Pat Coghlan

Don't include me with most people. Makes you look pretty silly (to me). You have no idea what my level of economic knowledge is. The wealthy get their income from capital gains and dividends. As a percentage of their income, they pay less than wage earners. An acquaintance of mine started a small company and sold it a few years later for a $30M profit, of which less than 25% of that went to taxes. In Canada, you have to have a very low salary to pay only 25% of it in taxes.

Have a listen to the following for info on trends in the US economic situation: http://www.europac.net/radioshow_archives.asp http://www.financialsense.com/fsn/main.html On tap in US tax policy include things like: Removal of caps on social security Income tax increases Estate tax increases When you add up the various taxes (fed/state/municipal), social security, health insurance etc. you may find that marginal rates are not that far off those found in Canada. However, for upper-income earners, I expect that the joint tax return and "real" exemptions for dependents will put thousands more in your pocket each year. Things could get very ugly, though, for the US economy.

Your problem is, your income is in the form of wages. If you're paying $70K in taxes, your family income is in the neighbourhood of $150K. That puts you in the top 5% of income earners. I was in a similar situation prior to 2000 (one high income, stay-at-home wife). I too lamented how much better off we would be tax-wise in the US. The US is a great place for high income earners. Canada is a great place for REALLY high income earners...if that income comes in the form of dividends and capital gains. It's also a pretty fair place for families with two equivalent incomes. I will tell you what I consider a very wise person told me: "learn to use Canada's tax rules to your advantage". Slowly, this is what I am doing. My income came down (not by choice), my wife's income went up (entered the workforce). We have tax-free inheritances coming (more than $1, less than $1M). In other words, will will be doing more what rich people do - rely less on just salary income. Those in the middle class that have only their wages to rely on are going to continue to suffer. THEY (and I include myself in that group right now) had better push for a more equitable tax system because they're the ones whose pockets the government will pick.

Careful though. There is going to be a democratic president. The Bush tax cuts are ending and the US dollar is going to plunge in value. You will definitely benefit from a joint tax return and nominally will pay less in taxes ($10K less, maybe more). However, you will also have to purchase a $1M home in a nice neighbourhood to get away from the crime and the guns. You couldn't have picked a worse time to be setting up shop in the US.

Something like that, except you have the tax rates reversed. The lower rate applies to the first portion (what I call non-discretionary income) and the higher rate applies to the rest (what I call the luxury portion). I think the rates would be more like 15% and 30%, respectively.

Yes. Similar rates of tax on ALL forms of income. Just 2 income tax brackets so people can more readily see how much of the next dollar they keep. Use family income as the base for taxation, just as it is used as the base for benefit eligibility. I recall a manager I had years ago who was well-educated and very intelligent, who commented on his T4 how tax rates are quite reasonable, as only about 35% of his income went to taxes. He had no clue that 56% of the last dollar he earned went to taxes. This is what happens with a myriad of tax brackets, deductions, credits etc. As per the title of this thread, we need to reform the system so it's more in-the-face of taxpayers. For me, this is the battleground. Make it easier to stand with objectives that are logical and fair.

It might feel more like it, but then if you received you pay in cash FIRST and had the government ask you to hand over 35% of it in cash, that would also feel more like it. Call it what you want, but it's the system we have. As I said, the best we can hope for is that it's not only the income of the middle-class that gets redistributed. You don't "owe" the bills to anyone. They are supposed to represent a measure of economic value (labour, goods etc.). You can trade them any time for some precious metals or other real goods. The problem - especially in the US - is that those dollars don't represent very much any more. Again, the "system" isn't going to go away, but if they're going to confiscate income/wealth they should not collect it just from the middle class. Under Bob Rae tax rates on income reached 56% in Ontario. Care to wager a guess what the top tax rate on dividends and capital gains was? This is the battle I'm fighting (middle-class bearing the brunt of taxation), not the fact that we have taxation. We are ALWAYS going to have taxation.

Marie Antoinette probably thought so also, but you know what happened to her. Wealth redistribution won't go away. I'm sure you're not naive enough to think that it will. The best everyone can hope for is that it's done in a fair and sustainable manner.

Not pay more. Tax less, as is done in 25 out of 32 OECD countries where family status is taken into consideration by the tax system. Joint tax return with 2 rates.

Don't worry, it IS going to get redistributed, if for no other reason than to prevent social unrest. The challenge is to ensure that it isn't all redistributed from the middle-class. The wealthy don't want to pay. An every-man-for-himself attitude works fine for them. It doesn't work for people that need to eat their paycheques. The (sustainable) answer is somewhere between a flat tax and what we have now (numerous tax brackets, byzantine deductions, twice the tax rate on salary income as for investments)

CCTB (Canadian Child Tax Credit). Basic benefit is something like $1,200/child. There are also supplements. If you make too much, you can lose this benefit due to clawback, but if you have 20 kids, you could receive payments of $30K/year tax-free. So, you see, we do shell out for dependents, but mostly to lower income earners with lots of kids. Just your opinion. Not backed up by tax policies of most OECD countries. HDRC cuts you cheques of $1,200-$1,500 per year per child in Canada. The tax system of 25 out of 32 OECD countries give consideration to family status, presumably with majority consent. Ditto for Canada/US. Expecting the incomes of two earners to be lumped into the tax brackets designed for single earners makes no sense whatsoever. You can take that one to the bank. Well, let's at least have the debate and have the government clearly explain the objectives of tax policy. At the moment, it's just THE POLICY, subject to constant tweaking but not reforms (pension-splitting excepted).

The changes are incremental, but substantial (e.g. taxing aggregate vs individual income). I would see a tax *increase*, not decrease. My wife's (part-time) income would be taxed in a higher bracket. Why would you suggest something that hasn't a hope in hell of ever being implemented? It's like the $25,000 assessment on families for each additional kid that someone (was it you?) suggested. Family income taxation requires a separate set of tax brackets, wider than those for singles.

There used to be a deduction but this has been replaced with a credit that can be clawed back. Your daycare expense deduction certainly increases with the number of kids you have, but this is to support a 2nd spouse in the workforce, not the kids. Tells you something about our government's priorities. If I go from 1 child to 20, yes, my "credit" can go up to $30K (assuming all are under 18), even more if some are under-7. However, this benefit is clawed back, based on family income.

To the extent that a reasonable amount of income should be exempt/taxed less in order that their basic necessities can be met, yes. Not just MY kids. ALL kids. When my kids are grown up and living on their own, I will have no problem with family status being recognized by our tax system. It helps more families look after their own kids at home, if they so choose, and until we have a government come out and say that families with children are undesirable/unaffordable, I want family status taken into consideration. What you are essentially saying is that none of my income can be exempt from tax in order to look after the needs of my dependents (except perhaps the income earner) because it was my decision to organize as a family and I bear total responsibility, but I - and most - people don't agree with that view.

Because they are part of my economic "unit" and need to be provided for. I should be allowed to have a certain portion of my income sheltered from tax, in the same manner that you feel there should be an exemption for the income earner. I'm flexible on what the amount should be. If the consensus is that the amount should represent an extra or larger room in an apartment ($250/month more?) fine. Just don't try to sell me on the idea that the tax system should give ZERO consideration to family status when determining tax liability. If you Google "oecd family status tax" (or equivalent) you will discover that some countries in Europe prefer to give zero consideration to family status (7 out of 32, I believe) but the other 25 all do. I found this somewhat surprising, but I think you will also find that many of the 7 who give no such consideration are what most would consider to be very socialist countries...something that you accuse me of for WANTING to give consideration to family status. I don't care what the amount is (well I do, but am happy to go with whatever amount there could be consensus on...in Canada, it won't be zero, as you suggest). Am i a socialist? Hardly. I simply believe in adopting policies that make sense and sustainable over the long term. I actually did vote NDP one election, but that was before I understood socialist idealogoy. I am savvy enough to realize that governments will never give up their ability to confiscate wealth. If they're going to confiscate it (what they don't tax, they inflate) then at least do it in a way that doesn't require wage earners to pay tax rates that are double those for investments etc. If we don't want to support families through the tax structure, have the guts to come out and make it official policy. At least then people will know where things stand. You know as well as that this will never happen, so people like me go with the assumption that there will be some degree of tax support for families, in which case it should be consistent, starting with the belief that if two families are eligible for identical amounts of tax-delivered benefit payments, then they should have identical tax liability, which is not the case today.

See my previous post. Portion of income deemed necessary to meet some basic needs of all family members is generally tax exempt, or at least subject to lower rates of taxation. Too easy for many - especially the wealthy - to avoid paying tax. Have you seen the "hand in my pocket" commercials from ING? This is the way governments will collect taxes...forever. I think there's an outside chance that once people understand how pension-splitting works there will be pressure on the government to do something similar for all families.

I'll explain it this way. You - a person - have a personal exemption because a certain amount of money is needed from your income in order for you to eat, be clothed and have shelter. Your wife (if you have one) - another person - also needs to eat, be clothed and have shelter. Children - also persons - also require a certain amount of income to meet their basic needs...plus a great deal more. Society (well, most anyway) recognizes that the portion of income needed to meet basic needs of the income earner, his/her spouse AND their dependents should either be taxed at a lower rate - or not at all. If you don't agree with this principle, you must also disagree with exempting a portion of your income to provide for a spouse...and yourself. Taken to its lowest level, taxes should start applying to the first cent of income earned. I think a system to your liking could be found in ancient Roman times. Landholders simply charged their tenants a flat percentage of their crop. No deductions for seeds, oxen or family members to support. Of course, that was 2,000 years ago. Granted, income tax - in its modern form - didn't come into existence until the 20th century, but progressive taxation has been around for almost 100 years...with basic exemptions to meet the needs of family members. I don't see this going away anytime soon, do you? And they will continue to do so...forever. You'll have to show me that island you live on some time. The best you can hope for are reasonable limits on what portion of your income is subject to tax and the applicable rate. For now, there is general consensus that a portion of a family's income is required for basic necessities and should be taxed less. Income is the higher range(s) is taxed more. Don't like the term "ability to pay"? That's fine too. How about "based on income, after exemptions for basic necessities"? For now, though, with a myriad of brackets and rates, it is supposedly based on ability to pay (vertical equity).

I don't have the complete answer, but I agree that the current, complex system makes no sense either. My position is, let's try *something*, where *something* is more flat, with fewer trivial deductions but more substantial deductions for family members (put a limit if you want, to make our friend happy). Do two families with the same income have identical "ability to pay"? I can't say for sure, but apparently they have identical need for benefit payments, so as long as they have this in common then it follows that the tax liability should be identical as well. It makes *no* sense for 2 families to qualify for $129/month in identical CTB payments, while tax liability differs by $7,000 per year or more. This is the first major reform I'd like to see implemented (joint return). Otherwise, if you're going to tax each spouse separately, let them file separate claims for benefit payments too. Don't "marry" them only for the purpose of calculating tax liability.

I might be willing to accept a "reasonable" limit to the number of kids that should be taken into consideration when calculating tax liability. For me, that number is somewhere between 2 and x, where x is certainly less than 10. I'd offer to let you pick a number, but the only number you would consider is 0. I'm happy to be subject to whatever limit would be enacted into legislation as reasonable and applied to everyone, but you'll never be happy with anything but the zero number. Frankly, I don't think we'll ever see ANY kind of limit imposed. The tax system can't be made much worse for families with one spouse earning most or all of the income, so I can only see things evolving more along what I have suggested, rather than what you are suggesting. So then, you don't use *anything* paid for with public money: health care, schools, public transit, community pools, libraries, police/fire. You procure all these services privately and resent chipping in for all those who use those services that you don't need on that island you live on. If you read back through my posts (or newsgroups, over the years) you will find that I advocate defining various family classes (singles, couples, couples with children etc.) and the creation of 2 tax brackets for each class, with different thresholds. Put an end to the number of tweaks for bus passes, prescription drugs etc. that constantly change with each budget and adjust brackets and exemption amounts (per individual) only each year. Keep things as simple as possible with a basic exemption equal to a fair amount deemed necessary for basic necessities. Not exactly to your liking? Fine, then suggest something that has a hope in hell of being achieved. What you propose does not, but you won't be shaken from your tenet that all families are the same, regardless of the number of members. I think you take the concept of a family being a "blob" with an income too far, and you will never see all families treated as identical blobs w.r.t. exemptions. OTOH, I think there is a fair chance that we will move to a US-style joint tax return and achieve tax parity between families with equivalent numbers of dependents. Sorry, but this will NOT mean that a family with 3 kids is taxed the same as a single person with the same income.

I think that's how we all got here. Last time I checked, procreation is not frowned upon by the government. Oh, yes they do. There is a formula for the amount of child support payments to be paid in case of separation/divorce. I don't believe there is a cap, so if I earn $1M/year and got divorced, I think there would be a HUGE claim on my income for child support, clearly not just to feed/clothe/shelter my kids. That obligation continues until they are 18; sometimes even later. Hell, just about everything could be considered self-interest then: my health care, education, public transit. When does self-interest qualify as common-interest, only when it infringes on your ability to keep the same amount of after-tax income as a family of 12 with the same income as yourself? It's unfair because it is not based on ability to pay. I don't believe in taxing income that is needed to pay for food/shelter (i.e. living expenses) at the same rate as the next dollar earned by a $10M player in the NHL.

Your opinion is the only justification offered. You are not able to back it up with examples of what other western democratic countries have implemented. I have a different opinion which believes that the number of dependents should factor into the calculation of tax liability, and this is exactly what most western democratic countries have done - although Canada does one of the poorest jobs. Does it not follow that if an opinion has merit, it would make its way into policy??? Well, I wasn't there in the 17th century, but I'd wager that hunter A (with a family) would be allocated more rations than hunter B (no family). The tribe had a vested interest in the survival of every member. A good/fair idea has a much better chance of being adopted as policy than an unfair/bad idea. I would put most - but not all - government policies in the former category, else how did they get there??? It's also the fair thing to do. Often, this can only be realized after having been in the situation yourself. Anyone who has raised young children understands the financial and time demands that are involved. Those who haven't or don't plan do, don't. Perfectly understandable. It's self-interest if it applies only to you. It's common interest when it's something that will affect just about everyone, as is the case for parenthood. Eh? Where did I say that? If you're going to tax family income then, of course, deductions would also apply to family income.

Well, everybody's entitled to an opinion. In this case, you are in the minority and the changes you'd like to see are much more radical. Isn't what you're suggesting analogous to the following. Imagine 17th century Huron Indians returning to their long houses after a few days out hunting in the snow and returning with food. You and I both put in the same amount of effort to hunt and kill a few deer etc. However, I have a wife and 3 small children while you are unmarried without a family. Tell me, how do you think that primitive society would divide up the food between you and I? You have a tendency to describe my situation (family/dependents) as somehow the exception, rather than the norm. It is the latter. Most people (who also vote, BTW) have families at some point and are in favour of taking the number of family members into consideration when calculating tax liability. I rather doubt that things will change radically over the next decade or two, especially along the lines you are suggesting I think the system should not completely disadvantage singles (as does pure 50/50 pension splitting), and would prefer to see a tax structure based on a number of well-defined family classes with only 2 tax rates. I think if we could even get that far, we'd both be happier. You'll never get a system that ignores reality (dependents) and should, for now, be prepared to at least take some baby steps towards a system that is more fair to everyone, not just couples with a nice 50/50 split in their incomes - who benefit the most under the current system.

Pretty much. They're here, and I have to support them. From a tax point of view, we should just overlook them, at treat me like a single person, right? First, show me a country on the planet that does so. If you're going to take a position, it would help if you can find at least one other country that shares your view. Governments have tried to take children out of the tax system, but they're still here despite their best efforts (replacing deductions with credits etc.). I'd be happy if the government would just be consistent, and look at tax liability the same way they look at benefit eligibility (based on family income).

Because, unlike a big house or a car, you can't simply run away from your dependents. Ask any divorce lawyer. If I have a bunch of kids and you have none, and our incomes are the same, there are other people (dependents) who have a claim on my income, while your income is 100% yours. You can't just "ignore" the fact that a good portion is earmarked (legally) for the support of those dependents and therefore cannot ignore the fact that I don't have as much available to fork over to the tax man. If the government levies a $40K tax on your income and mine, my family may not have enough money left over for food, shelter, clothing and transportation. We simply don't have the same ability to pay. Is there a country on the planet in which the tax system treats a family like a single person? Your "simple" example assumes that there is no consideration given to the number of family members (no exemptions, deductions etc.) and a flat tax. Correct me if I'm mistaken, but I don't think this applies anywhere on planet earth today. Wouldn't "what's found on earth" form a reasonable framework for a discussion of tax reforms?

Come on, get serious. "My" rules simply require the same tax burden on all families with the same income, allowing for reasonable deductions. You don't have to look far to find "my" rules. This is what happens in the US where, unlike in Canada, a family with 3 kids and a $100K aggregate income is NOT taxed like a single person with a $100K income AND all such families have identical tax liabilities which, naturally, are lower than those of single filers. BTW, before you attack the US system, keep in mind that the joint filing provision provides LESS of an advantage to joint filers vis-a-vis single filers than the new pension-splitting scheme in Canada. When you claw back virtually all the benefit payments and have only a spousal exemption (in Canada), the $100K family pays pretty much the same taxes as a single person which, according to you, is desirable. Watch what happens as people catch on to the big tax break (pension splitting) now afforded to pensioners as of the 2007 tax year. This has made the playing field very uneven. Rather than eliminate it, I would not be surprised to see some form of joint tax return introduced in Canada. If not this year, quite likely within 3-4 years.