Federal Tax Reform: A Serious CTF Proposal

[Pat Coghlan]

Pat, let's get something straight. The government, and society in general, did not have intercourse with your wife/significant other. You did.

I think that's how we all got here. Last time I checked, procreation is not frowned upon by the government.

The government, and society in general, did not force you into a large mortgage. The government, and society in general, does not force you to do anything more than feed, cloth and shelter your dependants.

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.

You said it yourself very clearly, "They're here, and I have to support them."

Your dependants are not my responsibility to pay for. No doubt if the government announced that there would be a tax exemption of $50,000 per child retroactive to 1990, you would cheer quite loudly. Would that make it fair? Not even close, but you'd accept the cash just the same (as would any reasonable person). That is self-interest at work.

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?

What you're proposing has absolutely nothing to do with fairness. As for what ancient indians would have done to split up food rations...who cares? Were they a Canadian democracy? Did they have a secret ballot to elect the chief? If they had a different culture, then it would stand to reason that they would have different social standards.

You have still not given any reason why a flat tax is unfair. Please do so.

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.

[Renegade]

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..

What some else does or doesn't do isn't justiticaiton. Being in the majority doesn't make you right, being in the minority doesn't make me wrong.

When I say you provide no justification, I mean you have not provided a single explaination of why other taxpayer should support the kids you chose to have. It is irrelevant what any other person/socieity/country does. I am asking why YOU think it is right because that seems to be the basis of your argument.

Does it not follow that if an opinion has merit, it would make its way into policy???

Not at all. It is much more likely whether right or wrong, merit or not, an opinion which is in the self-interest of whomever holds power 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.

Hard to make an argument on what you'd wager but don't know and provide zero evidence of, don't you think?

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???

Only if everyone agrees on what "fair" means and agrees to put aside self-interest in order to adopt what is "fair". In most people support government policies which are in their self-interest and skew their definition of "fair" to coincide with their self-interest.

My definition of "fair" is that you pay for the services you and your family consume. Is that yours?

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.

You seem to jump to the conclusion that I'm not a parent myself. You are wrong. I simply believe as a parent I've signed up for the financial responsiblity for my kids. My expection is the same for other parents including those who have a large number of kids.

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.

It's self-interest when it benefits you as well.

Eh? Where did I say that?

You have always said that. You want the exemption to reflect the number of individuals in the familiy. If you want to ignore the number of individuals who contribute to the income, you should equally ignore the number of individuals when it comes to exemptions.

[Renegade]

It's unfair because it is not based on ability to pay.

"Ability to pay" is also one of the least measurable critieria and trying to measure it has led to the complicated tax system we have today. Does an adult child living at home and working full time, have a better "ability to pay" then someone else with the same income but rental, food, and student-loan costs? Of course he does, but the system in place can't measure that. The tax rules put in place in order to cater to "ability to pay" have led to progressive tax rates and a maze of deductions and lead to many, many situations where different incomes lead to different tax payments.

You argue that a family where there is a working single-earner should pay the same tax as a family where the income is split 50-50 between spouses? How do you know that they have the same "ablity to pay"? Perhaps the cost of having 2 spouses working incurs additional costs such as 2 cars, additional costs for clothes, additional costs for daycare, which impact their "abilty to pay" . Perhaps the premium you pay as a single wage-earner over dual-income families is because your family has a larger "ability to pay" because you haven't incurred similar costs.

[Pat Coghlan]

When I say you provide no justification, I mean you have not provided a single explaination of why other taxpayer should support the kids you chose to have. It is irrelevant what any other person/socieity/country does. I am asking why YOU think it is right because that seems to be the basis of your argument.

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.

My definition of "fair" is that you pay for the services you and your family consume. Is that yours?

You seem to jump to the conclusion that I'm not a parent myself. You are wrong. I simply believe as a parent I've signed up for the financial responsiblity for my kids. My expection is the same for other parents including those who have a large number of kids.

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.

You have always said that. You want the exemption to reflect the number of individuals in the familiy. If you want to ignore the number of individuals who contribute to the income, you should equally ignore the number of individuals when it comes to exemptions.

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.

[Pat Coghlan]

"Ability to pay" is also one of the least measurable critieria and trying to measure it has led to the complicated tax system we have today. Does an adult child living at home and working full time, have a better "ability to pay" then someone else with the same income but rental, food, and student-loan costs? Of course he does, but the system in place can't measure that. The tax rules put in place in order to cater to "ability to pay" have led to progressive tax rates and a maze of deductions and lead to many, many situations where different incomes lead to different tax payments.

You argue that a family where there is a working single-earner should pay the same tax as a family where the income is split 50-50 between spouses? How do you know that they have the same "ablity to pay"? Perhaps the cost of having 2 spouses working incurs additional costs such as 2 cars, additional costs for clothes, additional costs for daycare, which impact their "abilty to pay" . Perhaps the premium you pay as a single wage-earner over dual-income families is because your family has a larger "ability to pay" because you haven't incurred similar costs.

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.

[Hydraboss]

Pat, we can debate the pros and cons of a single tax rate versus two tier tax rate until we're blue in the face. What we cannot come to terms on is why you are so hung up on deductions for children. Answer this simple question: Why should I pay for your kids? If we can get past that then the rest of the discussion becomes one of semantics.

As for an earlier statement of yours: No, I don't use anything paid for by the "public". My family pays far more in taxes than we will ever see in benefits. Before you make a comment like "public money", make sure that you fully understand that I am "public money". Governments do not make money, they take it in the form of my taxes.

Ability to pay is BS. Do you and your family of five live in a two bedroom rented apartment? Why not? If you get some bunk beds you could easily fit in there. Voila! Your mortgage payment just went away and I bet you save at least 50% of your shelter costs. Did you just develop a major increase in your "ability to pay"? If so, you should now pay more taxes. So by that line of thinking, if I want to pay less taxes all I have to do is increase my monthly mortgage payment and buy a couple of new vehicles. While I'm at it, I might as well start pre-paying for my kids' university education. I should be able to drop my tax load by 50-70% with ease.

Also, the easy way to fix your benefit-splitting issue is to CANCEL ALL PAYABLE BENEFITS. Problem solved.

[Renegade]

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.

This is not a negotiation. I can't negotiate a principle. If I don't belive taxpayers should subsidize your kids but you do, explain why. You have avoided answering this question. It makes no differnce if you agree to limit the number of kids which you require taxpayers to subsidze, you are still asking taxpayers to subsidize some of your kids. Why?

The tax system can't be made much worse for families with one spouse earning most or all of the income,

Sure it can. If the system moved away from generating revenue from income taxes and more towared use-based taxes, certainly large families such as yours would feel the impact.

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.

No I never said that and I never said that all services should be privately provided. What I said is that my definiton of fair I should pay for what I use. It doesn't mean I don't use those systems but that I would pay relative to use. I understand that it is not always practical to measure use, but to the greatest extent possible that shoud be the principle implemented.

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.

Sorry it doesn't sound a lot simpler then the current system.

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.

What gets implemented has very little to do with what you or I propose. Much has to do with demographics. I suspect with an aging population (who vote in greater numbers), you will see a lot more benefits catering toward them. If suddenly single households become the dominant voting block, you will see the policy shift again. Perhaps I'm cynical but whatever you and I posture as the "right" policy is irrelevant. It is whatever policy the caters to the groups which can generate the votes. Any "justification" provided around that policy is pure spin.

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.

Who knows, maybe we will maybe we won't. In any case whether adopted or not, it won't be because it is "fair"

Edited February 8, 2008 by Renegade

[Pat Coghlan]

Pat, we can debate the pros and cons of a single tax rate versus two tier tax rate until we're blue in the face. What we cannot come to terms on is why you are so hung up on deductions for children. Answer this simple question: Why should I pay for your kids? If we can get past that then the rest of the discussion becomes one of semantics.

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?

As for an earlier statement of yours: No, I don't use anything paid for by the "public". My family pays far more in taxes than we will ever see in benefits. Before you make a comment like "public money", make sure that you fully understand that I am "public money". Governments do not make money, they take it in the form of my taxes.

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.

Ability to pay is BS. Do you and your family of five live in a two bedroom rented apartment? Why not? If you get some bunk beds you could easily fit in there. Voila! Your mortgage payment just went away and I bet you save at least 50% of your shelter costs. Did you just develop a major increase in your "ability to pay"? If so, you should now pay more taxes. So by that line of thinking, if I want to pay less taxes all I have to do is increase my monthly mortgage payment and buy a couple of new vehicles. While I'm at it, I might as well start pre-paying for my kids' university education. I should be able to drop my tax load by 50-70% with ease.

Also, the easy way to fix your benefit-splitting issue is to CANCEL ALL PAYABLE BENEFITS. Problem solved.

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).

[Pat Coghlan]

This is not a negotiation. I can't negotiate a principle. If I don't belive taxpayers should subsidize your kids but you do, explain why. You have avoided answering this question. It makes no differnce if you agree to limit the number of kids which you require taxpayers to subsidze, you are still asking taxpayers to subsidize some of your kids. Why?

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.

Sure it can. If the system moved away from generating revenue from income taxes and more towared use-based taxes, certainly large families such as yours would feel the impact.

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.

What gets implemented has very little to do with what you or I propose. Much has to do with demographics. I suspect with an aging population (who vote in greater numbers), you will see a lot more benefits catering toward them. If suddenly single households become the dominant voting block, you will see the policy shift again. Perhaps I'm cynical but whatever you and I posture as the "right" policy is irrelevant. It is whatever policy the caters to the groups which can generate the votes. Any "justification" provided around that policy is pure spin.

Who knows, maybe we will maybe we won't. In any case whether adopted or not, it won't be because it is "fair"

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.

[Pliny]

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?

I couldn't let this go. You are forgetting one element in your analogy. The "government" of that society. If it existed and consisted of a chief his brothers and their families, or perhaps the elders would be a closer approximation because they would not be contributing to the production of food just as government today does not contribute to the production of wealth, they would take by force, the share they wanted or was agreed to be given to them. By todays standards that would be about 50%.

Now that isn't how their governments were. They were tribal and the Chief was the leader who advised and led.

He found his own food or with a few of the tribes best braves went and brought back food for the whole tribe.

At least that's how I think it went. The elders offered advice or did what they could to contribute to gain a share of the production of necessities. Nowhere is anyone forced to do anything. They willingly contribute or they leave.

Remember, we have in government today a class that uses force against it's citizens, a necessity in matters of justice, but not in matters of the societal distribution of wealth. None of the Braves in your analogy needed to be forced to share their food. If they were forced they more than likely would not bother bringing food back and would take their families and leave. They shared their food because it would not make sense to not share it. Do your kids force you to share your food - if they are hungry you would? Does the neighbour force you to share your food - if they are hungry you would? How about if you have barely enough for your family though?

Would you still share with your neighbour? If you wanted to be "fair" you would support a law where your neighbour could go to the police and say you had food and he had none so in the interests of equality and fairness he should have some of yours. Not only that but he should always have half of yours. If he always had none and you always had some I am certain you would not agree with that law.

You essentially believe that force should be used to distribute wealth. It is true that some will hog wealth if left on their own but most know that the value of social interaction, the give and take of society is more beneficial than acting solely in selfish interests. One may act in his own interests but those interests may include family, associates, neighbours, communities, and even a Nation. It is very lonely to be selfish but governments and other have-nots feel people prefer being selfish - force them or threaten to force them from their property and they do become selfish.

[Hydraboss]

Pat,

You are right. I absolutely disagree with all exemptions, spousal as well, but I can concede allowing the first $1000, $15000, $20000 or whatever to be tax free FOR THE INCOME EARNER. However, your hang up that children have needs that are required to be met does not mean that it is society's responsibility. It's whomever brought those kids into the world. You still have not stated why you should get an exemption for your non-working wife and kids from my tax dollars.

As to basic necessities, this is where we part ways once again. You avoid answering my question about shelter. What you deem to be "necessities" does not mesh with (what appears to be) the majority of posters in this thread. Necessary food=basic food, necessary shelter=basic shelter, necessary clothing=basic clothing. $10000 a year per kid buys a hell of a lot more than the basics. There are a ton of people earning a hell of a lot less than that and are surviving, and that is all society has a responsiblity to do, make sure you survive. It is not my responsibility to make sure your kids have XBOX 360 or clothes from the Gap. If you want them to have those things, work harder.

"Ability to pay" and "based on income, after exemptions for basic necessities" obviously equate to the same thing. Socialist distribution of wealth.

Admit it, Pat, you're a socialist. Lenin would be proud. Voting NDP are you?

[Pat Coghlan]

You are right. I absolutely disagree with all exemptions, spousal as well, but I can concede allowing the first $1000, $15000, $20000 or whatever to be tax free FOR THE INCOME EARNER. However, your hang up that children have needs that are required to be met does not mean that it is society's responsibility. It's whomever brought those kids into the world. You still have not stated why you should get an exemption for your non-working wife and kids from my tax dollars.

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.

As to basic necessities, this is where we part ways once again. You avoid answering my question about shelter. What you deem to be "necessities" does not mesh with (what appears to be) the majority of posters in this thread. Necessary food=basic food, necessary shelter=basic shelter, necessary clothing=basic clothing. $10000 a year per kid buys a hell of a lot more than the basics. There are a ton of people earning a hell of a lot less than that and are surviving, and that is all society has a responsiblity to do, make sure you survive. It is not my responsibility to make sure your kids have XBOX 360 or clothes from the Gap. If you want them to have those things, work harder.

"Ability to pay" and "based on income, after exemptions for basic necessities" obviously equate to the same thing. Socialist distribution of wealth.

Admit it, Pat, you're a socialist. Lenin would be proud. Voting NDP are you?

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.

[Renegade]

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.

Pat, even in the current system the basic exemption doesn't give you a larger exemption based upon the number of mouths you have to feed. There are some very specifc exceptions, such as spousal amount, or amount for eligible dependant, but in general the deduction you are allowed doesn't depend upon the number of dependants you have. Ask yourself if you go from 1 dependant to 20 does your basic exemption change?

As far as your contention that "society" expects that people should be exempted to provide for spouse and dependants, I expect that most people haven't really though of the implications. I suspect if you asked people directly, are you willikng to subsidize the cost of other people's decision to take on dependants, you might get a different answer than you expect.

Too easy for many - especially the wealthy - to avoid paying tax.

What does that even mean? It is hard to avoid paying tax for what you use, when you are charged by use.

Have you seen the "hand in my pocket" commercials from ING? This is the way governments will collect taxes...forever.

Yes, because it is easy for them to do so this way. This supports what I have been saying. That what we have been left with is not a tax structure that is "fair", it is because it panders to special-interest and is collectable.

------------------------------------------

Pat, there are many, many, inconsistancies in the tax system. For example the child-care deduction, and moving deduction, are given on the principle that those cost are incured as nessary in order to generate income, however transportation costs to and from work are not deductable even though they are necessary to earn income. The basic exemption is supposed to exempt income for food and shelter, yet does not account for the fact that comparable shelter is far higher in Vancouver than in Moncton. You focus on simple one inconsistancy when to truly resolve the problem, the whole tax system should be reformed, rather than incemental changes you suggest.

If you want consistancy between how benefits are assessed and how taxes are assessed, how about this: we combine incomes of spouses and then assess taxes on the same scale we do today. No option to file single, afterall with benefits assesments there is no such option. People with spouses with a 50/50 split in income would see a significant tax increase. People like you woudl see a small tax decrease, but at least you would have consistancy and you can stop complaining that you pay $7K more than your neighbour.

[Renegade]

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.

I'm disappointed in your responses Pat because you avoid answering the question directly. You have couched your answers in what "society recgonizes" or what other countries do, or what current tax code is. None of that is relevant to the question that I and others have asked. Do YOU think that other taxpayers should subsidize the cost of YOUR kids? and if so why. Since you have so much difficulty answering directly let me help you out be starting your answer: "Yes, I think..." or "No, I don't think...". If you want to take a stand, at least have the courage to answer directly.

[Pat Coghlan]

I'm disappointed in your responses Pat because you avoid answering the question directly. You have couched your answers in what "society recgonizes" or what other countries do, or what current tax code is. None of that is relevant to the question that I and others have asked. Do YOU think that other taxpayers should subsidize the cost of YOUR kids? and if so why. Since you have so much difficulty answering directly let me help you out be starting your answer: "Yes, I think..." or "No, I don't think...". If you want to take a stand, at least have the courage to answer directly.

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.

[Pat Coghlan]

Pat, even in the current system the basic exemption doesn't give you a larger exemption based upon the number of mouths you have to feed. There are some very specifc exceptions, such as spousal amount, or amount for eligible dependant, but in general the deduction you are allowed doesn't depend upon the number of dependants you have. Ask yourself if you go from 1 dependant to 20 does your basic exemption change?

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.

[Pat Coghlan]

Pat, there are many, many, inconsistancies in the tax system. For example the child-care deduction, and moving deduction, are given on the principle that those cost are incured as nessary in order to generate income, however transportation costs to and from work are not deductable even though they are necessary to earn income. The basic exemption is supposed to exempt income for food and shelter, yet does not account for the fact that comparable shelter is far higher in Vancouver than in Moncton. You focus on simple one inconsistancy when to truly resolve the problem, the whole tax system should be reformed, rather than incemental changes you suggest.

The changes are incremental, but substantial (e.g. taxing aggregate vs individual income).

If you want consistancy between how benefits are assessed and how taxes are assessed, how about this: we combine incomes of spouses and then assess taxes on the same scale we do today. No option to file single, afterall with benefits assesments there is no such option. People with spouses with a 50/50 split in income would see a significant tax increase. People like you woudl see a small tax decrease, but at least you would have consistancy and you can stop complaining that you pay $7K more than your neighbour.

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.

[Renegade]

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.

I was refering to the "basic exemption" in response to you comment that the basic exemption was intended to cover basic food and shelter.

The intent of the daycare expense has nothing to do with basic food and shelter.

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.

I'm not familiar with this credit. What is it called?

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.

Then IMO you and the other people who agree with you would be wrong. You brought them into this world Pat, you and your spouse DO bear sole responsiblity for the cost of feeding, clothing, and sheltering them. Any financial help you get should be at the discretion of the ones providing that help.

BTW, do you have any evidence to support that most people agree with you view?

I would see a tax *increase*, not decrease. My wife's (part-time) income would be taxed in a higher bracket.

OK, I was not aware your wife work. OK, you'll see an increase, but at least it will then be "fair".

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.

Of course not, nothing "fair" ever is. The only things ever implemented are proposals catering to special-interest groups such as the one you propose. It is all simply cloaked under the guise of "fairness".

Family income taxation requires a separate set of tax brackets, wider than those for singles.

It would be stupid to create a seam in the income tax infrastructure where people are lumped into one of two classes "single" and "family" when in reality there are a huge variation in family makeup. Is a single person with one-kid "single" or "family"? Is a single-mother living at home with her parents part of their family? All it will do is shift tax burden onto singles and retired, however I think the retired have enough political lobby to ensure they aren't adversely affected. I guess that only leaves the singles to screw.

If your proposal becomes law, my advice to singles is to shack up with poor friends and become a common-law family for tax purposes.

[Pat Coghlan]

I'm not familiar with this credit. What is it called?

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.

Then IMO you and the other people who agree with you would be wrong. You brought them into this world Pat, you and your spouse DO bear sole responsiblity for the cost of feeding, clothing, and sheltering them. Any financial help you get should be at the discretion of the ones providing that help.

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.

BTW, do you have any evidence to support that most people agree with you view?

The tax system of 25 out of 32 OECD countries give consideration to family status, presumably with majority consent. Ditto for Canada/US.

OK, I was not aware your wife work. OK, you'll see an increase, but at least it will then be "fair".

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.

Of course not, nothing "fair" ever is. The only things ever implemented are proposals catering to special-interest groups such as the one you propose. It is all simply cloaked under the guise of "fairness".

It would be stupid to create a seam in the income tax infrastructure where people are lumped into one of two classes "single" and "family" when in reality there are a huge variation in family makeup. Is a single person with one-kid "single" or "family"? Is a single-mother living at home with her parents part of their family? All it will do is shift tax burden onto singles and retired, however I think the retired have enough political lobby to ensure they aren't adversely affected. I guess that only leaves the singles to screw.

If your proposal becomes law, my advice to singles is to shack up with poor friends and become a common-law family for tax purposes.

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).

[Renegade]

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.

OK now I know what you are referring to. Yes I am aware we do it. I don't agree with it however, but I can see that people with kids would because of course it is in their interest to do so.

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.

Yes, my opinion. (thats what the "IMO" stands for). Just as yours is your opinion and nothing more. The fact that other countries have tax policy which favours families is explained by the fact that people with families generally hold voting power and will favour any policy which benefits them. That they act in their self interest doesn't make it "right"

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.

To me it makes much more sense to do so then your expectation that others should subsidize your kids.

Well, let's at least have the debate and have the government clearly explain the objectives of tax policy.

I don't beleive that "government" should explain the objectves of tax policy. That should be something "we", the people decide, while bounded by our individual rights. IMO, wealth-redistribution should not be the objective of tax policy, nor should behaviour incentives. Raising money for services should.

[Pliny]

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.

Families, in a socially engineering way, were encouraged by tax incentives to be large when the country was being settled, even up to and including the fifties and into the sixties. World population then became a concern of governments and families were not encouraged. If you are following a politically correct or socialist line of social engineering then families should pay higher taxes as they consume more than childless couples or singles.

You wouldn't encourage driving an SUV and probably believe it should be taxed more than a fuel efficient hybrid. Neither should you encourage procreation. Perhaps adoption should be favoured over procreation.

The table can turn, Pat. It depends on governments interests and the strength of influential vested interests.

From the point of view of resource conservation, if you want "fairness" you will support a heavy tax on procreation and consequently families.

Now I don't support that as you know. Optimumly, all taxes would be voluntary.

[Pat Coghlan]

IMO, wealth-redistribution should not be the objective of tax policy, nor should behaviour incentives. Raising money for services should.

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)

[Hydraboss]

Well, I just went back and reread all nine pages.

Pat believes that the more kids he has, the more the rest of us should pay him. You and I have to work more for them.

The rest of the posters seem to believe that Pat's kids are his responsibility to pay for. He should have to work

more for them.

Neither side will agree on what is the only point to be resolved...the definition of fairness. I think this thread could end now and we wouldn't miss anything. By the way, Pat, it was me that suggested the $25,000 surcharge on kids for demonstration purposes.

Anyway, love to stay and chat but I have to go to work (on a Saturday) so Pat's youngest can have a new Pokemon. Anything else you need since I'm going, Pat?

Edited February 9, 2008 by Hydraboss

[Renegade]

Don't worry, it IS going to get redistributed, if for no other reason than to prevent social unrest.

By "social unrest" I assume you mean violence or the threat of violence. IOW, those who have earned are forced to redistribute their earnings under threat of violence. In English we call that "extortion".

[Pat Coghlan]

Well, I just went back and reread all nine pages.

Pat believes that the more kids he has, the more the rest of us should pay him. You and I have to work more for them.

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.

The rest of the posters seem to believe that Pat's kids are his responsibility to pay for. He should have to work

more for them.

Neither side will agree on what is the only point to be resolved...the definition of fairness. I think this thread could end now and we wouldn't miss anything. By the way, Pat, it was me that suggested the $25,000 surcharge on kids for demonstration purposes.

Anyway, love to stay and chat but I have to go to work (on a Saturday) so Pat's youngest can have a new Pokemon. Anything else you need since I'm going, Pat?

Joint tax return with 2 rates.