msj

We can discuss the fundamentals of the US and CDN currencies all we want. But as the old saying goes: the market often remains "irrational" longer than investors can remain solvent.

For those interested here is a screen shot from a 1999 tax return setup to show how a person earning $250,000 in salary may not pay any tax, still get a GST tax credit in the next year (2000) of $257 and get the BC PST tax credit of $50 all thanks to losing money as a, say, farmer: http://farm3.static.flickr.com/2128/152494...7e34536c5_o.gif The lawyer who also is a full time farmer is a good example of this. There is a legal case where a Toronto lawyer had huge farming losses - it went to court because the CRA wanted the losses to be restricted so that he could only deduct a limited amount of the losses against his salary from his legal corporation and then carry the rest forward to be deducted against any farm income if that ever occurred. The lawyer was successful in arguing that he was not only a full time lawyer but a full time farmer; therefore, the full deduction was allowed.

1) I never said anything about employees setting themselves up as contractors. I did say that people can legally avoid paying CPP with the use of a CCPC. 2) I never claimed it would be practical nor that a person would necessarily be better off. If a person is making good money and benefits as an employee I would expect he/she to be smart enough to know this. 3) Anyone, however, can start or buy a business and they may choose to incorporate that business if one of their goals is to avoid paying CPP (which generally is lower on the list than the deferral of income tax and potential liability protection offered by the corporation). 4) I never "recommended" the use of a CCPC. I merely suggested it as an easy way to avoid paying CPP. One could also avoid CPP by leaving Canada or by living off of investment income. I recommend doing the latter but most people are smart enough to realize that for most people this just isn't practical. 5) I was merely pointing out that your suggestion that "f we were allowed to opt out of the plan, then I'd agree. But since everyone pays, everyone should benefit." is wrong. Some people do opt out thanks to being self-employed through a CCPC. Indeed, some people even go so far as to arrange their affairs to avoid paying CPP as can be evidenced in the legal case where a married couple used a profit sharing plan to avoid paying CPP (and they won). 6) Methinks that you just don't like being wrong so you will find any excuse to call me "unethical" and "unprofessional" in an ad hominem kind of way.

You are getting it entirely wrong: 1) When a person works in the US and is still considered a resident of Canada (which is how we tax people) then that person would not pay into Canada's EI system. 2) A person can make $250,000 in salary during the year, get laid off and, ignoring any effects of severance pay on an EI claim for simplicity, collect EI. Why? Because EI is not income tested with the exception of the EI clawback (for which the government adds an extra clawback tax to EI benefits if you collect them during the year and then file a return with Net Income in excess of $48,000) and with the payment of EI benefits which are based on the maximum amount (there is a reason a person only pays EI premiums on the first $40,000 of income).

1) Where have I painted anyone with "the same low level brush" wrt welfare? I am specifically talking to EI, CPP and IT for which you are one of the worst offenders for knowing very little about those particular Acts and/or for your idle speculation based on limited information and limited knowledge. 2) See my earlier post responding to, iirc, Geoff, about using a CCPC to either pay out dividends or to set up a proper profit sharing plan to get around paying CPP.

1) I agree with you that we are not talking about year after year. We are talking about 1999. That is one year. We do not know from the information provided whether or not any of these individuals are not paying tax in earlier and/or later years because the statistics are based on aggregate information. 2) Since we are talking about one year and there is no statistical proof presented here of anyone getting away with paying no taxes while having a high taxable income (or even total income or net income) it is nothing more than idle speculation and, therefore, completely worthless, to "discuss" these alleged tax avoiders. 3) The reason those line numbers are so important is because if I am a proprietor who makes $250,000 in net income in my business this year I will show that $250,000 at Total Income and Net Income. But if I had large losses in the past it is possible that I will have a deduction that would reduce my taxable income to be non-taxable. Alternatively, I could be a lawyer and make $250,000/year but also own a farm and lose $250,000+ in that year. The two would lead me to be non-taxable (despite restricted farm loss rules as happened to a Toronto lawyer). 4) Many businesses are reported on personal tax returns. These are called proprietorships and partnerships. I have not confused this with a corporate return although in an earlier post I did recommend the use of a CCPC to get around paying CPP premiums. 5) Tax shelter schemes like the buy-low-donate-high scheme's are currently being audited and tens of thousands of taxpayers have been/will be audited and are/will be assessed tax. This undoubtedly includes people from 1999 which will not show in these statistics since they were compiled in 2001. 6) The fact is, other than a vague and inferential original post, most of the posts here are nothing more than speculation based on an incomplete understanding of the law, whether it is the Income Tax Act, Employment Insurance Act or Canada Pension Plan Act.

The problem I have with this is that the frames of reference are either not provided or are not understood. [Actually, they are implied in the original post but only a few people would actually have an understanding of what is being implied] Look at a proper tax return. Look at line 150 Total Income. Is that the frame of reference being used to determine someone "made" $250,000 or is it going to be line 260 aka "taxable income?" Let's also not forget about line 236 aka "Net Income." The distinction is important because it is very possible for a person to have net income of $250,000 but have losses from other years that exceed that which would mean that taxable income is $0. So this person would be in the non-taxable tax bracket under rules that, may appear complex, but are really just rules applied to recognize that we live in a complex world. Throw in all the deductions between lines 207 through 235 and lines 244 through 256 and there is a lot that can reduce a person's net or total income to become non-taxable. Then throw in the tax credits, refundable portion of AMT etc... and it is very possible for a person to pay no tax under the right conditions. So, without a proper frame of reference I have to say that 95%+ of the posts in this thread are a complete waste of time since very few people here actually know what is being talked about in the first place.

Not everyone pays into CPP. People have a choice if they want to. Incorporate a Canadian Controlled Private Corporation and run a business. Then pay out dividends rather than wages. You would not have to pay any CPP. However, you would be paying corporate tax and personal taxes on the dividends (assuming they were high enough to be taxable on your personal tax return). Alternatively, set up a CCPC and set up a profit sharing plan (make sure it is set up absolutely legally). The payments will be deductible to the company but do not count as earnings for CPP purposes. A legal case just came out on this so it is possible that the Finance Department may shut it down in the future.

mikedavid00, the reality is that no one here really is going to take your word on anything. Your ridiculous use of hyperbole added to your pathetic math skills, all while claiming to allegedly knowing how to do research, is laughable at best and sad at worst. So compare Canada to Cuba or China all you want, and continue to make up numbers without statistical merit, but no one buys it.

Fair enough. Probably almost as widespread as the misperception that self-employed people are better off since they get to deduct expenses.

For any self-employed person to not know what their after tax income is (that is, gross income minus the expenses they incur to earn that income = taxable income then minus taxes = after tax income) compared to their employees (since, gee, the business person is paying the employees' wages, deducting the employees' cpp/ei/tax, then adding 1.4 * the withheld EI and doubling up the CPP and then paying that to the government by the 15th of the next month) well, there is no explanation for their ignorance. The self-employed take risks. They don't get vacation pay like employees since when they take time off it generally means they are reducing business opportunities. They don't get overtime at 1.5 or double time, either. They pay employees for work done even if the client/customer has not paid for the good/services yet. They get reviewed and audited by the CRA at a much higher rate than employees. They have to pay extra legal and accounting bills that most employees don't have to pay since they can do their own tax returns and rarely have to deal with issues of collections or liability that the self-employed have to deal with. Etc...

Frankly your story is ridiculous. I am a tax accountant so I know the difference between gross income, net income and after tax income. Just because your farmer friend conducts himself in a way that involves tax evasion does not mean that all business people do. The only expenses that are tax deductible are those that are reasonable and are incurred to earn income. As such, by definition, the typical business person or farmer is not better off for taking deductions since s/he has to spend money in order to make money whereas an employee often does not. IOW, most farmers break out property taxes, utilities, mortgage interest etc... between business use and personal use. Remember, too, that the self-employed do not get the chance of collecting EI benefits (although this has the advantage of not having to pay into EI) and have to pay both portions of CPP (i.e. 9.9% as compared to an employee contributing 4.95%). Sure, your farmer friend has the opportunity to get preferential treatment for when he sells the farm (generally tax free capital gain if it is qualified farm property) but this is only an opportunity which is less likely to be realized than a civil servant's pension benefits.

1) Most employees don't get employment expenses. Even those that do they are often scaled back considerably through stupid laws such as only allowing apprentices to deduct up to $500 worth of tools but s/he has to spend $1,500 to get that $500 deduction. Also, why do people consider this a perk? If I have to shell out $100 on expenses in order to maintain my employment then I am still out of pocket $60 after the tax savings. Why do people think that this is good for someone? Think about it: you are better off if you are not paying for expenses in the first place or, if you are, you are being reimbursed at a high level (see below regarding government employee reimbursement rates re: meals/vehicle use). 2) At least public sector workers get pension plans. Increasingly private sector workers get no pension plans or contribution type plans rather than the defined benefit plans government workers get. There is a huge difference between these plans and they must be factored into anyone's pay because a benefit is a benefit whether it is felt now or 30 years from now. 3) Many private employees do not earn tips or gratuities and if they do it is part of their pay because that person is making minimum wage. Increasingly private employees do not get stock benefits, nor tax free gifts (one or two gifts per year under $500 total (for both) is non-taxable to the employee - if the gift(s) go above $500 then the entire amount is a taxable benefit to the employee). As for perks, at least civil servants get generous travel and meal allowances when they travel. When I travel on company business I get $0.44/km and I'm expected to buy reasonable meals for which I get reimbursed based on the receipts (therefore all of this is tax free to me). This is compared to the federal civil servant who gets ~$0.50/km and $78/day for meals. All of this tax free without the need for receipts.

Good way to delve into the stats bk59. My opinion on the payment of federal civil servants is informed at the bottom of this link: http://www.tbs-sct.gc.ca/spsm-rgsp/er-ed/vol1/vol106_e.asp As for compentency: you're right we can only judge on an individual basis but how many people are there who are highly competent and are willing to take a pay cut for the public good when they see CEO's in the private sector making a ton of money? As much as I think the private sector pay grades are ridiculous (at the top levels) we don't have much choice but to follow them to some extent if we want to have competent leaders in the civil service (of course, I wonder sometimes if there are people who don't want to properly pay our civil service to only make it useless and to justify cutting back government programs to get further tax cuts but that is a topic for another thread).

I will assume that you are off on the basis that it should be 3.2M + 10.9M = 14.1M employed and, based on this at a simplistic level, is 22.6%. The problems here being many: 1) Self-employed people aren't counted as employed (unless they work for their own corporation as an employee) 2) Part time/full time breakdowns may also prove beneficial 3) Government's contract out (often to former employees) so these people are counted as self-employed or as private sector employees. 4) Etc... Why wouldn't most civil servants be making more money than many in the private sector? The private sector is weighed down by the retail and hospitality industries. Break that out and perhaps some other industries and then do a proper comparison of like job to like job. One would likely find the typical bottom civil servant is overpaid, the middle civil servant is slightly overpaid, and the top civil servant is underpaid and likely the least competent amongst the three (if only because anyone who is competent at a high level works in the private sector for 10 times the pay).

Here is the story about the Cons backing off: http://www.ctv.ca/servlet/ArticleNews/stor...829?hub=QPeriod I found this section of the article most interesting: Government officials have distanced themselves from Harris's unofficial appointment of Smith as the riding representative in Ottawa. "He just kind of did that himself,'' government spokesman Ryan Sparrow said of Harris's move. "(Smith) is the Conservative candidate in the next election. That's her only official capacity.'' Sparrow was unequivocal when asked whom local residents should contact for federal help: "They should contact their local member of Parliament ... Ms. Smith is working hard to be that person after the next election, but for now the riding is held by a New Democrat.''

This was already discussed on Garth Turner's blog: http://www.garth.ca/weblog/2007/08/26/screwy-in-skeena/ Also see the August 22 and 23, 2007 CBC interviews: http://www.cbc.ca/daybreaknorth/daybreak_again.html