August1991 Posted April 22 Report Share Posted April 22 Prior to 1970, only working people paid income tax. Working capital paid no tax. ====== Pierre Trudeau first imposed in 1970 a tax on working capital - at (half) 50% of the rate of working people. In 1990, Mulroney then raised the tax on working capital to (three-quarter) 75% of the tax rate of labour. (It is difficult to calculate taxes: inflation is one problem. When, how to calculate another.) In 2000, Chretien/Martin lowered the rate to 50%. Trudeau Jnr raised the rate to Mulroney's rate. Quote Link to comment Share on other sites More sharing options...
August1991 Posted April 22 Author Report Share Posted April 22 In Canada, homeowners have a tax advantage over poor renters. The capital gain of a principal residence is tax-exempt. (Hey kids! Choose a rich parent.) ===== In the US, the tax scheme is even more skewed to home buyers. 1) Mortgage payments are deductible from federal taxes 2) SALT - State and Local Taxes - are deductible from federal taxes. In Canada, this is not possible -except in Quebec. Provinces cannot use the federal authority to tax. ==== Trump changed this US federal tax system - SALT in particular. ========= Last thought: My Newfoundland grandfather once said that people who own land are better. Quote Link to comment Share on other sites More sharing options...
ExFlyer Posted April 22 Report Share Posted April 22 4 hours ago, August1991 said: In Canada, homeowners have a tax advantage over poor renters. The capital gain of a principal residence is tax-exempt. (Hey kids! Choose a rich parent.) ===== In the US, the tax scheme is even more skewed to home buyers. 1) Mortgage payments are deductible from federal taxes 2) SALT - State and Local Taxes - are deductible from federal taxes. In Canada, this is not possible -except in Quebec. Provinces cannot use the federal authority to tax. ==== Trump changed this US federal tax system - SALT in particular. ========= Last thought: My Newfoundland grandfather once said that people who own land are better. What can they do in Quebec but not anywhere else? Quote Link to comment Share on other sites More sharing options...
Nefarious Banana Posted April 22 Report Share Posted April 22 Would like to see income taxed at a flat rate. There's no incentive to work longer hours/days to better your conditions, pay off debts, etc. and have the tax man take a large proportion of your earnings. The present taxation process is a limiting factor for working men and women. Quote Link to comment Share on other sites More sharing options...
herbie Posted April 22 Report Share Posted April 22 12 hours ago, August1991 said: In Canada, homeowners have a tax advantage over poor renters. They do, but it has nothing to do with taxes. There are private fools that lease vehicles and rent furniture and appliances too and never get to own them. 6 hours ago, Nefarious Banana said: There's no incentive to work longer hours/days to better your conditions, spoken like a true tyrant (or scab). Floggings will continue until morale improves..... 1 Quote Link to comment Share on other sites More sharing options...
suds Posted April 22 Report Share Posted April 22 Generally speaking, in Canada mortgage interest is not tax deductible (unless you're renting the residence out) and there are no capital gains as long as it was your principal residence. But there are exceptions. The U.S. does the exact opposite (but again there are exceptions). It would be nice if young people buying their first home and planning on raising a family had a choice. Quote Link to comment Share on other sites More sharing options...
Aristides Posted April 22 Report Share Posted April 22 Mortgage interest on a primary residence is tax deductible in the US but they pay capital gains unless they buy another principle residence of equal or greater value. Perhaps we should be doing that to help first time buyers. Quote Link to comment Share on other sites More sharing options...
herbie Posted April 22 Report Share Posted April 22 40 minutes ago, Aristides said: Perhaps we should be doing that to help first time buyers. You'd be deducting 99% of your mortgage payments at today's home prices and interest rates.... Quote Link to comment Share on other sites More sharing options...
Nefarious Banana Posted April 22 Report Share Posted April 22 2 hours ago, herbie said: spoken like a true tyrant (or scab). Floggings will continue until morale improves..... Scab reference? Guessing you're some little man hiding in some union, afraid to work, afraid to think . . . carry on, be happy if you can. Quote Link to comment Share on other sites More sharing options...
herbie Posted April 23 Report Share Posted April 23 We don't hide. Cross a picket line and find out.... 1 Quote Link to comment Share on other sites More sharing options...
Nefarious Banana Posted April 23 Report Share Posted April 23 2 hours ago, herbie said: We don't hide. Cross a picket line and find out.... Little man hiding in a union . . . all members levelled to the lowest producing member. Paying a 'fatass' union dues' to be able to work at the level of the lowest producer union member. Oh well . . . . solidarity forever. yuck! 1 Quote Link to comment Share on other sites More sharing options...
ExFlyer Posted April 23 Report Share Posted April 23 10 hours ago, herbie said: We don't hide. Cross a picket line and find out.... You just confirmed union BS. Bully people into submission. 1 Quote Link to comment Share on other sites More sharing options...
Aristides Posted April 23 Report Share Posted April 23 (edited) 15 hours ago, herbie said: You'd be deducting 99% of your mortgage payments at today's home prices and interest rates.... You would certainly be deducting a large part of it but you would also be able to pay of a mortgage quicker and it would make it easier for first time buyers to get into a home. You could also make it optional. You could not deduct interest and sell with no capital gains tax or accept the deduction and pay tax when you sell. Edited April 23 by Aristides Quote Link to comment Share on other sites More sharing options...
Moonbox Posted April 23 Report Share Posted April 23 42 minutes ago, Aristides said: You would certainly be deducting a large part of it but you would also be able to pay of a mortgage quicker and it would make it easier for first time buyers to get into a home. If the priority is to actually make it easier for first time homebuyers to get homes, the policy needs to have a surgical focus on that. This does far more for the wealthy than it does for renters trying to break into the market, and wouldn't help them qualify. 22 minutes ago, Aristides said: You could also make it optional. You could not deduct interest and sell with no capital gains tax or accept the deduction and pay tax when you sell. It would be a devil's bargain - pay a little bit less now so you can pay orders of magnitude more later and leave nothing for your kids. You'd be crazy to take that deal. The $250,000 threshold means that 99% of people will never encounter it, outside of real-estate speculation. Real-estate speculation is something that's poisoned Canada's allocation of capital since the turn of the century, and discouraging that is good policy (IMO). The collateral damage is the real problem. Small business owners (like doctors) who want to sell their business will now either eat shit when they sell their practices, or they'll have to set up complicated, clunky and expensive succession plans where they sell the practice off over years to stay under the threshold. Dumb. Quote Link to comment Share on other sites More sharing options...
CdnFox Posted April 23 Report Share Posted April 23 17 hours ago, Aristides said: Mortgage interest on a primary residence is tax deductible in the US but they pay capital gains unless they buy another principle residence of equal or greater value. Perhaps we should be doing that to help first time buyers. It's a good idea and it would have some benefits - but probably not the ones you hope. It is impossible to help 'first time buyers' by making it easier for them to afford a home. The market ALWAYS will seek to drive prices up to the maximum amount people are willing to spend or the maximum amount people are able to afford. If you increase the amount people are willing to spend or can afford then prices go up as well. The biggest example of this is in the very late 60's when women got the right to include their income in mortgage stress tests with banks. But we saw it with the 'RRSP' first time buyer thing as well, etc. If you want to help first time buyers there's ways to do it but that's not really it. Having said that - i really do believe it would be a good idea. Quote Link to comment Share on other sites More sharing options...
suds Posted April 23 Report Share Posted April 23 1 minute ago, CdnFox said: It's a good idea and it would have some benefits - but probably not the ones you hope. It is impossible to help 'first time buyers' by making it easier for them to afford a home. The market ALWAYS will seek to drive prices up to the maximum amount people are willing to spend or the maximum amount people are able to afford. If you increase the amount people are willing to spend or can afford then prices go up as well. The biggest example of this is in the very late 60's when women got the right to include their income in mortgage stress tests with banks. But we saw it with the 'RRSP' first time buyer thing as well, etc. If you want to help first time buyers there's ways to do it but that's not really it. Having said that - i really do believe it would be a good idea. Good points! Quote Link to comment Share on other sites More sharing options...
Aristides Posted April 23 Report Share Posted April 23 46 minutes ago, Moonbox said: If the priority is to actually make it easier for first time homebuyers to get homes, the policy needs to have a surgical focus on that. This does far more for the wealthy than it does for renters trying to break into the market, and wouldn't help them qualify. It would be a devil's bargain - pay a little bit less now so you can pay orders of magnitude more later and leave nothing for your kids. You'd be crazy to take that deal. It would help people to qualify because of the increase in take-home pay could be taken into consideration. That would be a choice you would have to make. You can't leave anything to the kids if you were never able to buy a home in the first place. Quote The $250,000 threshold means that 99% of people will never encounter it, outside of real-estate speculation. Real-estate speculation is something that's poisoned Canada's allocation of capital since the turn of the century, and discouraging that is good policy (IMO). The collateral damage is the real problem. Small business owners (like doctors) who want to sell their business will now either eat shit when they sell their practices, or they'll have to set up complicated, clunky and expensive succession plans where they sell the practice off over years to stay under the threshold. Dumb. Building homes is not real estate speculation, lack of supply has driven prices up, not speculation. Increasing taxes on capital gains does not encourage people to build homes. Quote Link to comment Share on other sites More sharing options...
herbie Posted April 23 Report Share Posted April 23 Tax dollars for consumers to shovel more money to the banks? I'm sure they'd love that. Quote Link to comment Share on other sites More sharing options...
Aristides Posted April 23 Report Share Posted April 23 Just now, herbie said: Tax dollars for consumers to shovel more money to the banks? I'm sure they'd love that. Tax dollars go to government, not banks. Banks actually pay taxes. https://financialpost.com/news/election-2021/this-is-how-much-the-big-six-banks-would-have-to-pay-if-trudeaus-tax-goes-through Quote Link to comment Share on other sites More sharing options...
CdnFox Posted April 23 Report Share Posted April 23 13 minutes ago, Aristides said: Tax dollars go to government, not banks. Banks actually pay taxes. https://financialpost.com/news/election-2021/this-is-how-much-the-big-six-banks-would-have-to-pay-if-trudeaus-tax-goes-through Amusing side note is that other than other banks, the biggest owners of banks are mutual funds and pension funds. Which means those profits banks make are not going to some big fat guy with a top had and bicycle moustache smoking a stogie, they're going to average people's retirements. https://finance.yahoo.com/quote/RY/holders/ Quote Link to comment Share on other sites More sharing options...
Moonbox Posted April 23 Report Share Posted April 23 2 hours ago, Aristides said: It would help people to qualify because of the increase in take-home pay could be taken into consideration. It wouldn't, because underwriters use gross (pre-tax) income to qualify borrowers. That's true for both the lenders, and even more so for the insurers who underwrite high-ratio mortgages. 2 hours ago, Aristides said: That would be a choice you would have to make. You can't leave anything to the kids if you were never able to buy a home in the first place. It's kind of a non-choice. The math on this would be so bad that it'd be nothing but a latent tax trap that would keep lower income families perpetually poor. 2 hours ago, Aristides said: Building homes is not real estate speculation, lack of supply has driven prices up, not speculation. Unfortunately you're wrong. Lack of supply is definitely one of the biggest problems, but real-estate speculation has driven up prices dramatically as well. There was something like 1.3M vacant homes in Canada in 2022 - airbnbs, foreign students whose parents needed somewhere safe to park cash etc. 25 years ago, investment companies didn't play this game at all. Now, over 20% of purpose-built rentals are owned by large financial landlords (think REITs, fund companies etc) that make their money by turning over tenants any way they can and jacking the rents. 2 hours ago, Aristides said: Increasing taxes on capital gains does not encourage people to build homes. No, but it will discourage speculative investing. I suspect we're going to see a lot of these airbnbs etc hit the market before the new rules take effect. 1 Quote Link to comment Share on other sites More sharing options...
herbie Posted April 23 Report Share Posted April 23 Deductible mortgages encourage people to give more to banks. The tax dollars not collected are removed, gone, the same as if being spent on a balance sheet. Seeing as how the govt is YOU, directing revenue into bank profits is not a good idea and as most posters carry on so over redirection of wealth to the needy, redirecting it to the wealthy corporations is total hypocrisy. Unless of course mortgages were exclusive to a Crown corporation Bank, which they'd hate because that would be eeewww socialist. Quote Link to comment Share on other sites More sharing options...
August1991 Posted April 23 Author Report Share Posted April 23 On 4/22/2024 at 4:37 PM, herbie said: They do, but it has nothing to do with taxes. ... Disagree, Herbie. 1. Homeowners pay no tax on their rent to themselves. Renters pay to landlords with after-tax dollars. (Note: The GST does not apply to rent.) 2. Homeowners/Boomers in Toronto/Vancouver, when they sell and move to Florida/PEI, pay no tax whatsoever on their capital gain. This has not changed. At issue is their chalet/cottage/cabin sale. Or their increase in company value. Any such capital gain is now taxed at 75% of an equivalent labour income gain. I fully support this recent federal Liberal tax change. Quote Link to comment Share on other sites More sharing options...
August1991 Posted April 23 Author Report Share Posted April 23 On 4/22/2024 at 8:37 AM, ExFlyer said: What can they do in Quebec but not anywhere else? Uh, buy a Tesla? 1 Quote Link to comment Share on other sites More sharing options...
herbie Posted April 24 Report Share Posted April 24 You still don't get it... you don't pay tax on the sale of a principal residence OR on your rent, so how is ownership advantageous tax wise? You don't even have anything to sell if you're a renter. That part of tax law is fine as it is. Quote Link to comment Share on other sites More sharing options...
.thumb.jpg.9a49e1b2f22a6d34a345152c50044aa9.jpg)
Recommended Posts
Join the conversation
You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.