Consider capital gains tax

Throughout this year’s US presidential election campaign, the question of Republican candidate Mitt Romney’s tax returns haunted him. He steadfastly refused to release his tax returns for twelve previous years unlike other presidential nominees in the past. There was always the sense that he had something to hide. He did eventually release his 2010 and 2011 tax returns, but the figures hardly helped his case.

Although the top rate of federal income tax in the United States is 35 percent, Romney only paid 13.9 percent in 2010 and 14.1 percent in 2011. His income was certainly large enough to be attracting the top rate. In 2010, Romney and wife declared income of US$21.7 million, well within the income bracket of “US$373,651 and above” that attracts the top rate.  In 2011, the couple declared income of US$13.7 million, again within the income bracket of “US$379,151 and above” that attracts the top rate.

On average, US middle-income families — those making from US$50,000 to US$75,000 a year — pay 12.8 percent, according to congressional research (source: BBC). And according to the Center on Budget and Policy Priorities, the next-to-the bottom fifth of the US population — those with incomes between US$20,500 and US$34,300 in 2007 — paid an average of 10.6 percent of their incomes in federal taxes (source: cbpp.com).

The two chief reasons why Romney paid so little were that (1) most of his income came from capital gains and (2) the couple made huge donations to charity, mainly the Mormon Church (source: usnews.com).  Over the two years, the couple donated about US$7 million. In 2011 alone, they donated more than $4 million and claimed a tax deduction of $2.25 million for it (source: CBSnews).

..

What is capital gains tax?

Basically, it is a tax on profits that an investor realises when he or she sells an asset at a price that is higher than the purchase price. Capital gains taxes are only triggered when an asset is realised, not while it is held by an investor. In other words, your paper gains are not taxed. An investor can own, for example, shares that appreciate every year but the investor does not incur a capital gains tax on the shares until they are sold.

In the United States, the tax is computed on the net capital gains in a year. If an investor sells two stocks in a year, one at a profit and another at a loss, the amount of capital loss incurred on the latter is netted off the gains from the former for taxation purposes. Not all countries use this principle, though.

Other assets that can easily be made subject to capital gains tax include precious metals and property. However, a person’s main home, when sold, can be exempted from capital gains tax, or, as in the United Kingdom, be set off against a predetermined relief amount.

..

Capital gains are taxed at 15 percent in the United States, and yet the Romneys managed to pay under that figure; I can’t explain how but I see plenty of news stories bruiting Cayman Islands (a well-known tax haven), etc.

Unsurprisingly, a major theme through the US election campaign was whether the rich should be paying more in taxes.

* * * * *

In Singapore, the issue of the widening income gap has been high among people’s concerns for several years now. Add to that concerns about the thin social safety net (e.g. poor coverage of healthcare and aging needs), and the question of having to raise more taxes will inevitably surface.

Former chief economist at the Government of Singapore Investment Corporation Yeoh Lam Keong, in a talk he gave on 6 November 2012, said that to strengthen our social safety net, the state will need to spend an additional ten percent of GDP. The two largest components of the needed increase are healthcare and education. We need higher public spending of about 4 percent of GDP on healthcare and about 6 percent on education. Regarding the latter, we are currently spending on 3.7 percent of GDP, compared to the OECD average of 6 percent, he noted.

I too said in a recent article that Singapore’s public spending is currently too low and needs to go up. See In the national conversation, some kinds of talk don’t come cheap.

A simple comparison will show how pertinent the question is. Singapore’s top rate for income tax is 20 percent, compared to the US’ 35 percent.  Our capital gains tax is zero percent (i.e. we don’t have any) compared to 15 percent in America. If under the tougher tax regime of the US, rich people like Mitt Romney managed to pay about 14 percent annually, what do you think he (and those like him) would have done in Singapore?

So, raising taxes may be unavoidable, but which taxes? A capital gains tax may be worth considering.

* * * * *

There is also a moral angle. Wealthy people with the wherewithal to own large assets can live off buying and selling assets, enjoying capital gains as a result. Less wealthy people have to work to earn a living. We tax income from work, but not capital gains. It just feels a bit wrong.

Moreover, in times like these when, even for the middle-income group, income from work is stagnating, there is a growing temptation to look to speculative assets as an additional avenue of financial gain. The question we might want to ask is whether the absence of capital gains tax fuels speculative bubbles. Has the upward trend in property prices been exacerbated by this?

On the other hand, someone somewhere is going to argue that imposing such a tax would seriously undercut our ambition to be a financial centre. If it is as dreadful as that, then how is it that London can be the world’s leading financial centre when the United Kingdom has capital gains tax of 18 to 28 percent? Perhaps there is a difference, and Singapore is more reliant on hot money, money that is meant for evading taxes. Impose the slightest tax and the money will flee. I don’t really know if this is the case, but what I do know is that Singapore is now in the gunsights of other countries wanting to crack down on tax havens. So, maybe there’s something to the accusation, in which case the question becomes: Do we really want to be that sort of place?

A more serious objection to a capital gains tax is that it can disincentivise entrepreneurship. Someone with a bright business idea may slog at it for years, hoping that one day, he or she can either list their start-up venture on the stock exchange via a successful initial public offering or sell the company for a healthy return. Indeed, it is good for a creative economy to encourage such effort. One easy way around the problem is to exempt from capital gains tax any realised increase in value of shares if those shares are held by people actively working in the company.

In short, if we need to raise more money for public goods, Singaporeans should think about a capital gains tax.

48 Responses to “Consider capital gains tax”


  1. 1 Fox 13 November 2012 at 00:26

    We should note that Malaysia and HK have no capital gains tax. Imposing a capital gains tax would disadvantage Singapore’s position as a financial centre of the region.

    • 2 Chanel 14 November 2012 at 11:20

      Fox,

      That is a very simplistic way of viewing things. Both Malaysia and Hong Kong don’t have GST because of concerns/complaints that GST is a form of regressive taxation (i.e. it taxes the poor more).

      S’pore’s GST is now at 7%.

      S’pore’s highest income tax rate is significantly lower than that of Malaysia’s and S’pore has many schemes that lower or zeroized taxes for companies and individuals.

      One cannot just look at one element of our tax regimen (eg. capital gains tax) when comparing with other countries

  2. 3 Tan Ah Kow 13 November 2012 at 00:37

    On your point: “A more serious objection to a capital gains tax is that it can disincentivise entrepreneurship”.

    So how about this? Sweden Capital Gain Tax, top rate 30%, and Singapore Zero. Why is Sweden more successful at nurturing successful startups than Singapore.

    Examples of Swedish successful startups: Kazaa, Skype, MySQL, The Pirate Bay and Spotify. Can anyone name one successful one?

    Could it be that in Singapore, people prefer to invest in properties than startups?

    If yes, then clearly lack of capital gains tax as a spur for tech start ups in Singapore is a basically bogus argument.

    • 4 octopi 14 November 2012 at 09:12

      High property prices in Singapore are clearly an even larger disincentive for entrepreneurship than capital gains tax. If you are a young man with an onerous mortgage hanging over his head, you probably would not be in the mood to be an entrepreneur.

      The other reason why we don’t have a lot of startups in Singapore is because we don’t really have a big hinterland nearby, where good products can catch on.

  3. 5 voiddecker 13 November 2012 at 01:16

    >>A more serious objection to a capital gains tax is that
    >>it can disincentivise entrepreneurship.

    On the contrary, the lack of capital gains tax (at least on property sales) might have fueled a national obsession on property investment at the expense of money flowing into new ventures and enterprises.

  4. 6 what about estate duty 13 November 2012 at 01:21

    How about estate duty? Who remove it? Is there any debate in parliament? How about GST for gold? Who remove it? Is there any debate in parliament? How about raising top tier income tax and corporate tax? Who lowered these? Who benefitted from it? The MPs?

    • 7 Lye Khuen Way 13 November 2012 at 06:39

      Yes, Estate Duty and Capital Gain Tax on Property.

      Those two would do nicely.
      Wanted to add higher progressive personal Income Tax, but that can be seem to be going too far. As yet.

    • 8 Ace 13 November 2012 at 10:38

      Yes, capital gain tax can work but it needs to be targeted so that we can still encourage entrepreneurship. Yes, estate duty should not have been removed but then there is a problem – the old man’s estate value will be public knowledge when he passes away.

    • 9 one more 14 November 2012 at 14:05

      One more point. How does Singapore benefit by attracting people like Saverin, Jet Li, Gong Li to settle here if it doesn’t tax them?

  5. 10 Duh 13 November 2012 at 03:13

    The aim of PAP in NOT introducing capital gains taxation is to attract bigwigs into Singapore (*Singapore is a well-known tax haven for the rich – see recent agreements with Germany to counter this), thereby inflating GDP and hence, the salaries of the PAP ministers and their rich cronies. (Salaries of PAP ministers, as we all know, are partly pegged to GDP)

    Hence, PAP will never introduce such a taxation bcos it is basically against their own interest (both directly and indirectly). So the question is not whether capital gains tax is good or not (of course it is) but rather, whether PAP is willing to sacrifice their financial gains by introducing it into Singapore – I think Hell has a better chance of freezing over.

    • 11 octopi 14 November 2012 at 09:06

      That’s exactly right. The question is – how much does Singapore’s economy depend upon these bigwigs, and whether it is to the benefit of the 99% (or probably 66% in Singapore since there are so many rich people here) that they leave the country.

      So you have a more progressive tax system, it might distribute the wealth more evenly in Singapore, which is good for the lower / middle class. Or it could cause our banking sector to buckle over, which is bad for everyone. The problem is, we don’t really know which one is worse until we’ve really tried it out.

  6. 12 Alan 13 November 2012 at 13:31

    When they don’t even recognise the Indonesian Govt’s right to extradite their corrupt nationals hiding their wealth here, do you think our Govt wants to go after the super rich here ?

    When that corrupt PRC can so easily become a PR here without a single question asked about the origin of his wealth, God knows how many other corrupt criminals or drug barons have been allowed to reside in this country especially now that gambling & prostitution is no more a sin in the eyes of our PAP Govt ?

    • 13 walkie talkie 14 November 2012 at 10:04

      Dear Alan,

      Why should prostitution and gambling be a sin in Singapore? For example, are you able to point out rational evidence to show what is inherently wrong with paying for sex as long as both buyers and sellers are informed consensual adults?

  7. 14 yuen 13 November 2012 at 18:16

    capital gains tax usually comes with tax credit for capital loss; taxpayers would want to arrange for a combination of the two to their own best advantage by cashing out with a prepared plan, which makes tax reporting rather complex; very wealthy people can hire expert advice, but for small timers buying/selling property and securities occasionally, such complexity is an undesirable burden; I suspect the idea, if implemented, would be more unpopular with the less wealthy than the very rich

    I believe the government would eventually opt for a higher rate of GST to fund increased social spending; the current rate of 7% is still quite low by western standards, but the issue would still be a tricky one

    • 15 yawningbread 13 November 2012 at 22:03

      GST is a regressive tax. Raising the rate would be terrible.

      • 16 yuen 14 November 2012 at 08:25

        maybe, but go to http://en.wikipedia.org/wiki/Tax_rates_of_Europe to see how things are out there; US sales tax rates vary with state/municipality, but are generally within the 5-10% range http://en.wikipedia.org/wiki/Sales_taxes_in_the_United_States

      • 17 Chow 14 November 2012 at 09:09

        I’m going to be cynical this time round. The question is “who is more mobile”? London and some other cities may live without a capital tax gain perhaps because many financial companies have sunk roots there that will take a long time to extract themselves from. There is also a concentration of individuals and other smaller companies playing a supporting role that are not present in other countries as of now. Given time, these companies and individuals will eventually move to lower cost areas. On the other hand, the lower and middle class are often stuck and unable to move to other countries so raising taxes on them (like say a 10% GST) is easier. I know it sounds very much like a conspiracy theory but I half suspect that it is true to some extent.

      • 18 Xu Si Han 14 November 2012 at 11:18

        A VAT being regressive is one thing, but it is also far better than a CGT in that it is harder to avoid and the system being harder to game. On top of that, a flat VAT can easily form part of a Negative Income Tax system which you yourself have written about, which can serve as the basis of a living wage (as an alternative to a minimum wage) to help the poor.

      • 19 octopi 14 November 2012 at 17:25

        This “corporations moving to tax shelters” thing has been a perennial problem. It is also the reason why I am loath to completely condemn GLCs, because it is harder for GLCs to avoid tax.

        On top of a World Trade Organisation, an IMF and a World Bank, there should also be a World Revenue Consortium, where all the countries get together, share some of their tax information, and collaborate to impose economic sanctions on firms that seek to set up shop in tax shelters. Another option to consider is military options on Bermuda, the Bahamas, so that they can be the 51st and 52nd states of America.

    • 20 Chanel 14 November 2012 at 14:06

      Yuen,

      S’pore’s highest income tax rate is also a lot lower than western countries, so why not raise that??

      • 21 yuen 15 November 2012 at 05:48

        I am saying it has been the policy to keep income tax rates low while increasing the GST rate, and I dont expect the government to change its mind just yet; whether the policy is a good one, I leave to others with more expertise to discuss

  8. 22 Bhavan 14 November 2012 at 00:48

    Alex, I am not sure but I think you might have mentioned this in one of your past posts.

    We should not consider any type of increase in taxes without more transparency on how the annual returns of our reserves are being used. Constitution says up to 50 percent can be used to supplement annual budget. There is currently no official data on the percentage that we at now, with some S$8 billion of this year’s budget coming from the NIRC.

    Firstly, we must find out whether we are anywhere near to using 50 percent of the annual returns on the reserves.

    Secondly, we need to have a discussion on whether we really need to save (and invest) a minimum of 50 percent in overseas markets. Could the reserves still be a viable hedge against speculators if we were saving just 30-40 percent of the annual returns?

  9. 23 mainman 14 November 2012 at 01:25

    The problem is the ministers are rich and they don’t want to pay taxes. They have rich friends and Singapore believes in the 5 C’s

  10. 24 Ah boon 14 November 2012 at 08:46

    The upper echelons have too much vested interests to even consider it

  11. 25 Pearl 14 November 2012 at 09:04

    Only exempt capital gain tax on one property, i.e. the house one lives in.
    No capital gain tax will ensure the rich get richer!

  12. 26 Chanel 14 November 2012 at 11:23

    S’pore’s estate duty was abolished in a big hurry in 2008 (it was abolished immediately upon announcement!!). Our ministers, being very rich themselves, have strong vested in interest in keeping taxes very low for the rich.

    S’pore is fast becoming labelled as a tax haven by developed countries such as Germany, the US and the UK. Thus, we see some noise in the local papers about our govt’s efforts in making sure we don’t have labelled as a tax haven.

  13. 27 Chanel 14 November 2012 at 16:04

    Gina Reinhart, Nathan Tinkler and Saverin didn’t come to S’pore because they love S’poreans and S’pore. They came for just a few very powerful reasons: S’pore has no estate duty or capital gains tax…..and S’pore has one of the lowest income tax rates in the world.

  14. 28 Kelvin Tan Tuan Wei 14 November 2012 at 18:29

    We tax income from work, but not capital gains. It just feels a bit wrong.
    ====

    There is such a thing call the Corporate income tax that reduces firms’ profitability and hence their share prices. You want someone investing in capital to be double taxed?

    • 29 octopi 15 November 2012 at 00:32

      Consider a manufactured good. It passes from corporation to corporation along the way, during which it could be taxed maybe 5-10 times by different governments? Being taxed twice is nothing!!

    • 30 qwertot 15 November 2012 at 02:10

      Individuals have to pay GST using income that has already been taxed previously. It is really nothing new.

    • 31 Chow 15 November 2012 at 07:10

      Oh, in similar vein: Workers already are taxed on their income. There is a thing called GST that further reduces a person’s disposable income. You want a worker to be double taxed?

      The point about this is if taxation right now is doing what it should do in an optimum manner or even fairly.

      People will have different takes, naturally. The businessman/investor would like, through low income tax rates and capital gains tax, to have the tax code favour him. Workers may favour lower income tax for certain bands of annual income. Yet others may favour bigger redistribution to help balance out the income inequality.

      All of these do not operate in a vacuum. There are trade-offs to be made and it also depends on what the people want and how the government really decides to do things.

      Who gets to decide? Ultimately, because of the way governments work, it really sometimes boils down to a handful of people. As people, these decisions makers are also influenced by many other things. Their outlook on life, how open they are to different views, and maybe even what they had for lunch that day. Sometimes, these things sway them far to the right or the left and it’s usually left to the electorate to decide to bring them back to the middle, provided the usual checks and balances are in place.

      Perhaps you didn’t mean it that way, but that statement (as recast by me in the point-of-view of the wage earner) shows how abrasive, and authoritarian it can get. The tone matters, among other things.

      • 32 Kelvin Tan Tuan Wei 15 November 2012 at 12:24

        GST is not a relevant point difference here as capital income will also be subjected to it once it is spent.

        The optimal capital tax is zero because you do not want to penalize savers for saving their wage income in the form of capital investment.

        You must understand that those who earn income from capital do so because they choose to save a fraction of the income they earn from their labor, by investing in capital which is risky, while others prefer to either spend all of it or save in a risk free manner.

        Without the investors, the capital stock of Singapore will be much lower, meaning labor productivity will be even lower.

      • 33 octopi 15 November 2012 at 14:09

        It is not so much that the tone of the voice. It’s the content of what he’s saying. He’s saying that corporate profits are important – more important than anything else. More important than paying your employees any more than it takes to keep them alive. More important than paying a government to do its job. More important than protecting the environment. The biggest problem in the world today is that “corporate profits are king” mentality.

        That’s why I’m skeptical about a lot of what people say about the government. The problem is not that the government is squeezing the people. The problem is that businesses are squeezing the people, and the government and the people are not doing enough to fight back.

      • 34 Kelvin Tan Tuan Wei 15 November 2012 at 19:14

        Let me give an even clearer example to illustrate what I was saying above:

        Imagine two prosperous but not outrageously so working people living somewhere—two doctors, say, living in nearby small towns. They’re both pulling in incomes in the low six figures. One doctor chooses to spend basically 100 percent of his income on expensive non-durables. He goes on annual vacations to expensive cities and eats in a lot of fancy restaurants.

        The other doctor is much more frugal, not traveling much and eating modestly. Instead, he spends a lot of his money on hiring people to build buildings around town. Those buildings become houses, offices, retail stores, factories, etc. In other words, they’re capital. And capital earns a return, so over time the second doctor comes to have a much higher income than the first doctor.

        So then there are too different scenarios:

        — In the world where investment income isn’t taxed, the second doctor says to the first doctor “all those fancy vacations may be fun, but I’m being much more prudent. By saving for the future, I’ll be comfortable when it comes time to retire and will have plenty left over to give to my kids.”

        — In the world where investment income is taxed like labor income, the first doctor says to the second “man you’re a sucker—not only are you deferring enjoyment of the fruits of your labor (boring) but when the money you’ve saved comes back to you, it gets taxed all over again. Live in the now.”

        And the thinking is that world number one where people with valuable skills take a large share of their labor income and transform it into capital goods is ultimately a richer world than the world in which such people just go out to a lot of fancy dinners.

      • 35 yawningbread 16 November 2012 at 23:30

        Octopi has given a reply. I was going to write a similar reply except that I didn’t have time today. I agree with him.

        It’s a false choice between consumption and investment. Both can create economic activity. Money spent on consumption don’t disappear, they get recycled by the recipients of that money through other economic activities. The demand so generated increases confidence which will lead to others investing.

      • 36 eremarf 16 November 2012 at 01:29

        Re: “The point about this is if taxation right now is doing what it should do in an optimum manner or even fairly.”

        Well, I don’t know very much, but would like to contribute this (from http://prospect.org/article/what-would-pigou-do):

        1. “strong positive correlation between the marginal tax rate for the top 1 percent and total tax revenue”

        2. “Economists who specialize in these matters, including Thomas Piketty, Emmanuel Saez, and Peter Diamond, typically argue that a marginal rate around 70 percent maximizes revenue.” (this is for the USA, but you can see it is pretty high compared to ourselves, as YB has pointed out.)

        3. “But how might high marginal tax rates affect overall economic growth? The conventional wisdom holds that high rates are a threat to growth. The conventional wisdom is wrong. A plot of growth rates against top tax rates shows little or no correlation between the two.” (Again, a disclaimer this is just US data.)

        The article’s main point is to consider whether income inequality (and its indirect effects) might be considered a negative externality (a la The Spirit Level, Joseph Stiglitz, Amartya Sen, Chang Ha-Joon, etc), and hence deserving of taxation to discourage its production.

      • 37 octopi 16 November 2012 at 14:42

        This post is for Kelvin Tan.

        This story that you’ve told is something we’ve heard about long ago: “investment is good, frivolous spending is bad”. There are a few counterarguments.

        First, and most obvious, where the wellbeing of businesses and enterprises are concerned, there is not that much difference between investment and expenditure. Whether you are spending money or investing, it will be good for businesses. If you spend $20 on a fancy meal, maybe $10 of it will be profit for the restaurant owner, and he can plough it back into business, or donate it into charity, or doing. You’re merely handing your money over to somebody else. All economic activity is handing money over to somebody else / passing money to somebody else.

        Second, there are instances where investment is bad. Suppose you wanted to “help the poor”. Do you invest money in them? Is it really “giving” money to people when you invest? You give them a loan and charge back, say 3% interest a year. Over 30 years, I’m sure, what they’ll have to pay you back is so much more than what you’re giving them: so much more that whether you are “giving” them money is a very dubious assertion. Then you’ll probably “watch your money grow” – basically it’s rich people enslaving poorer people with their money. Spending money on businesses is also helping them to grow, isn’t it? Getting taxed is also a way of making your dollars find their way to social goods, isn’t it? So what is it really that makes “investment” so superior?

        Ultimately, neither spending or investment is superior to each other. The rich millionaire should be spending more money, instead of trying to turn his $10 million into $100 million. Maybe $5 million of it will go to his spoilt brat kids, and they’ll use it on something that you might find frivolous and unworthy? Frankly speaking, if somebody is “investing $50 million”, it is very dubious that he is performing a public service. He’s just trying to grab more money, plain and simple. I don’t know how the bankers managed to pervert the narrative and make him into a “philantropist”. He should just be spending that money. An “investment” will say to a business, “you must work your ass off to make so much profit that it will clear the hurdle rate I give you”. Translation: “you are now my slave”. There are plenty of activities that are worthy but not profitable enough to be businesses: hospitals, education, the arts, research. In fact, the “investment” mentality will pervert peoples’ minds and teach everybody that these activities are not worth pursuing because they cannot be profitable. Businesses cannot be set up because the perceived risk is too great. Businesses cannot make their operations more environmentally friendly because their bankers won’t like it. Inevitably our lives become worse as a result.

        Fundamentally “piling up money for the future” might sometimes mean that that money will be used for some future good, like the construction of a building that will one day be used for something good. But more and more often, it means that the money will go right into a big sinkhole where it will never be seen again. This is “the rich growing richer”.

        The poor and the middle class should instead be investing more. Except, of course, that the banks are trying to foist on them their toxic assets that aren’t worth anything. Ultimately, if you have too much money, you ought to be spending or giving it away. If you don’t have enough money, you ought to be investing. Ultimately, there is a balance, and ultimately, the government should decide what is the balance between spending and investing.

  15. 38 Rabbit 15 November 2012 at 00:28

    Not sure whether capital gain will help if they taxed ordinary folks who tried to downgrade from 5 room flats to 3 room. I suggest they cap the capital gain at around $400K and than imposed hefty rate (25-30%) above this benchmark sum. If a person has multiple properties, the $400K cap applies to his first sales proceed only, his subsequent property sale will not be exempted from cap and will be taxed in full.

    Estate duy should not have taken away, I see it as another ways to help the rich escape tax.

    On the other hand, instead of focussing on raising revenue we should not overlook the cost elements. Are our ministries spending too much on non-necessities and top civil servants overpaid relative to their duties? Singapore is also spending excessively on defence with many accidents involving National servicemen in recent years. The money not well spent? if so, are the excesses “corrupted” away via poorly implemented procurement procedures?

    Did the rich enjoy more “welare” than the poor resulted in us not having enough to cater for the needy in our society? More transparency is needed at the micro level and I hate to hear a 50-men year to do this.

    • 39 LinCH 15 November 2012 at 12:25

      Who was the culprit who removed estate duty? We should remember his mistake. But he has a way to making us forget his mistakes.

      Too much money is definitely spent buying American arms. It is a way to pay back the Americans for investing in the island. As though they do it (Invest) without any hope of gain,

  16. 40 Anon 16Y6 15 November 2012 at 14:43

    I feel that the crux of the problem stems from the humble HDB flat being allowed to be traded as an investment despite the current red tape. If the government is serious about home ownership for first home buyers especially those in the lower middle income bracket, public housing policy should go back to its roots.

  17. 41 Ally 16 November 2012 at 00:27

    Alex, you said, “So, maybe there’s something to the accusation, in which case the question becomes: Do we really want to be that sort of place?”
    We are already “that sort of place” – MAS recently ‘warned’ our local banks not to accept money seeking tax havens that is coming out of Europe.

    Comparing the top bracket of 18% in SG’s case against that of US is not comparing apples with apples because there are dozens of tax credits and deductions that that taxpayers in the US can use to reduce their tax liability especially for those making less than USD60,000 a year so that the end result is that they end up paying very little tax, and in some cases, even end up getting money from the IRS. These loopholes and deductions are the reason why some members of Congress want a eliminate these deductions so that the tax bracket can be lowered.

    • 42 yawningbread 16 November 2012 at 08:46

      Sorry, cannot comprehend what you’re trying to say. You’re talking about the top bracket of income tax and “especially for those making less than USD60,000 a year” — which is nowhere near top bracket.

  18. 43 octopi 16 November 2012 at 04:17

    An interesting primer to this discussion. This should answer a lot of questions that commenters have been asking.

    http://www.theatlantic.com/business/archive/2012/11/the-most-important-tax-break-is-the-one-that-nobody-talks-about/265308/

  19. 45 Anon U4ff 16 November 2012 at 13:50

    You start with a wrong assumption that raising taxes is unavoidable if there is to be more social spending. The MSM is spreading this illogical stuff also. First, there is a lot of unused money. There is a huge investment return from TH/GIC/MAS and other government funds that is not touched. Second, money can be channeled from wasteful projects.

  20. 47 Robox 18 November 2012 at 01:39

    I wish to bring to attention this book, but with one caveat: I haven’t read it yet but plan to. I have however, heard a radio interview with the author on a foreign channel.

    “Plutocrats: The Rise of the New Global Super-Rich and the Fall of Everyone Else” by Chrystia Freeland

    Mitt Romney was identified in that interview as belonging to the class of “Ultra, Ultra Rich”; the top 1% within the top 1%, as she put it.

    I found it very interesting that the author also referred this phenomenon as a global one, naming China and India where it is particularly pronounced, calling this a Gilded Age. (Does Lee Kuan Yew’s declaration of Singapore having entered a Golden Period strike a sense of deja vu?)

    However, she cautioned that while in China, India and other countries, this Gilded Age is only the first one in their history (would that be debatable?), the first one for the West being, very tellingly, the onset of the Industrial Revolution, the unbridled capitalism that ensued complete with the expolitation of labour to create that Age gilded only for the super rich.

    Well we know what happened after that, don’t we, with communist revolutions all over the world. (I predicted on the SDP website a few year s ago the same outcomes might be experienced if current practises are maintained.)

    To remove all possiblity of bias, I would add that the author identifies as an “ardent feminist”.

  21. 48 reservist_cpl 2 December 2012 at 00:11

    How about estate duty?


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For an update of the case against me, please see AGC versus me, the 2013 round.

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