Quora Answer: Why Do Poor People Complain That the Rich Pay Less Taxes Than They Do?

The following is my answer to a Quora question: “Why do poor people complain that the rich pay less taxes than they do?” 

They complain about this because it is true.  In any developed economy, the rich pay far more in taxes than the poor by quantity.  However, as a percentage of their income and wealth, the rich pay far less.  There is no way around this system because governments have to be practical. 

From a government perspective, we want to give the masses enough that they are tied to the economy, and grow with it.  This grows the tax base, creates the foundation for stability, and enfranchises the people.  Disenfranchised people in large numbers tends to lead to regime change, conflict, and a refugee problem.  When people feel that they have no stake in the system, they are not obliged to support it. 

The wealthy elite, however, is where the government truly gets much of its funding directly and indirectly, through taxes, production, and direct funding.  They have the connections and the wealth to acquire expertise on how to best manoeuvre in any system.  And when they are no accommodated, they leave and move their tax domicile to a more favourable climate.  The balance here is on taxing them adequately for them to stay, but not so much that the cost benefit of moving elsewhere compels them to do so. 

As a result of these considerations, tax systems eventually evolve to tax the masses based on their gross earnings, and the wealthy on their net earnings.  The wealthy, however, are indirectly taxed through their political contributions to causes.  Taxes work when the populace understands that this is the cost of the upkeep in society, and a well-managed revenue stream for the government is an investment into society.  They breakdown when people do not see that benefit, and tax evasion becomes a way of life.

Quora Answer: How is Tax Buoyancy Different from Tax to GDP Ratio?

The following is my answer to a Quora question: “How is tax buoyancy different from tax to GDP ratio?” 

Tax buoyancy indicates how responsive the taxation system is to changes in the gross domestic product, whether there is an increase in revenue, or decrease.  As a general rule, the tax system is considered buoyant if there is a greater increase in the tax than the output.  This is a rough indicator, and is not very useful in formulating government revenue policy. 

Tax to GDP ratio, on the other hand, is merely the size of the tax revenue relative to that GDP ratio.  The tax to GDP ratio determines the efficiency of government in managing economic output to develop infrastructure, build a reserve, and manage the strategic potential of the economy and the populace. 

Tax buoyancy is a rough indicator of a single aspect of the revenue or potential revenue.  The tax to GDP ratio is more of a helicopter view of the entire tax policy, and gives us a better idea of whether to create or raise taxes, or cut expenditure.  The former measures the responsiveness of the policy, whereas the latter gives us a guide on whether revenue needs to be increased or decreased overall.

Quora Answer: What Happens When a Mutual Fund Goes into Liquidation?

The following is my answer to a Quora question: “What happens when a mutual fund goes into liquidation?” 

When a mutual fund goes into liquidation, full closure, the funds assets are sold, and the proceeds distributed to the shareholders of the fund.  From the perspective of the fund, this is a straightforward process, and it happens regularly.  Funds are liquidated when there is heavy redemption, chronic underperformance, a fatal drop in asset value, or simply because it is an investment concept which did not gain traction.  None of this is ever good news for the investor, and not an ideal exit. 

From an investor perspective, this often means significant losses, and in some countries, they can still be taxed on those losses as gains because those losses are now liquid, in their account, even though it is a fraction of their initial holding value.

Quora Answer: Should Singapore Accept Amos Yee Pang Sang if His Asylum is Revoked?

The following is my answer to a Quora question: “Should Singapore accept Amos Yee Pang Sang if his asylum is revoked?” 

Amos Yee Pang Sang never actually renounced his citizenship.  He absconded court judgement in Singapore, and sought political asylum in the United States.  That asylum was granted that on the basis of political persecution, despite the US government itself appealing against the decision.  They do not want that troublemaker any more than we do. 

Upon conviction, the US government has a strong legal basis to rescind that asylum, and he will be deported after serving his time in prison.  Since he is technically a Singapore citizen, Singapore will have to take him back, under international law.  He will then be charged for absconding from court, and he will spend considerable time in prison.  That means he will have to be fed and housed at tax payer’s expense.

Quora Answer: Can My Ex-Husband Keep a $100,000 Insurance Policy on Me?

The following is my answer to a Quora question: “Can my ex-husband keep a $100,000 insurance policy on me?” 

I would assume that when he took out the policy, he was your spouse, which means that there was insurable interest.  He is the policy owner, and you are the life insured.  Despite your divorce, this does not change, the policy still stands, and he can keep that policy on you.  You could conceivably request that he transfer ownership of the policy to you, although he has no obligation to accede to that request.  He has paid the premiums, and you would likely have to compensate him for it. 

Quora Answer: Why Did My Insurance Company Allow My Wife to Change the Ownership of a Life Insurance Policy?

The following is my answer to a Quora question: “Why did my insurance company allow my wife to change the ownership of a life insurance policy?” 

The only conceivable way your wife was allowed to change the ownership of a policy is if she is the policy owner.  As the policy owner, she can assign it to another legal person.  There is no requirement for there to be insurable interest for this to be done.  Insurable interest is only a factor when underwriting a policy, where the policy owner and the life insured are different people.

Quora Answer: Does Not Wearing a Seat Belt Affect an Insurance Claim?

The following is my answer to a Quora question: “Does not wearing a seat belt affect an insurance claim?” 

In Singapore, and most other countries, wearing a seat belt is a legal requirement.  Failure to wear a seat belt when the vehicle is moving would most likely negate your insurance claim since any injury which occurs while flouting the law would nullify the coverage.