Election 2015

[ModlrMike]

Would someone please explain to me where this stat comes from and why only wealthy Cdns will benefit:
Wouldn't everyone?

My wife and I, both retired, income split, and we are not wealthy, financially.

Here's the bones of the policy:

Only families with children under 18 with two parents in different tax brackets would benefit.

The talking heads maintain that this requires one high income earner and one low income earner. Therefore, only the wealthy will benefit.

Considering that 50% of Canadian households pay no tax, it's only logical that a tax cut would favour those with higher incomes who do pay tax.

 

[The Bread Guy]

Would someone please explain to me where this stat comes from and why only wealthy Cdns will benefit:
Wouldn't everyone?

1)  Generally, the idea comes from a Conservative finance minister:  “It benefits some parts of the Canadian population a lot and other parts of the Canadian population, virtually not at all .... I think income-splitting needs a long, hard analytical look . . . to see who it affects in this society and to what degree, because I’m not sure that, overall, it benefits our society.”
2)  In particular, this from an admittedly happy-to-bash-Harper-and-company think tank:

.... This study finds that, in 2015, Canada’s federal government will give up an estimated $1.2 billion in lost revenue due to pension income splitting and the provinces will lose another $500 million in revenue for mimicking this tax change — for a total revenue loss of $1.7 billion.

(....)

- The poorest 10% of seniors receive an average of 10 cents in terms of a tax break from this loophole, whereas the richest 10% receive an average of $820 in perks.

•  One out of five among the richest 10% of Canada’s senior families receive a cheque for over $1,000 from this program while three out of five make some gain from it.

•  Of the poorest half of all senior families, only one out of every 1,000 seniors gets more than $1,000 from pension income splitting.

•  Seven out of 10 seniors enjoy no benefit at all from this tax loophole.

•  The poorest half of all senior families — they’re making less than $36,000 a year — receive only $2 out of ever $100 paid out by this loophole.

•  The richest 10% of senior families, making over $85,000, receive $30 out of every $100 paid out.

•  The richest 10% of senior families receive more than the bottom 70% of families.

(....)

 

[a_majoor]

OK everyone, repeat after me:

This is our money, not the government's.

I am quite good with the government leaving $2 billion + in the productive economy with the people and families who earn it, since they have a far better idea of where to invest, save or spend it than any number of bureaucrats staring at computer screens in an office in Ottawa. (the technical reason is termed the "Local Knowledge problem" i.e. knowledge is dispersed across the organization and can only be identified, accessed and used in fleeting instants, hence centralized organizations can never, in theory or practice, take advantage of it. See http://hayekcenter.org/?cat=41 for more discussion).

And of course with $2 billion staying in our pockets and not the bureaucrats, there is now some incentive to spend more carefully, since the problems of debt and deficit across Canada, from Federal down to municipal are all spending problems, not revenue problems.

 

[ballz]

While I'm all in favour of tax cuts and smaller government, I recently switched my view on income splitting.

To me, income splitting is a government policy that rewards certain lifestyle choices at the expense of other lifestyle choices. The government doesn't exist to pick and choose how people live their life, so it should not actively support the way certain people live their life by giving them a tax cut. The tax burden just got higher for me just because I am single and have no dependants.

IMO, the government giving a tax cut to two parents with children under 18 is no more fairer than giving all single, working people a tax cut that does not apply to people who have dependants. It's ludicrous.

Rather than give an income tax cut worth $2 billion dollars to certain people because you like the cut of their jib a little more, why not raise the Basic Personal Exemption and help out all taxpayer's equally.

 

[a_majoor]

In the best of all possible worlds, your solution is better, but since Dr Pangloss is not the leader of any political party at the present time  , I will take what is available.

I will even one up you and say the "ideal" policy would be a single or flat tax which taxes all income the same regardless of source and has few or no "loopholes" or exemptions. In most flat tax schemes the basic personal exemption is fairly high anyway, which answers some of the arguments that claim this sort of tax is "regressive". The added advantage to a flat or single tax is Canadians will no longer have to pay out an estimated $3.5 billion a year in after tax dollars to get their taxes done; an even bigger return of monies to the productive economy. (Making tax law and regulations so complex that even a non professional needs help to get their taxes done is diverting money away from where the taxpayer might want to save, spend or invest it).

Somewhere there is an entire thread on flat taxes, so I won't rehash the arguments here.

 

[YZT580]

Income splitting favours sergeants and above in pay scale whose spouses make less than 20 an hour. Part of the higher income is placed with the lower and is then taxed at the lower rate.  It will provide a few extra dollars to help with the daycare payments.  It is a solid benefit for most married couples who pay tax at two different rates.  It doesn't benefit single parents directly (there are other tax breaks for them) and there is no benefit for professional couples.  A single income family sees no benefit either.
f

 

[McG]

A single income family sees no benefit either.

How is that?  The parent earning an income transfers half to the spouse who does not.
It seems like a good deal for military families in small communities without many employment options for spouses.  Petawawa, Cold Lake, Baggotville, Shilo, Wainwright, etc should all see troops with young families benefit from this.

 

[PuckChaser]

A single income family sees no benefit either.

Really? Because I'm a single income family and I'll be getting the maximum credit of $2000. $2000 basically pays for my property tax for the year, or will put both of my kids in hockey. I fail to see how that's "no benefit".

In case anyone wants an estimate, here's a quick calculator I found: http://incomesplittingcanada.com/

 

[YZT580]

I was wrong.  I assume that this is done by filing a claim for the person that currently has no income.  Does that mean you will have to pay into CPP on behalf of the individual who currently has no income but will now be filing?

 

[krimynal]

a bit off-topic , but I've seen a french military news site ( 45enord.ca ) today , they had 2 different articles on both major parties ( Liberals and NPD ) ...

Am I the only one who is disgusted about them trying to say that the intervention we are doing right now with the Special Forces is wrong ? the way they act they are talking about how much good a humanitarian intervention would be, and how much Canada should try to provide help , with medical and food , and schools ......

what the heck do these guys think ??? I mean , if it was possible , we would do it .

What happen when you have sometype of Cancer ? do we feed you peanut butter - jelly sandwich to make you feel good ? No , it's not gonna make you better , you get chemo and you try to kill the disease to eventually win the fight and get better.

what does Chemo do ? it kills the cell , some good some bad , but it kills the disease so you can heal from it .... do we start manifestation about people getting chemotherapy ? heck no ! we know it's basically the only choice we have if we want to survive from cancer.  Then why do we start speaking about humanitarian aid ?? Right now we need to get rid of the disease , and avoid it to comeback.

 

[a_majoor]

Tom Mulcair and the Young Dauphin both forget (or never realized in the first place) that you need to control the area on the ground to ensure that humanitarian aid actually gets to the people who need it, rather than get expropriated by whoever has more guns and combat power.

I'm sure the Young Dauphin will be able to explain to CBC why ISIS fighters are running around in Syria and Iraq wearing Canadian cold weather gear and eating Canadian rations under *his* plan......

 

[krimynal]

I just love how these guys are trying to make the current situation look bad politically speaking ( I know we are going thought a election year and that's what they need to do to get elected ) .... and sadly average voters are going to fall for that simply because they see human aid , and they can't think otherwise ....

But the fact is .... so many previous situations has been seen when a country would send in  food / clothes / medicinal supplies / etc. ... and it would only aggravate the situation , because rebels would be taking them and basically make people do all the bad things for them simply to get access to some ....

are we safe to send a regular doctor over there , and ask him to cure people ?? how dumb do that sound ??

 

[ballz]

I will even one up you preach to the choir and say the "ideal" policy would be a single or flat tax which taxes all income the same regardless of source and has few or no "loopholes" or exemptions.

FTFY. The CRA costs $7 billion dollars a year just to run it, or almost $400 every working Canadian is paying just to get their taxes taken from them.

There *IS* one party advocating a $17,000 BPE with a 15% flat tax rate

 

[dimsum]

I'm sure the Young Dauphin will be able to explain to CBC why ISIS fighters are running around in Syria and Iraq wearing Canadian cold weather gear and eating Canadian rations under *his* plan......

Wait a minute....cold weather gear with GPS trackers installed.  Genius.  >

 

[Brad Sallows]

>This is not a another bag of money that is accessible for pet projects or infrastructure. Pension funds should be used for pensions.

I like the irony.  Although the prior raids have been on pension surpluses and this is an entirely deeper dive (presumably into the non-surplus pension assets, placing them at risk if the projects go tits up), the Liberals did most of the historical raiding and are now proposing to do more.  Meanwhile, there are people who claim to be former Conservative supporters spitting nails and blaming the Conservatives squarely for the bureaucracy's inability to spend VA money and making that their single-issue excuse for jumping ship to the Liberals.

Pension funds _could_ be used for infrastructure projects as investments (probably are), but only under the control of people who are 100% charged with managing the funds.  Politicians should have no say whatsoever.

 

[Brad Sallows]

A household with children is a family unit, not a husband and wife going their own separate ways with their respective incomes (OK, maybe some do, but that's not the ideal).  Variations on income splitting treat income as a household resource and tax it at potentially less confiscatory rates.  A counter-proposal might be to treat it as a single income, which would tend to push more of it into a higher bracket.

I don't find much to admire about progressives who whine about the money women make compared to men and the difficulties of paying for childcare, and then fight against policies which would at least allows families with kids to pretend that the hours the wife works are worth as much as the husband's (or vice versa, albeit more rarely) and to more easily afford childcare so that they can pay the taxes progressives love to spend.

 

[Kirkhill]

A household with children is a family unit, not a husband and wife going their own separate ways with their respective incomes (OK, maybe some do, but that's not the ideal).  Variations on income splitting treat income as a household resource and tax it at potentially less confiscatory rates.  A counter-proposal might be to treat it as a single income, which would tend to push more of it into a higher bracket.

That would be to treat the family as a corporation. No?

Not a bad thing.

 

[Jed]

That would be to treat the family as a corporation. No?

Not a bad thing.

That's how they do it down on the farm.  :nod:

 

[ballz]

That would be to treat the family as a corporation. No?

Not a bad thing.

This is the silliest thing I've ever heard. Two adult individuals made a *choice* to engage in an agreement that involves living together, sharing expenses, etc (which is usually financially to their advantage), and a *choice* to have kids (which is usually financially to their disadvantage). The government has no business supporting or not supporting these choices. They should still have the same responsibility to pay "x" % of their income in taxes. It would be no more justified than if two bachelor's lived together and decided to buy a dog, and the government decides all willy nilly they should pay less taxes than someone without a dog.

This is a Conservative Party promoting its own social agenda at the expense of all other taxpayer's. IMO, in a free society government has no place in supporting / not supporting choices made by sovereign individuals.

The right thing to do is a flat tax rate and no biases added from the government (deduction for this, credit for that). There is a hardly a person in the country that wouldn't directly benefit from a 17,000 BPE and 15% flat tax rate on anything over that, and we wouldn't need a $7 billion CRA just to take our money.

 

[Brad Sallows]

I agree from a libertarian perspective this is all screwy. I also would prefer a flat tax, but it would be hell to implement without some scheme for transferring the bulk of revenue generation to some other taxation scheme.  Meanwhile, on the other side there are two parties musing over childcare programs.  I'd rather let people pay less tax and make spending decisions for themselves than establish another grant program for one kind of spending.