The Trudeau Liberals 2016 Tax Plans

[Oldgateboatdriver]

If I recall correctly in these festive times, Scrooge was also very frugal.  :subbies:

 

[Humphrey Bogart]

The financial post disagrees with you.... but sides, from the looks of whatever Irving is the honorary colonel of 3 fd he's not hurting for grocery money

http://www.financialpost.com/m/wp/blog.html?b=business.financialpost.com//diane-francis/tax-avoidance-becoming-bigger-than-the-u-s-economy

Again, none of the Irving sons live in the Bahamas.  Just because the Irving family of companies keep some assets in Bermuda doesn't mean any of them actually live there.  I should know, my grandfather lived down the street from JK for many years.

I have to disagree with you.  I was at the Irving ship yard in Halifax during one of Preservers' refits.  I saw his workers all line up in Dec with pink slips and get handed a turkey and told if they wanted their jobs to show up in Jan. 

Sounds like a great employer to me.

They're a business, not a charity.  Many companies do this.  Irving is also notorious for shutting down businesses that aren't producing.  Here is a counter-narrative to this though.

My aunt ran her own interior decorating business for a number of years.  One day,  Kent Building Supplies sent a representative to visit her and offered a very generous sum of money to buy her out.  Along with that money they also offered her a very good job with the company.  She still works for Kent, in management, and really enjoys the company.  Pretty good for a lady that started a career 30 years ago as a nurse.

That's how they keep their bazillions.  I once worked for a private sector employer who had staff take off their shoes at the front door to cut down on floor cleaning costs.  One of the managers made sure I didn't waste my business cards by holding on to the box of them, and having me ask him for more if needed.  As they say, take care of the pennies ...

My grandfather told me that one of JK's sons brought home a fancy sports car one day and was promptly ordered by JK to return it and go get a normal persons car before KC saw it.  The discussion went something like "Irving's don't drive fancy cars".

 

[a_majoor]

While the story of the car is appealing in an urban legend sort of way, all it really illustrates is the Irvings had both the ability to do whatever they wanted with their own money and that the senior Irvings were sensitive to appearances.

On a more meta level, *we* should also have the ability to do what we want with our own money, and not be artificially fettered due to the greed or envy of others.

 

[YZT580]

On a more meta level, *we* should also have the ability to do what we want with our own money, and not be artificially fettered due to the greed or envy of others.

Amen to that.  And others includes a government that continuously racks up debt that I will eventually have to assist in repaying  Leaving me much less of my own money to do with as I wish. Tax breaks are much better than a government that announces their desire to help me.

 

[Halifax Tar]

On a more meta level, *we* should also have the ability to do what we want with our own money, and not be artificially fettered due to the greed or envy of others.

This is the part I have an internal struggle about and is the real separation of my left and right political leanings.

I agree with the post I should have more positive control over the destiny of the money I earn,  but I think social programs like universal healthcare and social assistance are important facets of our society. 

 

[Bird_Gunner45]

This is the part I have an internal struggle about and is the real separation of my left and right political leanings.

I agree with the post I should have more positive control over the destiny of the money I earn,  but I think social programs like universal healthcare and social assistance are important facets of our society.

Agree. We need to support health care and social assistance but it's some of these other programs (money to artists, arts, social justice programs, daycare, etc) that we could look at.

 

[Fishbone Jones]

Agree. We need to support health care and social assistance but it's some of these other programs (money to artists, arts, social justice programs, daycare, etc) that we could look at.

That's it in a nutshell. There are just some things (police, fire, etc) that need support for the greater good, unless you go the route of Freemen on the Land. The other programs should be put under a microscope. We live in a capitalist society. If you can't support yourself with what you choose to do, best get out there and find something that will support what you want. It is not for me (taxes) to be supporting your poems, music, children, et al.

The government, in this case, acts like the unions. I have to pay dues, but I have no say in what the executive does with it, whether I agree or not.

As far as social assistance, I believe a form of workfare is in order. Don't come out to clean the highway? Don't expect a cheque. It's easy enough to assess those that actually require it.

And if I have to take a drug test to make the money, you should have to take one to receive the largesse of all those hard workers that are giving it to you.

 

[YZT580]

amen!

 

[Harris]

Recceguy for Prime Minister.

 

[McG]

The media seemed to have stepped away from this, but it looks like the heat is not gone just yet.

How the Liberal ‘revenue neutral’ tax plan could cost billions and could push top talent south
Gordon Isfeld
The National Post
15 Jan 2016

OTTAWA — The cornerstone of the Liberal campaign platform was a pledge to grow the economy and create jobs by putting more cash into the hands of middle-class Canadians through aggressive new tax measures.

But that policy pillar — to be supported by higher tax payments by the country’s biggest wage earners — could be crumbling, less than three months post-election.

That’s because delivering on the promise, intended to be “revenue neutral,” is proving much more costly than envisioned when Justin Trudeau was elected prime minister on Oct. 19.

For starters, the hoped-for economic climb-back from the oil-plunge-fueled recession in the first half of last year is sputtering and could stall, or possibly go into reverse — undermining Ottawa’s ability to spread the wealth by providing average wage earners with more untaxed dollars to spend or save, or both.

Also troublesome, Trudeau’s tax regime for 2016 and beyond could actually lead to a mini-exodus of the country’s top-income professionals — those with annual salaries above $200,000, the threshold for the new, high-income tax bracket — whose taxes would be needed to cover the gap created by the tax cut given to Canadians earning between $45,000 and $90,000 a year.

“The typical ‘one per cent’ are in positions that have more mobility in their roles,” says Les Gombik at Caldwell Partners, a global executive recruitment firm in Calgary.

“They are typically executives that are making greater dollars, and those are often the types of roles where they could do those types of roles in different markets,” he says, adding that the drop in the value of the loonie compared to the U.S. dollar was already inspiring people to look south of the border.

“The tax changes were one more significant catalyst for people to be looking (south),” Gombik says.

The cost to the federal government’s middle-class tax-bracket cut has been estimated at $3.5 billion — “and that’s a transfer of $3.5 billion into the hands of households,” says Craig Alexander, vice-president responsible for economic analysis at the C.D. Howe Institute.

“When the (Liberal) plan was originally discussed during the election, there was an expectation that the introduction of the high-income tax bracket would generate revenues to offset the cost of the middle-income tax-bracket cut,” says Alexander, who co-authored of a recent study on government’s tax reform policy.

“We argued that there would be a revenue shortfall, that the Liberal Party was over-estimating the amount of money they were going to be able to generate from the higher income-tax bracket.”

As of Jan. 1, the federal tax rate on income between $45,282 and $90,563 declined to 20.5 per cent from 22 per cent. For salaries over $200,000, Canadians will now face a federal tax bill of 33 per cent — up from 29 per cent. That hike in federal taxes, when combined with provincial income tax, means many Canadians will now be paying close to or more than 50 per cent tax on their income.

The biggest hit will be felt by high-income residents of British Columbia, Manitoba, Ontario, Quebec, New Brunswick and Nova Scotia.

And rather than putting more money into government coffers, critics maintain that the Liberal tax changes could add fuel to a brain drain of talent from Canada and weaken the ability to attract high-end foreign workers to this country.

For instance, those in the top one per cent “have various legitimate ways” to lessen the impact of those tax changes, or could move to less expensive tax jurisdictions, either within Canada or outside the country — the U.S. being the prime destination, says the C.D. Howe’s Alexander.

“These are not just CEOs. Many others are doctors, high-skilled technical employees — such as engineers — along with small- and medium-sized business owners,” he adds. “The increase in taxes on the top one per cent is modest.”

Nonetheless, experts as far back as the 1966 Carter Royal Commission Report on Taxation say 50 per cent represents a threshold at which the rate of taxation has a negative effect on a person’s decision to work.

“If personal tax rates get too high that is going to be a disincentive in terms of attracting talent to Canada,” says Kevin Dancey, president and CEO of Chartered Professional Accountants of Canada.

“This raises the point that there is only ‘just one’ taxpayer in Canada. If the provinces are going to target the top one per cent, and if the national government is going to target the top one per cent, they should really work together to realize there is really only that one taxpayer,” he says.

“I think there’s a lot that can be done, but I think it needs a thoughtful, comprehensive look and not just a piecemeal approach.”

Dancey adds: “And I’d rather see it done in better co-ordination with the provinces, so that the provinces and the federal government aren’t stepping on each other.”

It may be an ominous start to the year for Canada, already darkened by even more weakness in the price of crude and a global economy now increasingly threatened by emerging markets, including China — the world’s second-largest economy, after the United States, but now wavering.

Juggling how personal taxes are applied may not prove to the best means of defence for Canada at the moment.

“The revenues won’t be as great as previously anticipated … and that shortfall could be even greater,” Alexander says.

In fact, Alexander points out, Ottawa is already adjusting its expectation to slightly less than $2 billion annually coming from those with the higher incomes — meaning there will be a shortfall of $1.5 billion.

“When you take money away from (the) one per cent, and you give it to the rest, you’re spreading it across a very large group of individuals and households. And as a consequence, it’s a very ineffective way of trying to lean against income inequality,” Alexander says.

The bottom line, says the Conference Board of Canada’s Matthew Stewart, is that the Liberal tax changes “will pretty much have no effect on the economy.”

“And when you take out the income splitting (allowing couples with children to be taxed at lower rates), which is about another $2 billion, it’s actually a net increase in taxes — not a lot, but close to $1 billion a year,” says Stewart, the board’s associate director, responsible for national forecast. 

http://business.financialpost.com/news/economy/the-tax-effect-how-a-revenue-neutral-move-will-wind-up-costing-billions-and-could-push-top-talent-to-seek-work-south-of-the-border

 

[McG]

The PBO is now saying the "middle class tax cut" will cost $100 million more than already thought.
As an aside, the median income in 2013 was $32,020.  If the tax changes benefit those earning $44,701 to those earning over $200,000 - is that really a middle class tax cut?

Liberal tax changes to drain about $100M more per year than expected: watchdog
Liberals had projected tax changes, which includes creation of a new, upper bracket, to be revenue neutral
Andy Blatchford, The Canadian Press

The federal budget watchdog says the Liberals' tax-bracket changes will drain about $100 million more per year from the public treasury than the government expects.

Since winning the election, the Liberals fulfilled their campaign vow to cut federal income taxes for middle-income earners by raising the rate on the highest-earning Canadians.

The Liberals had initially projected the adjustments — which include the creation of a new, upper bracket — to be revenue-neutral. But last month they acknowledged the plan will actually lower government revenues by more than $8.2 billion over six years.

The parliamentary budget office now says that figure will be $8.9 billion.

The budget office's calculations, like those of the government, made assumptions on how people at different income levels might respond to the tax changes.

The report released Thursday says some people may adjust how much they spend, while those in the highest bracket may take steps to lower their tax payments.

"Between 2015-16 and 2020-21, the revenue gains from the new tax rate would fall short of covering the loss in revenues from reducing the rate on the second tax bracket by an estimated $8.9 billion," the report said.

The government's new measures, already introduced for 2016, have lowered the income-tax rate to 20.5 per cent, from 22 per cent, on people earning between $45,282 and $90,563 per year.

To help pay for that change, Ottawa added a 33 per cent tax rate on income earned by those who make more than $200,000 per year — the top one per cent.

Previously, the highest tax rate in the country was the 29 per cent bracket, which applied to incomes between $140,388 and $200,000.

Last month, Finance Minister Bill Morneau said the revenue cost of the changes would be $1.4 billion in 2016-17  a shortfall that's projected to rise each year until it hits $1.7 billion in 2020-21.

On Thursday, the budget office estimated the net cost of the measures will have a net drain on the public books of $1.6 billion in 2016-17. That number will creep up each year until it reaches $1.9 billion in 2020-21.

The numbers were crunched after New Democrat finance critic Guy Caron asked the budget office to examine the fiscal impact of the Liberal tax changes.

He also made a request to the office to explore the potential revenue loss if the government were to lower the tax rate to 14 per cent for the first bracket, from its current level of 15 per cent.

That bracket covers those who earn up to $45,282 of taxable income — about 17.9 million people.

The budget office estimates such a change would have a net reduction on government revenues of $3.7 billion in 2016-17, a figure that would grow annually until it hits $4.4 billion in 2020-21.

From here: http://www.cbc.ca/news/politics/liberal-tax-drain-100-million-1.3413516
But also carried here:http://www.ctvnews.ca/politics/liberal-tax-changes-to-drain-100m-more-per-year-than-expected-watchdog-1.2746426

And read the PBO report yourself here: http://s3.documentcloud.org/documents/2696078/Parliamentary-Budget-Office-Impact-of-tax-changes.pdf

 

[a_majoor]

The elephant in the room (which no one is talking about) is the effects of the various "climate change" initiatives, which generally fall into extra taxes and fees on consumers. Since the Liberals and their provincial allies have all taken the Kool-Aide, expect that there will be a huge increase in the amount of money taken from Canadians in the name of "climate change" over the next five years.

The reduction in savings, investment and spending power due to the massive increase in taxes will cripple the Canadian economy (think of Ontario and then scale it up), so lower economic performance will create a vicious circle effect of lower tax revenues and reduced spending or greater deficits.

Elections do have consequences.

 

[Lumber]

The reduction in savings, investment and spending power due to the massive increase in taxes will cripple the Canadian economy (think of Ontario and then scale it up)...

The Ontario economy has been crippled? When did this happen?

 

[Kilo_302]

TFSAs are a wealth transfer in favour of the most well off, at the expense (through offset taxes) of taxpaying Canadians who cannot afford to maximize their contributions. That's pretty manifest just by a basic look at the math.

I have no problem with TFSA's conceptually, but there's not a policy justification for them beyond the extent to which they're accessible to the average Canadian. There was nothign wrong with the indexing $5k cap.

Does it suck a bit for me? Sure; I am a person who is in a position, with sufficient financial discipline, to maximize contributions. As is my partner. But my self-interest does not sound policy make. More tax breaks for the wealthy are not called for, and that, in its ultimate effect, is what a TFSA is.

Excellent post. The math doesn't lie.

 

[Brad Sallows]

Virtually every tax mitigation measure is a wealth transfer in favour of the most well off.  Welcome to the land of the obvious.

 

[Kilo_302]

Virtually every tax mitigation measure is a wealth transfer in favour of the most well off.  Welcome to the land of the obvious.

Well if you read what a lot of people on this forum say about taxes Brad, I don't think you could say it's very obvious at all.

 

[Brad Sallows]

What do people's expressed opinions have to do with it being obvious?

 

[Kilo_302]

What do people's expressed opinions have to do with it being obvious?

The definition of obvious is "easily perceived or understood; clear, self-evident, or apparent."

You have stated that "Virtually every tax mitigation measure is a wealth transfer in favour of the most well off.  Welcome to the land of the obvious."

I don't think it's controversial to say that many members of this forum would disagree that tax cuts typically favour the wealthy. This is usually a left wing argument.

If you believe the fact that tax cuts benefiting the wealthy is obvious, you're revealing a rather low opinion of many members of this site and their powers of perception, no? If "tax cuts benefiting the wealthy" was self-evident and apparent, Thucydides would have nothing to write about. 

 

[Brad Sallows]

The fact that most tax mitigation tends to favour well-off people - because tax mitigation often favours people with disposable income, or allows them to reduce taxable income at the top end - doesn't preclude it from favouring others.

Arguing against tax mitigation that benefits wage serfs in the middle class, on the basis that it also benefits well-off people, is not really a substantive objection.  "You can't have it, because they also get it" is childish.

 

[George Wallace]

The fact that most tax mitigation tends to favour well-off people - because tax mitigation often favours people with disposable income, or allows them to reduce taxable income at the top end - doesn't preclude it from favouring others.

Arguing against tax mitigation that benefits wage serfs in the middle class, on the basis that it also benefits well-off people, is not really a substantive objection.  "You can't have it, because they also get it" is childish.

Those who oppose your views expressed here will never acknowledge that they are ignorant of how the system works.  They have a fantasy that somehow there is a magic method to make the rich pay while the less than 'rich' get off not having to pay.