"Robin Hood in Reverse"

[cybercoma]

The current system grants upto $7000 of tax credits for people who pay for daycare. This income splitting schema balances that subsidy. I think it makes the system more equitable.

This does not address the problem of daycare being unaffordable and a barrier to getting off social assistance, which is the whole purpose of the daycare program anyway. Giving tax credits to people on welfare or low income jobs does nothing. You're only subsidizing the rich and keeping those low-income earners down.

[Oleg Bach]

What a bunch of ass holes - all of them. They talk about pension reform and mention that an aging couple can have an extra 600 bucks a year. Why they can't even buy a sofa for that...It is equal to a weeks pay for a waiter in a bar that has good tippers. It's a joke..are these people so out of touch that they actually believe that 600 dollars is going to get them a vote..Lets try six grand for instance - at least that is a decent bit of cash.

The way things work right not as far as attitude in this nation regarding money...Is if you have lots of money, somehow that entitles you to more free money! And if you have little money -that entitles you to no money. It's kind of like the guy that goes out into the garden and waters the rose in bloom..rather than the one that needs the water. People like to give to the rich,mistakenly believing that there will be a pay back THERE WILL BE NO PAY BACK...How do you think our wealthy got wealthy? Certainly it was not by being kind, fair or humane.

[TimG]

This does not address the problem of daycare being unaffordable and a barrier to getting off social assistance, which is the whole purpose of the daycare program anyway.

There is no economic justification for paying $1000/month so someone can take a job that earns less than $1000/month. You are making society less efficient. Daycare only makes sense when the mother can earn more than the cost of daycare (i.e. that means that only the middle class and upper class can make effective use of daycare). The one exception would be daycare so mom can attend school. Edited April 2, 2011 by TimG

[Shady]

This is an income tax program, not a welfare program. We already have welfare programs. This is about middle class families keeping more of the money they earn.

[Oleg Bach]

There is no economic justification for paying $1000/month so someone can take a job that earns less than $1000/month. You are making society less efficient. Daycare only makes sense when the mother can earn more than the cost of daycare (i.e. that means that only the middle class and upper class can make effective use of daycare). The one exception would be daycare so mom can attend school.

.Day care is a stupid idea..seems we have liberated the mother to the point of slavery. Woman used to stay home with the kids until the banks got wise and figured out that two incomes under the guise of female freedoom - would generate larger profits for the banks...

No woman should be forced by our system to have children but not be allowed to rear them. Day Care is bull shit...none of my kids were dumped into day care - they had a mother.

Soviet style day care is now an institution in Canada. It does not grant more freedom to children - mothers - fathers or anybody..it enslaves - To drag some poor 3 year old out of bed at 6 in the morning is child abuse..and the kids in effect become instruments of deployment - child labour - There very existance guarentees jobs for useless èarly child hood educators and other losers.

[RNG]

I like it because in situations where one spouse has a "good" job and the other has an average or less job, this might be the economic incentive needed for the couple to decide to give their kids a full time parent. And nothing but good comes of that.

[msj]

Let's put it this way:

Spouse A makes $200,000 and spouse B makes $0. Federal tax savings = ~$6,500.

Spouse A makes $100,000 and Spouse B makes $0. Federal tax savings = ~$3,750.

Spouse A makes $80,000 and spouse B makes $20,000. Federal tax savings = ~$1,470.

Spouse A makes $60,000 and spouse B makes $40,000. Federal tax savings = ~$70.

Some rough calculations based on 2010 tax rates and tax brackets.

edited to add the $100,000/$0 option as requested.

Edited April 2, 2011 by msj

[TimG]

Let's put it this way:

It is deceptive to list only 1/2 the story. Total tax not including childcare:

200/0: $65972

100/0: $23083

80/20: $19025

60/40: $17280

So the family with a 60/40 income split is already paying $5000 less in taxes than a family with a 100/0 split. I don't know why you excluded the 100/0 split from your list.

If you include the daycare deduction which is ONLY available to families with two incomes the difference is event larger.

Edited April 2, 2011 by TimG

[msj]

It is deceptive to list only 1/2 the story. Total tax not including childcare:

200/0: $65972

100/0: $23083

80/20: $19025

60/40: $17280

So the family with a 60/40 income split is already paying $5000 less in taxes than a family with a 100/0 split. I don't know why you excluded the 100/0 split from your list.

If you include the daycare deduction which is ONLY available to families with two incomes the difference is event larger.

Yes, I should have been clearer: I was only pointing out the federal tax savings (i.e. the difference in federal tax between the current system and the proposed system).

As for your own numbers - well, you're including provincial taxes and that should not be included since we are only talking about a change at the federal level.

For example, a couple at $200,000/$0 income is paying $44,929 of federal tax. If they had a kid and the new rules went into effect they would pay about $38,562 in federal tax for a saving of $6,367.

I don't bother worrying about daycare expense deductions etc... in order to keep everything simple and to avoid the arguments that having two people working incurs more costs yadda yadda yadda... (it does, generally, and more economic activity too - so no surprise government's generally support two working spouses but that is an unnecessary tangent).

So, to be clear: assuming only taxable income of what I mentioned above, and applying only the basic personal amount/eligible dependent as the tax credit(s) (where applicable) the savings are as mentioned.

As for Federal/Provincial - the provinces do not have to follow the Feds lead on this. If this went through at the Federal level any province could disagree and override this tax break (i.e. so only federal taxes are cut but no change to provincial rates).

Just because the provinces rolled over on the senior income splitting doesn't mean they would do the same for other forms of splitting.

Edited April 2, 2011 by msj

[TimG]

Yes, I should have been clearer: I was only pointing out the federal tax savings (i.e. the difference in federal tax between the current system and the proposed system).

But to evaluate that difference one must look at the total tax paid - not the difference. The problem is the current tax system is unfair to single income families. What you call a 'tax savings' only closes the gap between single income families and two income families with the same family income. Edited April 2, 2011 by TimG

[msj]

But to evaluate that difference one must look at the total tax paid - not the difference. The problem is the current tax system is unfair to single income families. What you call a 'tax savings' only closes the gap between single income families and two income families with the same family income.

Sure, sure.

I was only trying to give people an idea of what some of the tax savings could be based on some simple scenarios.

Next time I won't bother.

[blueblood]

Let's put it this way:

Spouse A makes $200,000 and spouse B makes $0. Federal tax savings = ~$6,500.

Spouse A makes $100,000 and Spouse B makes $0. Federal tax savings = ~$3,750.

Spouse A makes $80,000 and spouse B makes $20,000. Federal tax savings = ~$1,470.

Spouse A makes $60,000 and spouse B makes $40,000. Federal tax savings = ~$70.

Some rough calculations based on 2010 tax rates and tax brackets.

edited to add the $100,000/$0 option as requested.

Going by your numbers, it looks like the "average" 30+ year old married w/ kids couple (the family stereotype) as I call it benefits fairly significantly, even more so if the kids are day care age.

Also shows why lower income people could be bitter.

I think its all right that single income households could get this potential benefit because of the one extra dependant vs single parent families.

[msj]

Going by your numbers, it looks like the "average" 30+ year old married w/ kids couple (the family stereotype) as I call it benefits fairly significantly, even more so if the kids are day care age.

Also shows why lower income people could be bitter.

I think its all right that single income households could get this potential benefit because of the one extra dependant vs single parent families.

Well, as a childless professional couple you know that I think it stinks.

As I have stated here before: other than the TFSA (tax free savings account) and a GST cut (arguably taken back through the introduction of the HST here in BC - although I do support the HST so that's okay), Harper has given my wife and I dick and I don't vote for dick when that happens.

I'd prefer just a straight forward, and simple, tax cut.

Cut the 15% to 14% and the 22% to 21%. Maybe even the 26% to 25% and the 29% to 28%.

Is that really so hard to do?

For Mr. Stephen ``boutique tax cut guy`` Harper, apparently it is.

I have people coming to me to do their tax returns who have no business having their tax returns prepared by anyone because of all the stupid tax credits that have been introduced over the past 5 budgets.

My business model does not need government subsidy from complicating the income tax act and it is very strange to me that fiscal conservatism effectively died when Paul Martin lost in 2006.

[TimG]

Is that really so hard to do?

Academically I agree with you.

it is very strange to me that fiscal conservatism effectively died when Paul Martin lost in 2006.

It died the day Martin was elected with a minority government. The only virtue that the CPC has is no matter how much it spends the other guys will spend even more.

[msj]

It died the day Martin was elected with a minority government. The only virtue that the CPC has is no matter how much it spends the other guys will spend even more.

I don`t think that is necessarily true.

Iggnatief doesn`t scare me as much as you CPC supporters hope he would.

[TimG]

Iggnatief doesn`t scare me as much as you CPC supporters hope he would.

I was not trying to scare - simply stating the facts as I see them. The one virtue that Iggnatief has is he is willing to raise taxes to pay for his promises, however, I suspect he will find the corporate tax increase will generate a lot less revenue than he expects.

[blueblood]

Well, as a childless professional couple you know that I think it stinks.

As I have stated here before: other than the TFSA (tax free savings account) and a GST cut (arguably taken back through the introduction of the HST here in BC - although I do support the HST so that's okay), Harper has given my wife and I dick and I don't vote for dick when that happens.

I'd prefer just a straight forward, and simple, tax cut.

Cut the 15% to 14% and the 22% to 21%. Maybe even the 26% to 25% and the 29% to 28%.

Is that really so hard to do?

For Mr. Stephen ``boutique tax cut guy`` Harper, apparently it is.

I have people coming to me to do their tax returns who have no business having their tax returns prepared by anyone because of all the stupid tax credits that have been introduced over the past 5 budgets.

My business model does not need government subsidy from complicating the income tax act and it is very strange to me that fiscal conservatism effectively died when Paul Martin lost in 2006.

My theory on these boutique tax cuts and ill ask your opinion on this is that these are related to the same policy of walmart regarding refunds. I think the feds by over-complicating the tax system are hoping that thode little perks here and there get overlooked and people don't bother chasing those tax credits. I know that's a strategy with walmart to offer good refunds knowing a lot of people don't bother exercising them if they buy a faulty product. He's trying to do tax cuts as cheaply as possible.

The tfsa I find to be beneficial.

I like the corporate tax cuts as it potentially indirectly benefits me as a shareholder and somebody who spends money on farm inputs.

I am of the belief that x amt of the economy gets taxed. That means I think you have to go across the board and whittle down taxes (income and consumption). I try and let my company own as much assets as possible, in some cases its a write off, in some cases it isn't. Also use the visa as much as possible to ease things up on the personal income tax side. In toba its 12% small business income tax vs. The much higher personal income tax if I decide to hansdsomely compensate myself.

Ill give the harper govt a pass on spending due to the minority situation and that he has to buy votes. I don't know how much of it was martin or how much the bond market had in spooking him. I also think martin had the spending spigot wide open in the twilight of the liberal era. I can't vote liberal just because trudeau completely ruined the brand with his nonsense, even though martin did a bang up job with manning essentially giving him a free pass.

Edited April 3, 2011 by blueblood

[msj]

My theory on these boutique tax cuts and ill ask your opinion on this is that these are related to the same policy of walmart regarding refunds. I think the feds by over-complicating the tax system are hoping that thode little perks here and there get overlooked and people don't bother chasing those tax credits. I know that's a strategy with walmart to offer good refunds knowing a lot of people don't bother exercising them if they buy a faulty product. He's trying to do tax cuts as cheaply as possible.

No, people go to H&R Block and even to full service accounting firms like mine to get their taxes done.

Then these people become further divorced from their tax reality since they don`t even complete their own tax returns and are paying someone else to do it to. They may look at their total tax bill for the year but then are pleased because they gave the government an interest free loan for the past year (i.e. are getting a refund).

Even people who don't pay any tax want to file a tax return for their HST rebate and, in BC, their carbon tax rebate. Not to mention to have the tax return filed to get their subsidy on Medical Service Plan premiums.

Or they get the GIS (guaranteed income supplement) so they "need" a professional to do their tax return.

Sure, I take the money if they are willing to pay it - I`m not stupid.

But is this the type of tax system we want?

Edited April 3, 2011 by msj

[RNG]

The only answer is Fair Tax or equivalent.

[Oleg Bach]

The only answer is Fair Tax or equivalent.

For instance - merchants are taxed on the market value of their buisness...mean while the tax is so high that the merchants can not even buy their own buisness...so in eccense there is no market value if there is no market...Taxing should be adjusted to a rate where people can work hard and eventually free themselves finacially from the sytem. If this freedom can not be achieved then there is a problem with taxing - taxing is not supposed to damage a society..It is supposed to make the social order flourish.

[blueblood]

No, people go to H&R Block and even to full service accounting firms like mine to get their taxes done.

Then these people become further divorced from their tax reality since they don`t even complete their own tax returns and are paying someone else to do it to. They may look at their total tax bill for the year but then are pleased because they gave the government an interest free loan for the past year (i.e. are getting a refund).

Even people who don't pay any tax want to file a tax return for their HST rebate and, in BC, their carbon tax rebate. Not to mention to have the tax return filed to get their subsidy on Medical Service Plan premiums.

Or they get the GIS (guaranteed income supplement) so they "need" a professional to do their tax return.

Sure, I take the money if they are willing to pay it - I`m not stupid.

But is this the type of tax system we want?

I'm not a fan of it. I can see where the tories are offering tax cuts at little cost as possible to the piggy bank. I am a flat tax person, but I am also greedy.

What do you figure the percentage of the population makes the effort to use yours/h+r block's services?

[ToadBrother]

...I can't vote liberal just because trudeau completely ruined the brand with his nonsense, even though martin did a bang up job with manning essentially giving him a free pass.

You can't vote for a party because of a former leader that left the post almost 30 years ago and who is, in fact, now six feet under?

I'm not saying you should vote Liberal (heaven knows there are enough legitimate reasons not to), but to say "I'll never vote for those guys because a leader from their camp did stuff three or four decades ago..." seems a tad, I dunno, irrational.

[msj]

I'm not a fan of it. I can see where the tories are offering tax cuts at little cost as possible to the piggy bank. I am a flat tax person, but I am also greedy.

What do you figure the percentage of the population makes the effort to use yours/h+r block's services?

Well, in 2009 53% of income tax returns were filed by tax preparers and 47% were self-prepared. Link.

Even most of those self-prepared tax returns required the use of a computer program.

Sure, computer do make us more productive and can make it easier to do things like file a tax return, but people are using them (or the government is make things more complicated) because of computers and people's willingness to shell out money for tax preparers.

[blueblood]

You can't vote for a party because of a former leader that left the post almost 30 years ago and who is, in fact, now six feet under?

I'm not saying you should vote Liberal (heaven knows there are enough legitimate reasons not to), but to say "I'll never vote for those guys because a leader from their camp did stuff three or four decades ago..." seems a tad, I dunno, irrational.

Don't worry, their slate of leaders after martin don't appeal to me, and I don't see any business types front and centre in that party. Is mccallum gone or is he muzzled? Losing manley I think hurt them significantly.

As for trudeau, its all about branding. If a brand is tainted people will avoid it like the plague. Its like the tory brand in urban canada, whether their policies help urban canada is up for debate, but if the brand is tarnished, that's a huge problem. The current liberals also won't apologize for his nonsense.

I would wonder if the liberals would be better off creating a spin off party for western canada and not run candidates against this new party. That new party would be subordinate to the lpc of course.

[blueblood]

Well, in 2009 53% of income tax returns were filed by tax preparers and 47% were self-prepared. Link.

Even most of those self-prepared tax returns required the use of a computer program.

Sure, computer do make us more productive and can make it easier to do things like file a tax return, but people are using them (or the government is make things more complicated) because of computers and people's willingness to shell out money for tax preparers.

My question is how much of that 47% are able to get all of the refund they are entitled to under the current tax system?

If they skip out on some of the deductions, the govt is laughing.