Pat Coghlan

You can't have more than 1-2 kids if both spouses are going to work outside the home. The price paid in terms of stress/logistics is simply too high. Things will not change until, as a first step, the government introduces a joint tax return so that at least those who want to try to keep a spouse at home have a fighting chance. Many seniors are discovering that they are saving several thousands of dollar per year in taxes thanks to pension-splitting. At best, families with kids are finding that they are saving a few hundred dollars per year with the new tax credits. My parents, who never made more than $20K-$30K each when working, are in their 80s now and pulling in $80K-$90K per year in gov't pensions, CPP, OAS etc. This is not far off what my wife and I make, yet we are raising 5 kids. My parents put everything in the bank, while we go into debt. Our system works for my family, only because we're going to inherit many times 6 figures one day from the money our parents are banking. Otherwise, we'd be toast.

AMEN brother!!! Professional people do it (see info re: my friend above). Families with a luck-of-the-draw resulting in both spouses earning similar incomes do it. Pensioners do it (now). Only families in which each spouse earn dissimilar incomes are left out. The government should either tie incomes together for tax purposes (i.e. not just benefits) or completely sever the income relationship between spouses and allow each spouse to apply for 50% of available benefits based only on his/her income. I always figured that seniors would be the first to push for income splitting once all those former DIFs realized they only had one decent pension income. That's why I participated in the CAPS lobbying effort (www.pensionsplitting.ca). The genie is out of the bottle now. Why limit the leveling of the income tax playing field ONLY for pension recipients. Solution: replace pension splitting with a joint tax return. All families with SAME INCOME will pay SAME TAXES. It sounds so simple when you hear someone else say it :-)

I was. If you look at my post you'll see that it was edited...several times. I was "less" bothered when I saw that the child tax credit could be transferred to either spouse. Initially, I thought "geez, if my wife didn't have taxable income we would not get the $1,216", but it now appears that we would. Not sure about the sports credit though. The whole system needs to be simplified and reformed. I just heard from a friend who, after being laid off, incorporated and works as a consultant. He's paying his 14 year-old son $5,000/year to shovel the driveway and do dishes - business expenses for the office (his home)! This guy's a newbie at the incorporated thing, so imagine what tricks the veterans get to play out there. I recently wrote a letter to Flaherty suggesting that, if you're going go force everyone to file as individuals, then they should allow spouses to also file for 50% of available benefits bases on their individual - vs family - income. I'm interested to see the response, as there's really no way to justify forcing spouses to pool their income only for benefits.

Note (l) in the KPMG link says that the child tax credit may be transferred between spouses. Note (u) does not say the same re: fitness credit. Good discussion though. It made me realize that the $8,000 credit I received was not for my oldest who is in university but, rather, the $2,000/child tax credit for my other 4 children. The line item description in Ufile may have been incorrect (or I read it incorrectly). It also prompted me to fill out fed/prov TD1 returns to get my tax at source reduced for the child tax credit and transferred tuition amounts and I sent them to our payroll people. No point waiting until April 2009 to get my $1,200. I wasn't even aware that we were eligible for the child tax credit.

Actually, my wife works part time now, but I think you're correct that SIFs (single income families) probably lose out. The reason: it is a non-refundable tax credit. It can be subtracted from taxes owing, but you won't get money refunded to you if you don't owe income tax. I noticed that Ufile put all the non-refundable tax credits (fitness, adult child etc.) on my return, but that's only because my wife also paid more than enough taxes to offset these non-refundable credits. Here's a quick summary of non-refundable tax credits in Canada for the 2007 tax year: http://www.kpmg.ca/en/services/tax/documen...Credits2007.pdf

Looks like they have big ones: http://www.theglobeandmail.com/servlet/sto...y/National/home

There should be only 2 tax brackets for singles and 2 (slightly wider) for families. Essentially there would be one rate for income above a certain (luxury) threshold, and another for all income below that thereshold. Objective: ensure that very high income individuals/families pay a higher rate than low-to-middle-income individuals/families, and also ensure that everyone else pays the same rate. This stuff of paying 15/22/26/29 percent federal tax rates depending on your income level is meaningless.

Well, it's just that there's far to much *fiddling* with the tax system. We've seen it all in the past 30 years. Income averaging. Forward averaging. $100K tax-free capital gains. Scheduled RRSP limits frozen/unfrozen. Pension reform. Etc. Don't get me wrong. I like the idea of tax-free returns, but I expect that one year some (Liberal) study will show that only the wealthiest 10% of Canadians make significant use of them and they'll be cancelled as well. I'm still waiting for one reform that would never be cancelled, namely, taxation of family - vs individual - income.

Just another in a long line of tax "gimmcks" rather than substantial tax reform. Read this: http://www.thestar.com/World/Columnist/article/307742

I disagree. The $5,000 limit is per *adult*. It's $10,000 for a couple. How many dentists/doctors with adult children who are in school etc. won't immediately be putting $5,000 into an account for each child? There used to be a $100K tax-free capital gains exemption. Who do you think benefited from this before it was cancelled?

Why? Just add TFSPs (tax-free savings plans) to existing RRSPs and RESPs. Put money in. Buy stocks etc. Take money out tax-free. B-r-o-k-e-r-a-g-e-s will probably love them. More accounts to manage - and charge fees for. I suspect this will not be beneficial for the average Joe starting a job and saving for retirement as we already have RRSPs. OTOH, it's a way for wealthy couples to put $10K to work earning tax-free returns each and every year. Wealthy grandparents should set up accounts in each spouse's name for each grandchild and contribute $5K into each account every year. Then, will the accounts to the grandchildren. No attribution rules. A lone grandchild whose grandparents do this for 10-15 years can have $200K-$300K passed on to him/her tax-free. Just imagine if the account can retain it's tax-free status if willed to a dependent. The grandchild can have a million dollars working for him/her tax-free by age 30. We have 3 sets of grandparents in our family (one couple split, remarried) who will all start taking full advantage of this vehicle immediately. In the short-term, well at least I have some credits for public transit passes and my kids' soccer activities.

I'd like to see US-style taxation of family (vs individual) income, but we may have to wait a bit longer for it.

What was I saying a while ago about how the wealthy don't pay the same tax (rates) as everybody else? http://www.cnbc.com/id/23219770

Didn't you just argue a few pages ago that people shouldn't have kids they can't pay for? Yet, here you are arguing that the poor $250K power income couple need a full deduction for their daycare expenses, else their family income might drop by $100K. Such a family doesn't need tax-subsidized daycare. I would think you would be arguing against this kind of subsidy, yet here you are trumpheting the need for daycare expense deductions, regardless of income. Following your logic, one of those six-figure spouses should stay home and look after their own kids, shouldn't they?

Employees can't deduct most work-related expenses such as clothing, meals, transportation etc. Reason: people are going to work regardless of whether these things are deductible. One execption: daycare expenses. Fully deductible. Even *nanny* expenses are fully deductible. We're talking $10,000-$20,000 or more in deductions. Isn't it great how a power couple with two six-figure incomes don't have a cent of this deduction clawed back, but an engineer with a wife and two kids at home can have all his child tax benefit clawed back because his (less than six-figure) income is too high? I'd love to hear an explanation of why two married doctors with a $250,000 family income need to have 50% of their nanny's salary paid for by other taxpayers, while the majority of tax-delivered benefits are all subject to clawback.

There is an accountant I used to exchange ideas with in one of the newsgroups. He stated that it was the norm for all of his self-employed clients to direct income to their spouse to achieve income splitting. An old (old) girlfriend of mine's father had a denture clinic. Every time she bought items for school (calculators, supplies etc.) the mother - a salaried employee of the business, btw - collected the receipt to include with the other expenses that year. None of this "personal use only" crap. And that was only the stuff I knew about. Let's face it, now that pensioners can split income, the only ones left are the families in which one spouse earns most or all of the income who is also an employee.

Does inconsistency = fair? Whether they want to be fair or unfair, they at least need to be consistent.

Seems so clear (to me) to hear someone else say this. Either treat people as part of an economic unit (family) for benefit/tax purposes, or as individuals for same. Don't treat them as an economic unit in order to reduce benefits, and as individuals to maximize tax liability. I think I'll put this in a letter to our good friend the finance minister. That's fine too, as long as the ground rules are front and center. The government should answer the question of whether we want to encourage families having children or not. By the time we get to this level of detail, the cork will have long been off the bottle on the issue. Fine with me. See above. I don't honestly think things would get carried to the point of one spouse collecting welfare if the other spouse is employed, but I'd be very happy to see the debate happen. I (and probably many others) would be ecstatic to see *anything* happen. The current system is a farce.

A tax system which treats everyone as a single person will never be on the table, IMHO. If it were, would those same single who are opposed to deductions for dependents, income-splitting etc. also be opposed to allow a married person's status to be completely ignored by the tax system, including allowing stay-at-home spouses apply for welfare, a full 50% of (gasp) benefit payments based solely on his/her own income? If my wife could apply for half the $8K-$10K in benefits that are potentially available for the number of kids that we have, she might decide to quit her part-time job and stay home. Would you be in favour of that, or do you simply want to be able to use a person's marital status to deny them benefit eligibility (i.e. treat as a unit) but not treat them as a unit for tax liability? You can't have it both ways. If you're going to take that approach, you have to find a way to stop undesirable behaviour - like people having lots of children. You can't just take benefits away from people out there working, and offer lots of benefits to the "bums".

It's already added...for pensioners (pension-splitting). I expect there will be more push for this once people become familiar with the concept of all couples with the same total income having the same tax liability. In the US, the tax brackets for joint filers are 175% as wide as for singles, while they are 200% as wide in Canada for pensioners. If I were a single taxpayer in Canada, I would view the US system as being much fairer to singles. Well how many families do you know that could pay for daycare without a full deduction, pay school costs, clothing, food, medical bills etc. My point is that while a wage earner can cover costs for him/herself, few families foot the full bill for any of these costs for their children. You would need a six-figure income to have a hope of doing it. I guess the real question is, are we willing to accept hard limits on services etc. that we can expect? What do you do with the class of people that have no hope of supporting themselves, yet having multiple children? Perhaps we're the proverbial frog in a pot of water being heated.

They're not getting much. Screwed perhaps. What aspect of my proposal (just 2 tax rates, exemptions for dependents) *would* childless couples support? Keep in mind that except for about 5% of families, most cannot pay for their own kids without services and tax breaks and (I'm estimating) at least 80% of people have kids at some point in their lives. What's the best that the other 20% can hope for, realistically?

You got it. If you live in this country and don't have kids, you are quite right to question "what the hell am I getting for my taxes"?

I agree. One can rise from middle-class to upper middle-class, but it's very difficult to move beyond this level - by design. It can be done, but it requires a lot of patience and possibly more than one generation of investing.

Well, usually nobody but an accountant would point out that somebody's income must be $190,000, not $150,000, to have a $70K tax bill. So, are you an accountant? There may be an argument for dividends to be taxed at somewhat lower rates, but not capital gains. If someone buys a piece of land for $1M and sells it 10 years later for $2M, there is no prior amount of tax paid to take into consideration. Who are we kidding here? If you want to keep more after-tax income, take it as a dividend. All of my self-employed peers organize themselves as corporations for this reason. The big deal is that once someone has "made it" and doesn't have to depend on salaried income, they pay half the tax rates that apply to working slobs - forever. I guess it depends on whether having children is something that we, as a country, want to support or not. If we don't, then it makes sense to not take family status and number of dependents into consideration, perhaps even levy a surcharge on families that have more children. If we do, then it makes sense to recognize that the families that create the kids need to use a portion of their income to feed, clothe and shelter them - legitimate expenses in the 'business' of raising kids. You can't have it both ways. Currently, Canada is one of 25 out of 32 OECD countries that does take family status into consideration for tax/benefit purposes. The reality is that MOST families can't pay for their own kids without public services and tax breaks. It's very difficult for working families to have more than 1 or 2 kids while the social underclass produce them by the truckload. Regardless of how you want to treat working folk - who are in the best position to produce well-adjusted, productive citizens - you are still going to pay for all the kids from those who've never had a job in their life. I think people should worry less about the enormous sum of $200 or so per month that we receive in CCTB payments as tax relief for our 5 kids thanks to all the claw-backs, and more about the $2,000-$3,000 per month that somebody who maybe never even had a job and decided to have 6-8 kids that the government transfers from the "less needy" to the "more needy".

You're not an accountant, are you? It's that accountants that always seem to point out inaccuracies. My point was that this individual has a very high family income (top 4% of income earners), able to pay for "his" kids, but in the small minority in Canada. He's still getting hammered by our income tax system because his income is in the form of salary, not investment income. Bottom line: Canada is not a good place for people capable of paying their (and their children's) own way, unless it's split 50/50 between the spouses. It is a great place for low-income earners (vs the US) and for the very wealthy whose income receives preferential tax rates.