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Comment by 99_00 | Hacker News Reader

I live in Vancouver.

The pattern for many Hong Kong immigrants is to have the mother and children live in Canada while the father works in HK.The family doesn't declare the foreign income in Canada.

So they enjoy the benefits of a low tax HK income. And they get all the nice things that go with living in high tax Canada while not contributing to it -free healthcare, subsided University, safe communities, clean environment, low income benefits.

It's so common it has a name, satalite family/astronaut dad.

This isn't a good deal for Canada and Canadians.

https://vancouversun.com/news/staff-blogs/the-unsettled-live...

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Canada, in general, is famous for massive tax loopholes and hiding income. It is not really a hk issue and is in the news on its own “merits” all the time. There are so many wealthy Canadians avoiding taxes that apparently the national debt could be cleared if we could find a way to make them pay

Yes, also so common that it has a name: https://wikipedia.org/wiki/Snow_washing

"The global elite, as well as criminals and foreigners avoiding economic sanctions, can set up shell companies to 'make suspect transactions seem legitimate' under the cover of Canada's reputation for fiscal integrity."

This is extremely common in many countries. Even in the US, there are many families that simply omit reporting income earned abroad. Sure, it's technically illegal, but it's not like the Chinese government is going to help enforce US tax laws.

Same is true for Chinese families in New Zealand and Australia as well. ...and it's not restricted to Chinese people either - obviously.

It's the curse of high tax jurisdictions.

Then shouldn't the government be closing this loophole and taxing whatever vehicle they use to transfer wealth?

I'd criticize an individual for evading taxes, but a "group" of people is just doing what people do.

EDIT: If you want to talk about the "functional" value of immigrants, then you need to get to the root purpose and bring in whoever is having the most kids.

Legislation that has any kind of a racial (or perceived to be racial) aspect to it cannot really be discussed freely. Even though closing such loopholes may be perfectly legitimate, if exploitation of the loophole happens to correlate to a racially identifiable group, in the current age of social media based hyper propaganda it is a very dangerous political move for a career politician (or their party) to touch.

Is that why they have not closed the loophole or are you speculating?

Weren’t they talking about taxing vacant properties in Vancouver recently? Was there social media backlash?

There were significant quantities of racism accusations in social and mainstream media, as there also had been for years during the money laundering in casinos debacle, that most politicians and right thinking news reporters also wouldn't touch.

Who knows what's really true, but there sure seem to be a lot of correlative coincidences, with similar stories in many different countries.

Even if that's the case (and I disagree that it is), I'm sure there are "satellite families" with the breadwinner working in Europe.

And I doubt there'd be an issue with racism making people reluctant to discuss the issue if they were the majority of the cases.

You are assuming that money ever gets to Canada. Half the time it's just kept in an account in Panama to be used when the family is on vacation or wants to buy a second home in another country.

Either that or it's brought in in literal cash. That's why the stories of Chinese home buyer showing up with literal briefcases in cash are all over the place.

The later should be tracked and treated as tax evasion.

> mother and children live in Canada while the father works in HK.The family doesn't declare the foreign income in Canada.

Why would the father pay taxes in Canada when he lives and works in HK (or anywhere else) and (likely) is not a Canadian tax resident? It doesn't make any sense.

After all they pay local taxes in Canada while spending (GST, PST, property tax etc.)

Count this as evidence for consumption tax being fairer than income tax.

Earning money and sitting on it doesn't hurt anyone. But in buying a nice life in Canada, you are in part buying what the government provides.

Agreed, there’s something to be said for GST or property taxes that are paid by all regardless of citizenship or legal residence.

Yeah it’s confusing.

At first, I was also going to post about how Canada uses a residential income tax system: even if you’re a citizen, you don’t pay income tax if you live and work overseas. But it turns out where your spouse lives is relevant for determining residency. [1]

Regardless of whether the “astronaut” dads are evading taxes, the bigger question is about designing a tax system that’s both fair and easy to enforce.

[1]: https://www.canada.ca/en/revenue-agency/services/tax/interna...

Income tax is by far the largest and most progressive tax.

Sales taxes are small and regressive.

It's a monster difference.

How is the sales tax regressive when there is a fixed percentage?

Like the more I spent the less I pay in sales tax? I don't think so.

It is regressive when you consider the position of the buyer. People need to buy large items, and low income people are disproportionately hurt by taxes on those items.

That doesn't mean it's regressive. It's just a demagogy.

Low income people buy less things and pay lower sales tax proportionally. Wealthy people spend more on luxurious goods and pay way higher tax in absolute numbers. Everyone is hurt the same.

On top of that, necessities (food, medication, books) are usually exempt from the sales tax.

The logic of calling a flat sales tax regressive is (I think) that poor people spend most of their income, while rich people save more, and thus pay a lower percentage of their income.

Agree that this isn't a great way to look at things. And that (as you say) there are often different rates of sales tax on potatoes vs yachts.

Fixed rate sales tax is regressive. A loaf of bread, a car, and a yacht should not be taxed at the same rate, and not only because of the demographic of the buyers, but also because of the introduced externalities.

Variable rate sales tax on the other hand is more progressive than any income tax.

It's also not a good deal for the kids who do not get to see their father.

> mother and children live in Canada

When these children grow up - they will pay taxes in Canada.

It looks like a good deal for Canada. Even if father's income is taxed in Hong Kong only.

It would be an even better deal if the father worked in Canada and paid Canadian taxes.

Besides, you are assuming that the children of this tax evader aren't going to figure out some other method of avoiding Canadian taxes - like doing literally exactly the same thing.

Are you sure? Or maybe they'll go work in Hong Kong too with the knowledge their Canadian passport gives them a nice escape plan.

It isn't a good deal for Canadians because we can get immigrants that will contribute to Canada, pay taxes, and have children who will do the same.

And many of the children of Hk immigrants will go back to HK to earn more money.

They will do whatever is in their best interest.

> They will do whatever is in their best interest.

Just like every other living being

At the individual level, yes. But at the aggregate level, certain patterns can be observed.

What do you think Canadians that work in the Middle East do? Report their incomes?

If the dad stays an astronaut, he will get lost in space once China finishes engulfing HK. I don't think HKers are going to be as worried about reducing their tax rates as staying free right now..

The whole reason for getting Canadian citizenship is for the day that China engulfs HK and they want to leave. China isn't going to restrict the movement of hundreds of thousands of foreigners legally living in HK.

300,000 Canadians living in HK right now.

Yep, the CCP is going after political dissidents. Expats that keep their head down while making money in HK aren't going to be affected.

> China isn't going to restrict the movement of hundreds of thousands of foreigners legally living in HK.

At least, they are less likely to do so than they are people who aren’t foreigners, although even them I wouldn’t want to bet my life on it.

China ending the two-systems arrangement in Hong Kong despite the Joint Declaration is basically saying “As far as HK (and, implicitly, anything we consider Chinese territory) is concerned, we aren't concerned about what other countries think, or international law or agreements, only power.”

Now you know how Iran feels :)

Well, not just Iran—the US does the same thing pretty blatantly a lot, and it's pretty much Israel’s only mode of operation. There's an argument that it's essentially all of international politics, masked by the fact that most countries, on all but the most existential issues, see the power vs interest calculus as favoring adhering to consensus international law and direct agreements.

It depends on your job. Software Engineer wage is way lower in Hong Kong than Canada. Low income tax in Hong Kong does not make it attractive at all.

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