Justin Trudeau & Red China

[Guest Derek L]

Icebound already explained it adequately. You are playing semantic games. You pay $550, the party gets $1000. The $450 comes from other taxpayers.

I think you've mixed up the order.......I pay $1000, the party gets $1000 and I get a reduction of my tax bill of $450....big difference.

[Bonam]

I think you've mixed up the order.......I pay $1000, the party gets $1000 and I get a reduction of my tax bill of $450....big difference.

The order doesn't matter, what matters is how it all adds up.

Let's say everyone is at 0 before the transaction occurs:

You have $0

The Party has $0

The Taxpayer has $0

After your donation and your tax credit, here's the balances:

You have -550

The Party has +1000

The Taxpayer has -450

Clear enough?

Edited December 11, 2013 by Bonam

[Guest Derek L]

The order doesn't matter, what matters is how it all adds up.

Let's say everyone is at 0 before the transaction occurs:

You have $0

The CPC has $0

The Taxpayer has $0

After your donation and your tax credit, here's the balances:

You have -550

The CPC has +1000

The Taxpayer has -450

Clear enough?

No it's not........since taxpayers don't start at zero.........The "taxpayer" isn't giving me anything, I'm just paying $450 less to Revenue Canada when I file my taxes in the Spring, the CPC has nothing to do with this portion of the transaction.

[Icebound]

No it's not........since taxpayers don't start at zero.........The "taxpayer" isn't giving me anything, I'm just paying $450 less to Revenue Canada when I file my taxes in the Spring, the CPC has nothing to do with this portion of the transaction.

Oh, but it does.

You are simply a pass-through. The $450 that you "saved" was passed through to the CPC. You sent it to them as part of the $1000.

Only $550 of that $1000 was your own money.

$450 of it was "passed-through" you, from the government of Canada (the taxpayers).

The final result is that the CPC has $1000, but only $550 of it is your own money, and the other $450 is the tax credit which you received, which you in turn passed on to the CPC together with your own $550.

Edited December 11, 2013 by Icebound

[Guest Derek L]

Oh, but it does.

You are simply a pass-through. The $450 that you "saved" was passed through to the CPC. You sent it to them as part of the $1000.

Only $550 of that $1000 was your own money.

$450 of it was "passed-through" you, from the government of Canada (the taxpayers).

The final result is that the CPC has $1000, but only $550 of it is your own money, and the other $450 is the tax credit which you received, which you in turn passed on to the CPC together with your own $550.

Are you old enough to pay taxes and understand how tax credits work?

Let’s say I make my donation of $1000 today……Once the payment is processed, the CPC receive $1000 from me………Months later, I file my taxes, tabulate the egregious sum owed to the Government, then subtract $450.……..

There is no “pass through” since Revenue Canada (or the “taxpayers”) has never had their mitts on the $450 sitting in my bank account since a tax credit is a deduction from tax already owed.

[cybercoma]

No it's not........since taxpayers don't start at zero.........The "taxpayer" isn't giving me anything, I'm just paying $450 less to Revenue Canada when I file my taxes in the Spring, the CPC has nothing to do with this portion of the transaction.

$450 that would have gone into general revenues. $450 that needs to be made up by other taxpayers who don't donate to a political party.

[cybercoma]

Are you old enough to pay taxes and understand how tax credits work?

Let’s say I make my donation of $1000 today……Once the payment is processed, the CPC receive $1000 from me………Months later, I file my taxes, tabulate the egregious sum owed to the Government, then subtract $450.……..

There is no “pass through” since Revenue Canada (or the “taxpayers”) has never had their mitts on the $450 sitting in my bank account since a tax credit is a deduction from tax already owed.

You pay $1000 to the party now, then the government reduces your taxes by $450. In other words, that $450 was general revenues the government would have otherwise had, except that you paid it earlier in the year directly to a political party instead of the federal government. Since it's money that would have otherwise been in general revenue, this is effectively the same as the federal government transferring $450 to your party. The government forgoes $450 from your taxes, so that you can pay it to your party of choice instead. This is money that would otherwise go to the federal government.

Do you understand now why it's the federal government's money? If you don't donate, it's not your money to keep. It would go to the federal government as part of general revenues.

[TimG]

Since it's money that would have otherwise been in general revenue, this is effectively the same as the federal government transferring $450 to your party.

Not that simple since taxation rules are pretty arbitrary. For example, the government foregoes revenue by taxing the middle class less than the rich. Does that mean that the middle class is being subsidized? The government allows companies deduct the cost of wages before calculating profit. Does that mean that everyone earning a wage is subsidized? You get a tax deduction for hiring a nanny but not by paying your spouse to the exactly the same job. Is that a subsidy to day cares?

Tax policy is set for a variety of social and economic issues and no practical tax system can treat all income as absolutely equal. It makes no sense to claim that every tax deductions is a "subsidy" from the government. The only subsidies are monies being actually given to people or companies.

Edited December 11, 2013 by TimG

[Guest Derek L]

Tax policy is set for a variety of social and economic issues and no practical tax system can treat all income as absolutely equal. It makes no sense to claim that every tax deductions is a "subsidy" from the government. The only subsidies are monies being actually given to people or companies.

Exactly, but if one is so preconditioned to believe that all wealth belongs to the State, then that would be a justifiable viewpoint.

[cybercoma]

Not that simple since taxation rules are pretty arbitrary.

Why don't you just go ahead and withhold $450 in the spring and let me know how arbitrary it is.

[cybercoma]

Exactly, but if one is so preconditioned to believe that all wealth belongs to the State, then that would be a justifiable viewpoint.

If you didn't donate to the party, where would the money go? Tell me.

[Guest Derek L]

Do you understand now why it's the federal government's money? If you don't donate, it's not your money to keep. It would go to the federal government as part of general revenues.

Nope. Your thinking might have some validity when applied to tax deductions associated with a restructured mortgage via the “Smith Manoeuvre”…..but even then…..It’s not your money, nor the State’s money.

[Guest Derek L]

If you didn't donate to the party, where would the money go? Tell me.

A TFSA for one my children.

[cybercoma]

A TFSA for one my children.

Don't be fatuous, Derek. A smart person would have maxed out their TFSA and RRSPs already. Otherwise, you're not maximizing your tax deductions.

Ceteris paribus, if you don't make that donation to the political party, your taxes are $450 greater. The money goes to the government instead of the party. It's not your money to keep. You either owe it to the government or you pay it to a political party.

You know exactly what people are saying here and now you're being ridiculous.

[Guest Derek L]

Don't be fatuous, Derek. A smart person would have maxed out their TFSA and RRSPs already. Otherwise, you're not maximizing your tax deductions.

I'm not being fatuous.......TFSA are great vehicles for your kids/family members, especially when gifting stock and the implications on capital gains………Perhaps I shouldn’t have said my children, but a rotten nephew that I only like slightly better then the CRA….

Ceteris paribus, if you don't make that donation to the political party, your taxes are $450 greater. The money goes to the government instead of the party. It's not your money to keep. You either owe it to the government or you pay it to a political party.

You know exactly what people are saying here and now you're being ridiculous.

Wow Latin.......tell me this, how do use that $450 tax credit on a political donation within the same tax year?

Are you predicating on said $450 tax credit being used to finance a political donation in a later tax year? Clearly all things are not equal then, since there is no guarantee that an individual would.

[PIK]

Agreed. The US apparently locks up more people than communist China. My reference to Texas was to do with an exercise, if I can call it that, that the state did were they took a portion of their budget they usually spend on jails and put it into crime prevention programs, many of them targeting young people to convince them to leave illicit drugs alone. I don't have the actual results at my fingertips at the moment but as I recall the returns on investment were significant. So, less people in jail, less cost to taxpayer. A win/win it seems to me. I;m certainly not suggesting we fashion our criminal system after any state, but I do believe that preventing crime where we can makes more sense than just building more cells to throw people in after the fact.

LOL And you believe that crap, china itself probably has no idea how many people that they have locked up. Edited December 11, 2013 by PIK

[cybercoma]

If you make over a particular amount of money on self employment, you're required to make income tax instalments throughout the year. In fact, that's why you get a tax return because you're actually paying your taxes in the tax year and getting a return over what you overpaid the following year. I'm not sure what's so difficult for you to understand here. All things being equal, meaning you don't then take your money you were going to donate and apply for another tax credit somehow (e.g., TFSA, RRSP), that $450/$1000 was either going to the government in the form of taxes or going to the political party. In other words, the government allowed you to give your taxes to the party instead. It doesn't matter what happens in following years or what you do with your $1000 instead. What matters is that those $450 were going into government revenue before you gave it to the CPC. In other words, the government gave $450 in taxpayers money to the CPC through you. That's exactly what people have said here and now you're just trying to be cute.

[Icebound]

Not that simple since taxation rules are pretty arbitrary. For example, the government foregoes revenue by taxing the middle class less than the rich. Does that mean that the middle class is being subsidized? The government allows companies deduct the cost of wages before calculating profit. Does that mean that everyone earning a wage is subsidized? You get a tax deduction for hiring a nanny but not by paying your spouse to the exactly the same job. Is that a subsidy to day cares?

Tax policy is set for a variety of social and economic issues and no practical tax system can treat all income as absolutely equal. It makes no sense to claim that every tax deductions is a "subsidy" from the government. The only subsidies are monies being actually given to people or companies.

Now we are into semantics.

Whether it is a "subsidy", or whether it is a "tax deduction", or whether it is a "tax incentive", or whether it is a "tax credit", the result is the same:

Which is: ... that the government of Canada... representing the whole of Canadian taxpayers ... has a reduced amount of money in its coffers.

Where has that money gone?

In the case of a political donation:..... (Derek giving $1000 to the party of his choice)... the situation is thus: He ends up being out-of-pocket exactly $550 AFTER he gets his credit.

The taxpayers are out $450, because they sent Derek the credit. But the political party has $1000. Derek didn't give them $1000, he is out-of-pocket only $550. So no matter how you want to describe it, the extra $450 came from a reduction in the taxpayer's (Canada's) revenue, transferred eventually (via Derek's bank account) to the political party.

SO... if we want to be fair and cut the per-vote subsidy to political parties, we should also cut this donations credit. Then Derek can send any amount he wants, and he will be out-of-pocket for all of it.

Derek should be looking at this another way.... when I send $1000 to the party of MY choice, I am out-of-pocket only $550. HE and his fellow taxpayers are footing the other $450 for MY party of choice.

[Icebound]

..., if you don't make that donation to the political party, your taxes are $450 greater. The money goes to the government instead of the party. It's not your money to keep. You either owe it to the government or you pay it to a political party.

This debate shows a wonderful example of how our governments and our lawyers and our political parties like to obfuscate the facts with language.

The tax form says "Derek donated $1000 to the political party"..... He didn't donate $1000, He is out of pocket $550. THAT is what HE donated.

The tax system says "We will give him a tax credit of $450".... The tax system gives him NOTHING. Derek doesn't get that tax credit. He has already sent it off to the political party hidden in that $1000 cheque. If he had not sent it off to the party, he would never have gotten it in the first place. He got N-O-O-TH-I-I-NG.

The political party says: "We got a $1000 from Derek". Well, at least the cheque came from Derek. But what were the components in that cheque? Which parties are out-of-pocket to make up that $1000 cheque? And each of the parties are out-of-pocket how much?

..

[TimG]

Which is: ... that the government of Canada... representing the whole of Canadian taxpayers ... has a reduced amount of money in its coffers.

So you are agreeing that the middle class are subsidized since the middle income tax rates are lower? After all if the government only taxed the middle class more it would have more revenue so by your logic the middle class should be taxed more.

Also your claim that the taxpayers would have $450 more if the donation was not made is false because the donor could have chosen to spend it on any number of other things with preferential tax treatment from childcare to RRSPs to other charities.

The last part is why it cannot be called a $450 subsidy from the taxpayer because there is no money actually changing hands. Hypothetical money lost is not a subsidy.

Edited December 11, 2013 by TimG

[Icebound]

Ah, the proverbial red-herrings are starting to appear....

So you are agreeing that the middle class are subsidized since the middle income tax rates are lower? After all if the government only taxed the middle class more it would have more revenue so by your logic the middle class should be taxed more.

The "middle class" are taxpayers. If they ARE being subsidized, then they are, in part, subsidizing THEMSELVES, since it would be taxpayers money doing the subsidizing.

A Political Party is not the same kind of entity as a "middle class" taxpayer.

Also your claim that the taxpayers would have $450 more if the donation was not made is false because the donor could have chosen to spend it on any number of other things with preferential tax treatment from childcare to RRSPs to other charities.

We were not talking about what the donor "MIGHT" have done. We are talking about what he DID do: he donated "$1000" to a Political Party.

OF COURSE, if he donated $1000 to a charity, then the charity would be getting (and the taxpayers would be out) by whatever the tax credit is for donations to charities, etc., etc.

If he donated to both, the taxpayers would be out by whatever the tax credit is for both, etc. etc. etc..

But we are not talking about charities or RRSPs or anything else.

We are talking about donations to political parties.

The last part is why it cannot be called a $450 subsidy from the taxpayer because there is no money actually changing hands. Hypothetical money lost is not a subsidy.

There is ABSOLUTELY money changing hands. The political party has $1000 more than it had before. How is that "hypothetical"?

The money did not go DIRECTLY from the government to the political party... But it DID go from the government ... to the political party ... through the bank account of the "donor". The "donor" paid his own share (the $550)... and he paid the government's (taxpayers') share ($450) up front. Then he sent in an expense claim to the CRA.... we call it his tax filing. Several months later, the CRA eventually sent real money to cover his claim.... we may call it a "tax credit", but is a re-imbursement for money he has already paid to a political party on our (the taxpayers) behalf.

..

[Guest Derek L]

If you make over a particular amount of money on self employment, you're required to make income tax instalments throughout the year. In fact, that's why you get a tax return because you're actually paying your taxes in the tax year and getting a return over what you overpaid the following year. I'm not sure what's so difficult for you to understand here. All things being equal, meaning you don't then take your money you were going to donate and apply for another tax credit somehow (e.g., TFSA, RRSP), that $450/$1000 was either going to the government in the form of taxes or going to the political party. In other words, the government allowed you to give your taxes to the party instead. It doesn't matter what happens in following years or what you do with your $1000 instead. What matters is that those $450 were going into government revenue before you gave it to the CPC. In other words, the government gave $450 in taxpayers money to the CPC through you. That's exactly what people have said here and now you're just trying to be cute.

What's so difficult for you to understand........The Government doesn't "give" me or the CPC anything, I give taxes to them....big difference in thought there.

But let’s assume you’re right, well acknowledging that this is an equal income level credit as opposed to a deduction……….what is your point? Does the credit not work likewise for donations to the Liberals, Greens and NDP? What about other (charitable) organizations that donators receive credits for contributing to, are they also Government subsidized? What about tax exempt Churches? Does the Government of Canada subsidize organized religion in your view?

[Guest Derek L]

The last part is why it cannot be called a $450 subsidy from the taxpayer because there is no money actually changing hands. Hypothetical money lost is not a subsidy.

Bingo.

[Bonam]

But let’s assume you’re right, well acknowledging that this is an equal income level credit as opposed to a deduction……….what is your point? Does the credit not work likewise for donations to the Liberals, Greens and NDP? What about other (charitable) organizations that donators receive credits for contributing to, are they also Government subsidized? What about tax exempt Churches? Does the Government of Canada subsidize organized religion in your view?

Yes, the government certainly does subsidize religion organizations in exactly the same way it subsidizes political parties and charities. The question one has to ask themselves is not whether it's happening, or whether 450+550=1000 or not (which is what you have been arguing about for like 5 pages), but whether or not one agrees with these practices. You can call it a subsidy, or you can shy away from that term and call it a tax incentive, but the reality remains that the government incentivizes giving money to charities, political parties, and religious organizations.

Personally, I believe that what people donate should be their own business, and does not deserve any special tax treatment relative to any other kind of spending. If someone wants to spend their money donating to a political party rather than buying a big screen TV, that's up to them, but there's no reason the government should incentivize one choice over the other. I believe that spending money in any other part of the economy (and thus creating jobs, etc) is just as good and valid a way to spend money as giving it to charity or to a political party, and that the government has no business preferring one over another. You, apparently, believe differently. You seem to believe that the government is justified in using tax incentives to try to get people to donate to political parties, charities, and churches, rather than other ways people may have spent that same money. That's what this discussion really should have been about, rather than accounting.

Edited December 12, 2013 by Bonam

[Guest Derek L]

Personally, I believe that what people donate should be their own business, and does not deserve any special tax treatment relative to any other kind of spending. If someone wants to spend their money donating to a political party rather than buying a big screen TV, that's up to them, but there's no reason the government should incentivize one choice over the other. I believe that spending money in any other part of the economy (and thus creating jobs) is just as good and valid a way to spend money as giving it to charity or to a political party, and that the government has no business preferring one over another. You, apparently, believe differently. You seem to believe that the government is justified in using tax incentives to try to get people to donate to political parties, charities, and churches, rather than other ways people may have spent that same money. That's what this discussion really should have been about, rather than accounting.

And what would give you that apparent opinion of myself? Is it because I partake in the scheme and/or because I don’t subscribe to the mantra that Government “gives us money”…….

At the end of the day, the credits that my wife and I receive for donating annually the maximum, Federal and Provincial, political contributions is still less then 1% of our combined annual tax bill………It is a drop in the bucket, that I’d gladly trade, along with all other credits, shelters and schemes, for a taste of a Federal Flat Income Tax rate.