sales, excise, capital gains, import and export duties, gift and estate taxes with a single comprehensive revenue neutral Automated Payment Transaction (APT) tax.

In its simplest form, the APT tax consists of a flat tax levied on all transactions. The tax is automatically assessed and collected when transactions are settled through the electronic technology of the banking/ payments system.

The APT tax introduces progressivity through the tax base since the volume of final payments includes exchanges of titles to property and is therefore more highly skewed than the conventional income or consumption tax base.

The wealthy carry out a disproportionate share of total transactions and therefore bear a disproportionate burden of the tax despite its flat rate structure.

The automated recording of all APT tax payments by firms and individuals creates a degree of transparency and perceived fairness that induces greater tax compliance. Also, the tax has lower administrative and compliance cost.

Like all taxes, the APT tax creates new distortions whose costs must be weighted against the benefits obtained by replacing the current tax system.
​
POSITIVES
  • Strong dollar due to economic stimulus attracting foreign investment where no income or excise taxes exist.
  • Very low interest rates due to extra savings by individuals and attraction of foreign investment capital allowing lower cost capital and infrastructure expansion.
  • Budget elasticity for government including the ability to respond to special demands such as war or national emergencies.
  • Eliminate budget deficits with minor adjustments in an already extremely low tax rate.
  • Eliminate accumulated national debt through same mechanism if desired; further strengthening the currency.
  • Multiplier effects of economic stimulus creating greater numbers and value of transactions in an upward spiral reducing rates or allowing more services.
  • Incentive to move toward a "cashless" system.

NEGATIVES
  • Public insensitivity to expansion of government budgets and commensurate regulation.
  • Very low interest rates for people relying on secure, fixed sources of income.
  • Loss of tax incentive for charitable contribution. People will have more wealth to give but must do so without economic advantage.

​Implementation of this elegant and simple idea in Canada would allow Canadians to create an original, authentic social organization that would eventually be copied by all other nations. Let's apply the power of the internet to get this Automated Payments Transaction Tax idea into the mainstream and into application. Canadians, write your Member of Parliament." BR 
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    "Progress, far from consisting in change, depends on retentiveness. When change is absolute there remains no being to improve and no direction is set for possible improvement; and when experience is not retained, as among savages, infancy is perpetual. Those who cannot remember the past are condemned to repeat it." George Santayana Vol. I, Reason in Common Sense​​
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