Pat Coghlan

The old didn't really receive much in the way of tax breaks in the past. Are you referring to the new pension-splitting provision?

Where the rules make sense, yes. Yours don't. I'm in favour of a system based on ability to pay. In other words, the same logic that tax-delivered benefit payments are based on (family income and # of dependents). Not sure what yours is based on. The problem with the current system is that we only look at family income for benefit eligibility, not tax liability. If you're going to use individual income to calculate tax liability, then let each spouse claim 50% of available benefits, based solely on his/her income.

You want to treat a single taxpayer the same as someone who has several family members to support, by the sound of it. We almost have that right now. If the primary income earner's salary is high enough, all benefit payments are clawed back and you're left with only the spousal exemption, which apparently you'd like to do away with also. In order to get to your ideal tax world (will never happen, btw) you'd also have to elminate the very generous deduction (not even a credit) for daycare expenses. Good luck with that one.

The government apparently feels the need to level the tax playing field for single-parent families. Perhaps you're familiar with the equivalent-to-spouse exemption. Like, what the hell is that? Okay, how about this. Every "family" gets a $10K exemption per family member, and all families pay the same tax on their combined incomes? In my case, there are 7 in our family, so the first $70K of our income would be tax-exempt. We would not expect any other benefit payments or deductions. You apparently want the same rules for all types of families, so how about that? Sign me up.

Well, you could start by reading the report by the 1967 Carter Royal Commission On Taxation, which recommended taxing family income since it is the family - not the individual - that spends the money. Yes, in that there would be a different set of tax brackets which are wider. If you don't like the idea of taxing family income, you must HATE pension-splitting, as retired couples essentially have tax brackets which are 200% as wide as those for singles. While families need wider tax brackets, they don't need brackets which are twice as wide as the brackets for singles.

Your point was that dividends need to be taxed less because the income has already been taxed once at the source. I'm saying this is mostly transparent to the investor. Companies aren't required to pay dividends. Getting married doesn't substantially affect the tax on one's income, so there are really no tax considerations that factor into the decision. The government tries to treat everyone as an individual, except when it comes to calculating eligibility for benefits. I'd be happy if the government treated family income for TAX purposes the same way they do for BENEFIT purposes, that's all.

Yeah, but so what? This affects the company's earnings and the amount of dividends you receive - all of which you took into consideration when you bought the stock, right? The tax you pay on the dividends afterwards is only relevant to you and your decision to invest in dividend-paying stock. Interesting point, though. There must be a formula which shows how much of an original $1 of earnings actually ends up as tax revenue for the government. Must be a hell of a percentage.

The thing is, how "wrong" is it to provide certain tax breaks, when the practice is universal. I tend never to try and argue a position that is futile. I think tax reform is possible - but not along the lines of a flat tax. We are about to enter a period of either stagflation or a hyperinflationary depression. Either way, income isn't going to go nearly as far, and we may see people screaming to keep more of their income.

Wrong according to you. Apparently right according to virtually every western democratic government.

I'd keep the principal residence exemption. Americans have a one-time exemption also. This is the biggest scam going. First off, while some DIFs (dual-income families) pay someone to clean their homes (under the table, I might add) the others do it outside of working hours. Secondly, even DIFs are penalized w.r.t. taxes if one spouse earns most of the income. What benefit are they enjoying that warrants SIF-style taxation? There are other benefits, e.g. the kids have a much more stress-free life, but since when do we tax that??? I don't pay income tax when I wipe my ass either. Like, where do you draw the line re: tax on labour? As for taxing seniors, this merits some consideration. My parents have more pension income than my current salary. They put it all in the bank. OTOH, I spend every cent I make (and more) supporting my family (7 members). Actually, I don't really think we need to hit seniors harder, but I don't believe that we should hit families with young families harder either, and we do. We NEED tax breaks when we start out and have young children. Trust me on this one. With the introduction of pension-splitting, we are giving a break to many seniors that probably don't need it, while we apply the top tax rate and claw back all benefit payments to an engineer trying to raise a family. I was actually involved in the lobbying effort for pension-splitting. Why? Because I felt that tax reform would happen with seniors first, and set the stage for similar reforms for all families. Why? Because I knew that the same generation that pooh-poohed the idea of taxing family income while both spouses were in the work force would suddenly start screaming for horizontal equity once they discovered that they only had one decent pension between them and were paying much higher taxes. You can check back through my newsgroup postings from 12-15 years ago and see that this was exactly what I predicted. Somebody needs to give his/her head a shake in the finance department and initiate some serious tax reform.

Small business owners don't receive their revenue in the form of capital gains and dividends. I know they are heavily taxed, just like wage earners. I'd like to see both wage earners and business owners have tax rates which are more in line with those for dividends and capital gains. The "place" that I'm descdribing is not one in which all wealth is confiscated, only that we treat all forms of income similarly and not provide an excessive advantage to those who have already "made it". If the poor old seniors need special tax treatment for their dividend income, cap it at $50K, and let the person with $500K in dividend income pay rates which are in line with salaried incomes.

Income. Wouldn't it be great if the Finance department was having this debate re: needed reforms? Investing in the stock market creates jobs when a company needs that money to grow, however, these are not the companies that pay dividends, generally. Many blue chip companies are buying back their own stock these days. It's okay for people to have lots of wealth...provided others have an opportunity to move up to the wealth class as well. I think you can understand the problem better if we use 1% as the tax rate on dividends/capital gains and 80% on salaried income. Clearly, the salaried individual doesn't have a hope of moving up to the wealth class, as he needs all of his income just to survive. While this is an extreme example, is it valid to charge twice the tax rate on salaried income as we do on investment income? Well, as long as the have-nots vote, there will always be wealth redistribution. The only thing that is debatable is the extent to which we will do it.

I take a system-level view of taxation, and feel the system is failing salaried wage earners, especially in families in which one spouse earns most or all of the income. Two families with idential combined incomes qualify for identical benefit payments, but their tax liabilities can differ by up to $15,000. BTW, RRSPs gains are not taxed while they remain in the plan. Wealthy families are entitled to a certain amount of wealth. I just don't feel that most wealth should simply accrue to families that already have acquired wealth, due in large part to the fact that their investments are treated more favourably by the tax system than the salaries of wage earners.

It depends what you mean by "benefits the family". Do you mean vs singles? Families still have an advantage - rightly so, given the increased number of mouths to feed - but there are families that have a tax advantage versus other families, even when incomes are identical. The families with the advantage are those with a nice 50/50 split in the incomes between each spouse/pensioner.

The need for entrepreneurs does not justify much lower tax rates on capital gains and dividends vs employment income. You just need to ensure "fair" rates of tax. I think you've bought into the scam that we need to be unfair to wage earners in order to be fair to entrepreneurs. It is small businesses that provide the most employment in Canada; the farms, the hair salons, the restaurants, landscapers, construction etc. I suspect that it is not these businesses that benefit most from low capital gains and dividend tax rates. A person with $10M in blue chip stock who receives $700K in dividends each year isn't creating a job for you (or me), so why is the dividend tax rate roughly half the rate paid by a salaried engineer supporting a family? As another poster pointed out, many of the non-salary forms of incomes can be harder for the tax man to get at, which may be the bigger reason as to why the government doesn't go after them more aggressively. The reason is NOT because it will result in fewer landscapers and construction companies.

I guess that, fundamentally, I believe in a certain amount of income redistribution. I don't have a problem with taking a slightly higher portion of a high six-figure income than a low two-figure one. I suppose I am for a flat tax up to a certain income level, while you feel that a flat tax should apply to all income. Bill Gates has a net worth of over $50B. When he dies, it normally would be subject to a 55% estate tax. That would leave only $20B for his heirs. In fact, he's going to leave the bulk of it to his foundation to be put to charitable purposes. There is also one other thing. If we change the existing system to make it flatter, I would expect that families would pay less tax on their existing incomes. This means that the difference would have to be made up somewhere else, presumably those forms of income that currently receive preferential treatment: capital gains and dividends. To summarize, I'd like to see: Just two tax brackets on earned incomes, one low, one slightly higher; Reduced tax advantage for investment income, enjoyed mostly by wealthy individuals. In your flat tax world, would you treat employment income and investment income the same, or would the flat rate apply to ALL income?

Your argument has merit, but history teaches us that governments will take more from those that have more as they have more ability to pay. I'm just suggesting that there be fewer brackets (2) and those with more income pay only a slightly higher rate, which I think is more practical than a flat rate. If you change your example so that the higher income person brings in $1M, I certainly think that income should be subject to a higher rate. I just don't like the games they play with a $40K vs a $70K income vis-a-vis different tax rates.

I'm open to a flatter tax (just 2 brackets works for me - applied to family income) but you seem to have non flexibility: flat tax only. In your flat tax scenario, exactly who does it apply to (individuals, businesses) and would you want it applied to all forms of income, including capital gains and dividends? On this we agree. Did I ever say that the 2 tax brackets I proposed would be 10% and 70%? How about just 15% and 25%? Is this going to make wealth accumulation impossible? What I want to get away from is the current situation in which wages are taxed at double the rate of investments. Hey, it's the biggest reform in over 40 years. I call it a gem. How can you have so many opinions on the tax system without a comprehensive understanding of the mechanics of how it disadvantages families in which one spouse earns most or all of the income?

I'm saying 2 things: That all the wealth of a country shouldn't become too concentrated; and That we shouldn't tax salaried individuals at rates which are twice those for capital gains and dividends. One of the two things I repeated above. Yes. Pension splitting is not a tweak. CRA has, for 40 years, bent over backwards to ensure that people can't split income (attribution rules etc.). Suddenly, retirees can split all their pension income right down the middle. This gem won't apply exclusively to retirement income forever, I predict.

Our tax system IS based on ability to pay, at least in theory. I disagree that the rich made their cash on their own. Bill Gates did not become worth $50B without the brain power of tens of thousands of software engineers and other professionals. While I don't have all the answers, there is something fundamentally wrong when a salaried employee supporting a familiy can pay the highest rate of tax on his/her income, while multi-millionaires are paying rates which are only half as high on their capital gain and dividend income.

You DON'T need to know both languages to have a federal job...at least not yet. If things stay on the current course, though, you probably will. Should the 90% of anglophones in this country only expect to be cleaning out horse stalls if they work for the government? Is language more important than technical, accounting, management and other skills? Well, if you look at the job postings one might think so.

When you have a lot of money in Canada, you can hold onto it better than wage earners. For example, if you invest $1M in a dividend-paying stock and cash out 10 years later with a $1M gain plus $800K in total dividends, all that income is taxed at about 50% of each extra dollar earned by a $80K/year wage earner. In the US, estates over $2M are taxed at 55% upon your death. This does not happen in Canada, so considering all I've mentioned above it doesn't surprise me that the wealthiest families in Canada remain so forever. What I'm saying is I'm against a flat tax. I think there should be just 2 tax brackets for each family class (singles, couples, couples with children etc.). You pay a lower rate on non-discretionary income (needed food, shelter, clothing, transportation) and a second (higher) rate on "luxury" income. Our current tax system is an abomination with too many brackets plus it uses individual income (vs family income) as the basis for calculating tax liability. Everything is stacked against a family with one spouse earning most of the family income. Many reforms are needed, and the door has been opened to that reform thanks to pension splitting.

Can it be that useful if, after 40 years of immersion schools, job requirements etc., less than 10% of anglophones have felt the need to become bilingual? In addition, the recent census indicates that French continues to decline across Canada.

No, I'm talking about interest in government jobs, in general. One federal recruiter once told me, "prior to 2000, jobs went begging, but now people are *crying* to get into the public service of Canada". Not convinced? Prior to 2000, federal jobs were posted on the website for a couple of weeks and received a handful of applications. Currently, jobs are only posted for a few *days* and result in HUNDREDS of applications. I feel that this renewed interest in public sector jobs is going to require that existing language language requirements be revisited and possibly overhauled.

I thought I was fairly clear. People can see that good jobs are getting harder and harder to find, except perhaps in the public sector. If they can't get those jobs because of language requirements that aren't backed up by any justifiable metrics (service to the public excepted), there will be an outcry which may push politicians to put some kind of caps etc. in place. Otherwise, virtually every job in the public sector (in bilingual regions) will be occupied by a francophone.