Pat Coghlan

I'd classify it as tax reform, not a tax cut. The goal is to make the tax system fair, and that means all families with the same income paying the same taxes...in the same way that they are deemed to entitled to equal benefit payments. Taxes are supposedly based on ability to pay, and that should mean that families with the same combined income (and number of dependents) should be treated identically from a tax/benefit point of view. Currenly, they are only treated the same w.r.t. benefit eligibility. If the government doesn't want to do that, then they should let each spouse apply for benefits based solely on his/her income...or would you be against that too?

If it's not justified, then wouldn't you agree it's EQUALLY not justified to lump a couple's income together to determine their eligibility for tax-delivered benefits? Shouldn't each spouse, then, be able to apply for a full 50% of each benefit based only on his/her income? You're also making the assumption that the low-income spouse is a zero income spouse, which is often not the case. Most families are dual income, and the income is not split 50/50 between the spouses. In the US, all families with the same income pay the same taxes, regardless of who earns it. This is the right approach, because the family is the economic unit that spends the money, not the individuals. Finally, they've done it for retirees, so I think the genie is out of the bottle and the first party to offer to implement a joint-income tax return will probably ensure themselves a victory.

I'm voting for the first party to commit to income-splitting for ALL families, not just retirees (who probably need the break less).

Where there's a real need to communicate between regions, yes, but the bilingual requirement is not restricted to this need. In addition, since many manager are getting tired of employees disappearing for language training for a year or more, they classify positions as bilingual imperative, which closes the door to those who don't already have official language results on file. I have been on language training myself. Recently, about half a dozen of my former classmates and a teacher met for a night out of beers. I asked if anyone was actually using their second language. The answer was a unanimous NO. There's a million bucks in language training dollars down the drain. I would expect similar results for the THOUSANDS of public servants who go on language training.

It depends on what you mean by "operate in both French and English". When it comes to services like tax forms or 800-numbers, sure. But what about requiring 40% of government jobs to be bilingual, including all senior management positions? Keep in mind that there is little to no scutiny of a manger's decision to classify a position as bilingual. Why we don't officially adopt the majority language of a region as the language of work is beyond me. A large number of fed jobs in Ottawa/Gatineau are officially bilingual, yet virtually every e-mail or all-staff meeting is performed in English. The net effect is to bar anyone who doesn't have official language results on file from applying many jobs that essentially are conducted in English anyway.

http://www.canada.com/ottawacitizen/news/s...ba4&k=15034

Meanwhile, John Roth, former Nortel CEO, can take advantage of the pension-splitting provision introduced for '07 tax year, and shift $115,000 of his $750,000 pension to his wife and save $15,000 in taxes. At the same time, the 35 year-old engineer supporting a wife and 3 kids on a $75,000 salary, sees very little difference in his family's after-tax income as a result of the changes announced yesterday, and still pays a few thousand more in taxes than his neighbours who have two $37,500 incomes. The point is, this is simply a continuation of the 40 years of tinkering with the tax system/brackets. Like, why bother, unless you're prepared to finally reform the tax system and introduced a joint tax return?

Okay, looks like we have the money to be able to implement income-splitting (joint tax return) for all families, rather than just retirees.

Individuals haven't been going bankrupt for several years because of all the credit that's been available. Now that free money is drying up, the bankruptcies will begin in earnest.

Here's my answer. The framers of the US constitution wanted to avoid the concentration of wealth in the hands of just a few, having come from such a system in Britain. Initially, they tried to solve the problem with just an estate tax (very high rate, I believe). Lobbyists fought hard recently and almost managed to repeal the estate tax. The ultra rich want to keep all their money. We in Canada also need to avoid the concentration of all wealth in the hands of just a few. To a better extent, we have succeeded. Moving to a flat tax would encourage more wealth concentration. This is my main problem with a flat tax. I don't believe that someone earning $60K should be taxed at the same rate as a Bell Canada VP earning $750K/year. When you speak of a flat tax, you aren't giving enough thought to the really big income earners. I think you might accept what I've long advocated, namely, that we have just TWO tax brackets for each family class. All income up to the first threshold represents money needed to live on, pay for kids' braces etc., would be taxed at rate A (e.g. 20%). All income above that threshold would be taxed at rate B (e.g. 40%). Rate B might kick in for a single person at incomes above $70K, while rate B would kick in only at $120K or so for a family of 6. We need a progressive system for the reasons I gave above. The problem is we have too many tax brackets and they're only applied to singles, not families (we have defacto brackets for benefits though, based on family income). To answer your question, if the $100K income earner is supporting a family of 5 then it may make sense for him to pay the same rate as a single person earning $50K. If they are both singles, then the $100K earner should pay a higher rate on the portion of his/her income over the first threshold for the single family class, e.g. $70K. IOW, you don't think the incomes of both spouses should be tied together for tax purposes. Okay, then if my wife has zero income, can she apply for 50% of the child tax credits that a single parent with the same number of children is entitled to? Or, do you want to have your cake and eat it too?

When it comes to creating a tax environment which promotes more than 1.7 kids per family, you may wish that they did. Over the next 5-10 years, something like 40% of the workforce will retire. We have an economy that EXPECTS 2-3% price inflation each year. This is what keeps the housing market going. When huge numbers of people retire - and no follow-up generation to replace them - there is going to be a severe downturn in the economy. You'll probably see the government come up with tax changes that encourage families to have more kids then, but it will be too late (hint: it already is).

Often, not practical. It's a mistake to think that this is a SIF problem only. If the wife works outside the home and cleans toilets for $12,000/year, and the husband drives a truck for $90,000/year, they are also penalized thousands more in taxes than a family in which each spouse earns $56,000/year. The working and stay-at-home spouses both do housework, so this "untaxed labour" argument is a false one, IMHO. The DIFs would have a problem with the above. You've combined their incomes without creating additional tax brackets, so they'd pretty much be treated like single-filers. Don't forget, we have credits, not deductions, for spouses, at the lowest tax rate (25%). Our (idiotic) system removes any deductions/credits for upper middle-class families and targets all benefits to lower income families. Therefore, if you are supporting a wife and 3-4 kids on a $100K income, your tax burden is going to be almost the same as a single person with no dependents, give or take $200/month. So much for a tax system that's supposed to be based on ability to pay...unless you feel that the single person and the guy supporting a family of 5-6 have the same ability to pay. I prefer the US approach, which has different tax brackets for couples vs single-filers. All families pay the same taxes on the same combined income, and there are actual deductions for kids (not like the CTB payments which can be clawed back). Now that retirees can split their income, there will be enormous pressure to do something similar for other families.

How absurd can it be, given that this is how the tax system works in the US. There, every family with the same income pays the same taxes. How absurd is that??? The tax break is not currently given to all DIFs (dual-income families). Those which have one spouse earning most or all of the income are, in fact, treated pretty much like a single person. THAT is absurd. One thing that you and I agree on, is the second income, especially when taxed in the lower tax brackets, represents a HUGE increase in disposable income for many families. This is what has pushed the price of houses up to the $300K-$400K range, and beyond. Question for you: If you are in favour of taxing ONLY individuals based on their income, then, if my wife stays at home and has zero income, should the government treat her like an individual with zero income, and allow her to apply for 50% of all available benefits on her own? For example, each child is eligible for a maximum of $1,500 per year in CTB payments, which starts to get clawed back after $40K of income. We have 5 kids. Should she be allowed to received half the total ($3,750), while most of my share is clawed back? Or, are you in favour of looking at family income when it benefits the government (use it to claw back family benefits) but not when it might benefit the individual (allowing a spouse to disassociate his/herself from the other spouse's income).

Time will tell, but they've opened the door for retirees, so the next logical step is to do the same for all families.

I'm not aware of any initiative to extend the income-splitting provision recently given to senior to all families.

The way they do it in the US is that married couples file a joint return, and the tax brackets for couples are 175% as wide as for singles, i.e. a single person pays the same marginal tax rate at $100K as a married couple does at $175K.

Forget tax cuts per se. What is needed is tax reform along the lines of the income-splitting provision now in place for retirees. There should be tax brackets for various family classes (singles, couples, couples with children etc.). After all, the government looks at your FAMILY income when determining your eligibility for benefits, and IMHO ability to pay taxes and eligibility for benefits are two sides of the same coin.

It may not be ALL bad, but I think it's going to be VERY bad. The only thing keeping the system going are the printing presses which are in high gear (close to 15% increase in the money supply EACH year). This can't continue forever. Just look at Zimbabwe. The US dollar index (http://quotes.ino.com/chart/?s=NYBOT_DX&v=dmax) has never been this low. This has the potential to really upset the global apple cart. Just remember, the baby boomers are all 45+ and have money, but the next generation has none (savings rate is zero) and this is the generation the BBs expect to sell their half-million dollar homes to. It ain't gonna happen.

Nobody can predict EXACTLY how things are going to play out, but overall I think things look negative for North America for the next 15-20 years. Even before the credit crunch, we've know for years that 80M retiring baby boomers can't produce a booming economy. The credit crunch is the biggest short-term threat to the US (and Canadian) economy. We've simply borrowed too much to fund our standard of living. One thing to watch out for is a BIG decline in the value of the US$...which most global commodities such as oil are priced in. Things are going to get fairly ugly, IMHO.

I know someone who was working at Nortel recently, got offered a gov't job and told his manager that he was leaving and, in response, the manager offered him a $25K raise (the guy's been out of university only a year). He turned it down, opting for security vs money. Twenty years ago this would have been considered insanity. We NEED government workers, but the problem is the taxpayer has no control over their numbers and wages.

They may be now. They weren't during the tech boom. People left the public service in droves to work at Nortel etc. and make double their salaries. Today, the Nortel people are crying to get into the government.

This article echoes what I've been saying: http://money.cnn.com/magazines/fortune/for...sion=2007090505

You mean innovation. To innovate, you need engineers and scientists. How many of these are finding jobs these days?

How do you compete with a country like India which, despite all the stories about their increasing prosperity, still has over 800M people earning less than $1/day?

Yes, and if you're providing a *service* (compensation, HR etc.), it makes sense for your position to be bilingual. The problem occurs when people expect employees to work in both languages. To me, if e-mails and meetings are all conducted in the majority language, then all positions (unless a service is being provided) should be unilingual <majority language for the region>. If 80% of people complete language training and never use their 2nd language, what does that tell you?