Tax Free Savings Accounts - TFSAs

[August1991]

I think we need a new thread. Quotes are linked to another thread.

Just another in a long line of tax "gimmcks" rather than substantial tax reform.

Read this: http://www.thestar.com/World/Columnist/article/307742

It's not a gimmick and you should know that the Toronto Star is more partisan than it is honest.

TFSA's are a compromise. It is defered tax relief because a government doesn't believe it has the room to offer it up front. It is also a great deal for those who can take advantage of it. If a person was able to make an RRSP contribution large enough to give them a $5000 tax refund and every year they put that refund in a TFSA which compounded at an average of 5%, in 20 years they would have $175,000 in that account which if desired could be withdrawn in one lump with no taxes. One would need to withdraw at least double that from an RRSP in a lump sum to wind up with the same amount after taxes. In addition to that they could contribute another $5000 for a spouse who is either not working or unable to contribute large amounts to an RRSP with the potential of doubling the return.

This isn't peanuts if you have the ability and are disciplined enough max out the opportunity.

In theory, TSFAs, RRSPs and the GST are identical. In all cases, you are taxed when you spend money and not when you earn it. (That may not be obvious but if you think about it and do the math, you'll realize it's true. See below.)

For an economy overall, it's better to tax when we spend rather than when we earn. Why? An income tax makes future consumption (saving) more expensive. On balance, with an income tax, people spend too much now and save too little. That's costly for an economy.

The GST is a replacement for income tax and TFSAs (like RRSPs) are a way to fix the distortion of an income tax.

----

I particularly like the TFSA with one provisio. The TFSA is good because it achieves the same goal as an RRSP but it also is exempt from pension supplement calculations. This is of great interest to people on low incomes.

Unlike an RRSP, you can take your savings from a TFSA at any time without penalty. That's the provisio and Wilber's point is well made. To use a TFSA, you must be disciplined. With an RRSP, the money is locked away. With a TFSA, it's not.

I think this distinction will be the main difference for many people. If you're OCD, can't control your impulses or turn your cellphone off in meetings, then buy an RRSP. If you're disciplined and can leave your cellphone on but ignore it, then put your money into TFSAs.

(If you're poor or have a poor spouse, put anything you can into a TFSA.)

----

First Last Point. The Tories have wisely created a new way to save. The bureacrats/economists in Finance have known about this for ages. The question is: why didn't the Liberals do this? I have no simple answer to that question except that I think Liberals, by nature, are paternalistic. Trudeau, Hebert, Chretien, Martin, (even Kinsella) are all paternalistic. They got involved in politics to help the "little people". In Liberal-view, TFSAs don't really help the little people anymore than RRSPs do. In fact, TFSAs give the little people more choice (which in Liberal/Roman Catholic view is worse).

Second Last Point. TFSAs (like RRSPs) amount to a huge, locked-in, future tax cut. Once people put money into a TFSA, it's tax exempt forever. As the account grows in value, all of the gain is tax free. No future government (Liberal, NDP or BQ) will be able to touch that money. (If a government tried, the voter revolt would be devastating.) Yet now, this year, TFSAs will cost this government little. If I were a serious politican, and I wanted to cut taxes, that's the way to do it. Change taxes in a way that no future tax-and-spend politician can touch. Smart.

Comparison of TSFAs to RRSPs

Tax-Free Savings Accounts versus Registered Retirement Savings Programs.

TFSA RRSP

Pretax income $5,000 $5,000

Tax owing ( % ) $2,000 $-

Net contribution to plan $3,000 $5,000

Value of account after years* $11,609 $19,348

Tax on liquidation ( % ) $- $7,739

Cash in your pocket $11,609 $11,609

Assumes a 7% annual pre-tax return

G&M Edited March 1, 2008 by August1991

[Alta4ever]

http://www.mapleleafweb.com/forums//index....45&start=45

I don't know if i can do this but my post might be better in this thread.

I think that many people fail to realize just how powerful a little bit of savings really is. If a 20 year old puts away $133 a month (about the same as what is paid per month for car insurance) for nine years at age sixty five it will compound to about $380,825. Now if you take the principal paid in over the nine years $14,000 - 380825 = $366425 in deferred capital gain which means 50% of that is taxible. So $183212.5 is taxable at the marginal tax rate. Now now lets plug that into 2007 Alberta and federal taxe numbers. You would have to pay $59,265 in taxes on that investment (just remember if you live in another province you will pay more). So if you live in Alberta the savings plan which you didn't max out, just saved you $60,000 in retirement that would have to have been paid to the government in taxes. That is huge and you should say thank you to the CPC. This isn't for the rich or the upper middle class this benefits everyone!

[August1991]

I think that many people fail to realize just how powerful a little bit of savings really is.

Exactly. Alta4Ever, you have hit the point.

A small government tax change can affect how people perceive the future compared to the present. The difference only appears if someone saves. (This is not an argument in favour of saving. IMV, young people should consume life now, not save it for when they are old and tired.)

Rather, the issue is how best to make the choice between enjoying life now and enjoying life later. Our current tax system distorts this choice and encourages people to spend now.

TFSAs correct this distortion. They make it a little more clear how powerful a little bit of savings can be.

Edited March 1, 2008 by August1991

[Alta4ever]

Exactly. Alta4Ever, you have hit the point.

A small government tax change can affect how people perceive the future compared to the present. The difference only appears if someone saves. (This is not an argument in favour of saving. IMV, young people should consume life now, not save it for when they are old and tired.)

Rather, the issue is how best to make the choice between enjoying life now and enjoying life later. Our current tax system distorts this choice and encourages people to spend now.

TFSAs correct this distortion. They make it a little more clear how powerful a little bit of savings can be.

Lets see how many can actually forget the political rhetoric of the media and actually think about this.

As for the Dippers out there, this is even better for those who think that will retire only on OIS and CPP as there will be no claw back from income from one of these accounts. That claw back exists on incomes taken from RRSP's and other retirment income vehicles.

[Topaz]

Question is WHO are the people that are going to be ABLE to use this? Over on Yahoo.ca , they asked a question about RRSP's and why they weren't going to contribute, 73% said they couldn't afford it. So, I can't see many people using this unless, they have the extra money would be the upper middle class, the very rich or the very young who don't have added debt. I heard someone say this was the government way of making up for the Income Trust to the older people.

[jdobbin]

A small government tax change can affect how people perceive the future compared to the present. The difference only appears if someone saves. (This is not an argument in favour of saving. IMV, young people should consume life now, not save it for when they are old and tired.)

Rather, the issue is how best to make the choice between enjoying life now and enjoying life later. Our current tax system distorts this choice and encourages people to spend now.

TFSAs correct this distortion. They make it a little more clear how powerful a little bit of savings can be.

Why correct the distortion at all? And how is it better than a basic income tax deduction?

[Alta4ever]

Question is WHO are the people that are going to be ABLE to use this? Over on Yahoo.ca , they asked a question about RRSP's and why they weren't going to contribute, 73% said they couldn't afford it. So, I can't see many people using this unless, they have the extra money would be the upper middle class, the very rich or the very young who don't have added debt. I heard someone say this was the government way of making up for the Income Trust to the older people.

The people who say they can't afford to save anything are the ones who don't want to. When I worked in the financial industry I got sick of dealing with people who would refuse to put money away, even though I could show them how to restructure their debt, and expenses to free up money to invest without impacting their lifestyle. It was just laziness. Everone one can afford to save a little, they just may not be able to max out the program. This doesn't really help the older generation as the younger because they do not have the time for the compunding interest to work for them.

EVERYBODY IS ABLE TO USE THIS, it is just a matter if people choose to.

If you don't beleive me I challenge you to find an investing firm with certified financial planners. They will show you how to do what I described. They usually do not ask for a payment up front, they get a commision from the investements you purchase

over time.

[socred]

On balance, with an income tax, people spend too much now and save too little. That's costly for an economy.

"The persistence of the idea that monetary saving has a physical counterpart in physical accumulation will no doubt exercise the attention of historians of the present period. Since money is normally distributable only through the agency of wages, salaries and dividends, it being assumed that the interest on Government loans is provided by taxation, the whole of these wages, salaries and dividends must have appeared in the cost, and consequently in the price of articles produced. It does not appear to need any elaborate demonstration to see that any saving of these wages , salaries and dividends means that a proportion of the goods in the prices of which they appear must remain unsold within the credit area in which they are produced and are therefore, in the economic sense wasted. The investment of the funds so saved means the reappearance of the same sum of money in a fresh set of prices, so that on each occasion that a given sum of money is reinvested, a fresh set of price values is created without the creation of fresh purchasing power." (C.H. Douglas, evidence submitted before the MacMillan Committe on Finance and Industry reprined in The Monopoly of Credit 4th edition page 143-144)

Edited March 1, 2008 by socred

[Keepitsimple]

There are many ways that the Savings Accounts can help ordinary people. The young couple who want to save for a good down payment on a house. They can now make a very viable plan and be pretty sure that they can meet their goal. How about income-challenged people who put away $50 a month and maybe save up for a used car. TFSA's can help people become goal oriented. A simple straight forward plan.

[Pat Coghlan]

It's not a gimmick and you should know that the Toronto Star is more partisan than it is honest.

Well, it's just that there's far to much *fiddling* with the tax system. We've seen it all in the past 30 years. Income averaging. Forward averaging. $100K tax-free capital gains. Scheduled RRSP limits frozen/unfrozen. Pension reform. Etc.

Don't get me wrong. I like the idea of tax-free returns, but I expect that one year some (Liberal) study will show that only the wealthiest 10% of Canadians make significant use of them and they'll be cancelled as well.

I'm still waiting for one reform that would never be cancelled, namely, taxation of family - vs individual - income.

[mcqueen625]

The vast majority of Canadians do not contribute to RRSP's, and during a recent poll conducted by Yahoo.ca the question asked was; "Why do most Canadians not contribute to RRSP's?" The answer given by 75% of the respondents should be no surprise to anyone, it was; "They cannot afford to."

Now we have the feds coming up with another plan to get Canadians to save their money, but guess what, if Canadians can't afford to contribute to RRSP's. where does the government think they are going to come up with money to set aside in a savings account, registered or otherwise? Most Canadians are in the situation where after paying for a roof over their heads, the ever increasing utility bills, transportation costs going through the roof, etc., etc., there is very little money left to even put decent food on the table, let alone thinking about the impossibility of contributing to an RRSP, or to a registered savings account.

This is just another way to allow the affluent, who do not have to worry about how they are going to put enough food on their tables, to salt away even more tax-free money. Could it be that this is a the result of lobbying efforts from the chartered banks to further build their assets, and therefore be able to reward their shareholders with higher dividends? Let's not forget those poor underpaid bank CEO's who clamor for their yearly bonuses, bonuses I might add are thousands of times greater than most Canadians make working 40 + hours a week.

[August1991]

The vast majority of Canadians do not contribute to RRSP's, and during a recent poll conducted by Yahoo.ca the question asked was; "Why do most Canadians not contribute to RRSP's?" The answer given by 75% of the respondents should be no surprise to anyone, it was; "They cannot afford to."

Huh?

Not only are many Canadians planning for their retirement, they are actively saving too. A record number now have RRSPs – 68%, up from 57% just five years ago. Among the younger age group of 18-34 year olds, a surprisingly large 62% are RRSP holders – up from 44% five years ago. Further, more Canadians are factoring in retirement savings as part of their budget, with 34% contributing through a monthly or quarterly plan – up from 29% in 2003.

Link

[Wilber]

This is just another way to allow the affluent, who do not have to worry about how they are going to put enough food on their tables, to salt away even more tax-free money. Could it be that this is a the result of lobbying efforts from the chartered banks to further build their assets, and therefore be able to reward their shareholders with higher dividends? Let's not forget those poor underpaid bank CEO's who clamor for their yearly bonuses, bonuses I might add are thousands of times greater than most Canadians make working 40 + hours a week.

It's not targeted at the affluent, that's why the yearly limit is $5000. If they really wanted to benefit the affluent, they would have increased the exemption because that would have reduced the taxable incomes of those in the highest tax bracket.

[jdobbin]

Huh?

The figures on RRSP should be broken down into how many buy RRSPs every year and how many hold RRSPs in general. There is a difference.

One thing that comes across in data consistently is that people don't contribute to their max because they can't afford it.

It is one reason I think that the better tax cut was an income tax cut.

[August1991]

The figures on RRSP should be broken down into how many buy RRSPs every year and how many hold RRSPs in general. There is a difference.

One thing that comes across in data consistently is that people don't contribute to their max because they can't afford it.

It is one reason I think that the better tax cut was an income tax cut.

Of course a tax cut would be good but everyone in Canada seems to be convinced that a federal budget deficit would be an economic disaster, signal financial incompetence and mean the end of life as we know it.

The government could cut spending and cut taxes but then all the Leftwingers would scream and yell about how Stephen Harper is a heartless neo-con fanatic. In a minority government, Harper doesn't need the aggravation - not now anyway.

And all of this is has little or nothing to do with a TFSA.

----

Government policies, tax policies in particular, should distort as little as possible the decisions people make. Income tax creates a large and major distortion because it makes future consumption (current saving) appear to be more expensive than it is in fact and as a result, people are inclined to consume now rather than save and consume later. There are several solutions to this distortion. GST and RRSPs are examples. TFSAs are another solution and they are appropriate for small savers who want ready access to their savings.

This particular TFSA has a few added bonuses. For example, they will cost the government little now but this will grow in the future. For political reasons, no future government will be able to raise these taxes. This is a smart way to cut taxes. It corrects a distortion and the tax cut is permanent and growing.

As to your quibble about breaking down RRSP data, if 62% of people between 18 and 34 have RRSPs, then I think it's fair to say that it's a broad-based instrument. A very high percentage of Canadians are going to enquire about TFSAs and many will use them as a way to save.

Dobbin, I think what disturbs you is that in all his years in power, Chretien never got around to creating TFSAs. (Why? I offered a reason in the OP but it comes down to the idea that Liberals like Chretien are paternalistic and felt that "little Canadians" didn't need this kind of complexity. Liberals are tax-and-spend since they know better how to spend our money.)

TFSAs will be a popular Harper/Flaherty legacy and that makes partisan Liberals like the Toronto Star jealous.

Edited March 2, 2008 by August1991

[msj]

It's not targeted at the affluent, that's why the yearly limit is $5000. If they really wanted to benefit the affluent, they would have increased the exemption because that would have reduced the taxable incomes of those in the highest tax bracket.

Just because you think it is not being targeted at the affluent doesn't mean that they are not going to be the primary beneficiaries.

The single mom who saves $50/mo in a TFSA will not have to pay tax on ~$6,338 in investment return over 20 years of contributions (using a 4% investment rate and inflation is ignored for simplicity).

My wife and I, OTOH, can each put $11,500 into a RRSP to create the $5,000 in tax savings to put into a TFSA over the next 20 years.

The benefit to us? ~$48,900 each in tax free investment returns assuming the 4% rate of return and no inflation for simplicity.

Of course this is a huge benefit for those who are able to save (which tends to be people who make more money).

Before, I was reliant upon RRSP's and my small business corporation to defer taxes. Now I have another way to save without paying tax (well, I pay tax first in order to have the money to make the contribution to the TFSA but then I don't pay any tax after that).

That $48,900 each in sheltered income will likely save us ~$19-21k in tax (each) which is much more substantial than the few hundreds of dollars the single mom will save.

So, thank you single moms out there: while you're struggling to save $50/mo to save a few hundred dollars in taxes over 20 years, my wife and I will max out our RRSP's, use my CCPC appropriately to minimize taxes, and will max out the TFSA to defer and/or save hundreds of thousands of dollars over the same period of time.

But, hey, we make more money, pay more tax, so we deserve another tax break.

Note sarcasm here - I would have preferred an increase in the basic exemption, an increase to the CTB claw back thresh holds and to CTB benefits, and some kind of adjustment to the GIS pension system - these would have benefited poorer people much more than the TFSA gimmick.

[socred]

Of course a tax cut would be good but everyone in Canada seems to be convinced that a federal budget deficit would be an economic disaster, signal financial incompetence and mean the end of life as we know it.

The government could cut spending and cut taxes but then all the Leftwingers would scream and yell about how Stephen Harper is a heartless neo-con fanatic.

And all of this is has little or nothing to do with a TFSA.

----

Government policies, tax policies in particular, should distort as little as possible the decisions people make. Income tax creates a large and major distortion because it makes future consumption (current saving) appear to be more expensive than it is in fact and as a result, people are inclined to consume now rather than save and consume later. There are several solutions to this distortion. GST and RRSPs are examples. TFSAs are another solution and they are appropriate for small savers who want ready access to their savings.

This particular TFSA has a few added bonuses. For example, they will cost the government little now but this will grow in the future. For political reasons, no future government will be able to raise these taxes. This is a smart way to cut taxes. It corrects a distortion and the tax cut is permanent and growing.

Why would you want people to "consume later"? What benefit to the economy is it if people "consume later"? This of course means that the goods and services which the people created remain unsold, since the income disbursed to people through the production process is costed into the goods and services. If the same people stop spending their income, then those costs cannot be defrayed. From an economic sense, this means that many of the goods and services that were created with the money that is now "saved" will be wasted.

[jdobbin]

Of course a tax cut would be good but everyone in Canada seems to be convinced that a federal budget deficit would be an economic disaster, signal financial incompetence and mean the end of life as we know it.

The government could cut spending and cut taxes but then all the Leftwingers would scream and yell about how Stephen Harper is a heartless neo-con fanatic. In a minority government, Harper doesn't need the aggravation - not now anyway.

And all of this is has little or nothing to do with a TFSA.

It does have to do with the TFSA when several analysts say that lowering the income tax would be the fairest way to deliver tax relief.

The TFSA will be an expensive policy. This has been mentioned several times. Just what are you saying? Lowering income tax creates a deficit? Creating the TFSA doesn't?

As for spending cuts, I'd settle for a government that doesn't spend like drunken sailors and keeps blowing past its estimates each year. Flaherty has no control over spending at all. Right wingers might complain that they can't cut but can't they at least hold the line? You keep saying the public doesn't want a deficit. Well, stop overspending.

----

Government policies, tax policies in particular, should distort as little as possible the decisions people make. Income tax creates a large and major distortion because it makes future consumption (current saving) appear to be more expensive than it is in fact and as a result, people are inclined to consume now rather than save and consume later. There are several solutions to this distortion. GST and RRSPs are examples. TFSAs are another solution and they are appropriate for small savers who want ready access to their savings.

This particular TFSA has a few added bonuses. For example, they will cost the government little now but this will grow in the future. For political reasons, no future government will be able to raise these taxes. This is a smart way to cut taxes. It corrects a distortion and the tax cut is permanent and growing.

As to your quibble about breaking down RRSP data, if 62% of people between 18 and 34 have RRSPs, then I think it's fair to say that it's a broad-based instrument. A very high percentage of Canadians are going to enquire about TFSAs and many will use them as a way to save.

Dobbin, I think what disturbs you is that in all his years in power, Chretien never got around to creating TFSAs. (Why? I offered a reason in the OP but it comes down to the idea that Liberals like Chretien are paternalistic and felt that "little Canadians" didn't need this kind of complexity. Liberals are tax-and-spend since they know better how to spend our money.)

TFSAs will be a popular Harper/Flaherty legacy and that makes partisan Liberals like the Toronto Star jealous.

I think TFSAs are an inferior choice to income tax cuts. Your only argument is that it will create a deficit. How?

Paternalistic is the Tories thinking that people don't need broad based tax relief. Will 38% of people be left out according to your figures? They certainly wouldn't be left out with an income tax cut.

The Tories are picking winners and losers. I thought that is what the right wing didn't want to do.

[Wilber]

Just because you think it is not being targeted at the affluent doesn't mean that they are not going to be the primary beneficiaries.

True but it will do so by helping people become affluent. I'm retired and except for my personal investments am on a fixed pension income (no indexing). I'm more into cash flow than savings and would prefer up front tax relief. In spite of that I am in favour of this program because it benefits most, young people who are trying to get ahead in life and still have the time to take maximum advantage of it.

My point was that if you raise the exemption by $5000, a person who has say $20,000 taxable at the highest rate will now have only $15,000 taxable at that rate and will benefit more than someone who's maximum taxable income is at a lower rate.

Edited March 2, 2008 by Wilber

[mcqueen625]

"The people who say they can't afford to save anything are the ones who don't want to. When I worked in the financial industry I got sick of dealing with people who would refuse to put money away, even though I could show them how to restructure their debt, and expenses to free up money to invest without impacting their lifestyle."

It's quite obvious from your condescending comments that you haven't had to visit a food bank or soup kitchen in the last little while. I do deal with these poor unfortunate people on a daily basis, and when these people say we have no money, they actually mean they have no money. Everything around us is going up in price as we speak, but unfortunately according to an article I read the only people who's income is keeping up are the upper management levels in the company, with annual increases in their wages of 14% and beyond, while those of us who are left, receive less than 4%, and that's only if they receive any raise at all. The cost of even food is going up at a level far beyond 4%, and for the unfortunates, in order for them to pay for housing, utilities, heat and phone, the only place they are able to make any deductions is on what they spend on food, everything else they either pay what the bill is or not receive the service or be able to keep a roof over their heads.

Consequently, many wind up relying on food banks or soup kitchens to supplement what they are not able to provide for themselves. More and more of our clients actually work, but minimum wage, and part-time jobs only provides so much before these people are forced to ask for help. Many employers have built their businesses around part-time employees so they won't be expected to provide benefits, and retail is the worst offender of all. Every time the minimum wage goes up the owners cut back on service and raise prices, and the cost of everything goes up, to more than claw back any raise the employees have received, it is almost like magic, watching it happening while listening to the owners cry hard times.

[Wilber]

Certainly TFSA's aren't going to help these people but neither is decreasing income taxes or increasing the exemption. I take it you are not in favour of reducing taxes in any way. Fair enough.

[Alta4ever]

Just because you think it is not being targeted at the affluent doesn't mean that they are not going to be the primary beneficiaries.

The single mom who saves $50/mo in a TFSA will not have to pay tax on ~$6,338 in investment return over 20 years of contributions (using a 4% investment rate and inflation is ignored for simplicity).

My wife and I, OTOH, can each put $11,500 into a RRSP to create the $5,000 in tax savings to put into a TFSA over the next 20 years.

The benefit to us? ~$48,900 each in tax free investment returns assuming the 4% rate of return and no inflation for simplicity.

Of course this is a huge benefit for those who are able to save (which tends to be people who make more money).

Before, I was reliant upon RRSP's and my small business corporation to defer taxes. Now I have another way to save without paying tax (well, I pay tax first in order to have the money to make the contribution to the TFSA but then I don't pay any tax after that).

That $48,900 each in sheltered income will likely save us ~$19-21k in tax (each) which is much more substantial than the few hundreds of dollars the single mom will save.

So, thank you single moms out there: while you're struggling to save $50/mo to save a few hundred dollars in taxes over 20 years, my wife and I will max out our RRSP's, use my CCPC appropriately to minimize taxes, and will max out the TFSA to defer and/or save hundreds of thousands of dollars over the same period of time.

But, hey, we make more money, pay more tax, so we deserve another tax break.

Note sarcasm here - I would have preferred an increase in the basic exemption, an increase to the CTB claw back thresh holds and to CTB benefits, and some kind of adjustment to the GIS pension system - these would have benefited poorer people much more than the TFSA gimmick.

So you would rather have that single mother who managed to put money into savings have her OAS clawed back in retirement, because she managed to save a little?

Seems to me that is penalizing her, and not right. With the TFSA, her OAS would not be clawed back, from her saving a little for retirement. This is no gimmick and will benefit all who choose to use it.

Refer back to the numbers I posted on the first page, anyone who choses not to use this will be a fool.

Everyone knows what they say about a fool and his money.

[Alta4ever]

"The people who say they can't afford to save anything are the ones who don't want to. When I worked in the financial industry I got sick of dealing with people who would refuse to put money away, even though I could show them how to restructure their debt, and expenses to free up money to invest without impacting their lifestyle."

It's quite obvious from your condescending comments that you haven't had to visit a food bank or soup kitchen in the last little while. I do deal with these poor unfortunate people on a daily basis, and when these people say we have no money, they actually mean they have no money. Everything around us is going up in price as we speak, but unfortunately according to an article I read the only people who's income is keeping up are the upper management levels in the company, with annual increases in their wages of 14% and beyond, while those of us who are left, receive less than 4%, and that's only if they receive any raise at all. The cost of even food is going up at a level far beyond 4%, and for the unfortunates, in order for them to pay for housing, utilities, heat and phone, the only place they are able to make any deductions is on what they spend on food, everything else they either pay what the bill is or not receive the service or be able to keep a roof over their heads.

Consequently, many wind up relying on food banks or soup kitchens to supplement what they are not able to provide for themselves. More and more of our clients actually work, but minimum wage, and part-time jobs only provides so much before these people are forced to ask for help. Many employers have built their businesses around part-time employees so they won't be expected to provide benefits, and retail is the worst offender of all. Every time the minimum wage goes up the owners cut back on service and raise prices, and the cost of everything goes up, to more than claw back any raise the employees have received, it is almost like magic, watching it happening while listening to the owners cry hard times.

How will a tax cut help those that hardly pay any taxes, an extra $300, or $400/year that they wouldn't have to pay in taxes would not change their standard of living. The people you are refering to aren't going to benefit from tax cuts or a savings plan. To help these people you have to look at the situation each individual is in. example geographical location, education level, social disorders, job availiblity. Budget hand outs won't help those people either. I don't pretend to know the answer to those problems, I have no idea what is really happing on the ground NB, but it obvious that what ever that the provincial government is doing there it isn't working.

When I posted the comments are refering to, I was talking about those who make $24,000/year plus.

Edited March 3, 2008 by Alta4ever

[msj]

So you would rather have that single mother who managed to put money into savings have her OAS clawed back in retirement, because she managed to save a little?

Given that the OAS claw back kicks in at ~$62,000 of net income I'm really not too worried.

Now, if you mean the GIS - sure. If she managed to save $18,338 and was 65+ years old and receiving the GIS then she would lose about $366 of the GIS.

Which I why I stated that the government could have (and still could) make changes to the GIS system that truly would benefit this person (the GIS already excludes the OAS in its calculation - why not exclude CPP too, as an example).

That would be of more benefit to this person than a TFSA.

Seems to me that is penalizing her, and not right. With the TFSA, her OAS would not be clawed back, from her saving a little for retirement. This is no gimmick and will benefit all who choose to use it.

Refer back to the numbers I posted on the first page, anyone who choses not to use this will be a fool.

Everyone knows what they say about a fool and his money.

Given that you don't know the difference between the OAS and the GIS I don't think you should be making any references to fools nor money.

[Alta4ever]

Given that the OAS claw back kicks in at ~$62,000 of net income I'm really not too worried.

Now, if you mean the GIS - sure. If she managed to save $18,338 and was 65+ years old and receiving the GIS then she would lose about $366 of the GIS.

Which I why I stated that the government could have (and still could) make changes to the GIS system that truly would benefit this person (the GIS already excludes the OAS in its calculation - why not exclude CPP too, as an example).

That would be of more benefit to this person than a TFSA.

Given that you don't know the difference between the OAS and the GIS I don't think you should be making any references to fools nor money.

Sorry used the wrong name. I do know the difference the OAS claw back starts at $60,000 of gross income, the GIS claw back is ment to keep retirees to stay in the work force longer.