Budget Talk

[Riverwind]

I strongly agree with this, but full income splitting may have some negative outcomes. I really haven't crunched the numbers much, but there are some serious negative implications possible.

I see no justification for income splitting between couples with no dependents. Any adjustment to tax policy in this department should be designed to encourage people to take care of their dependents themselves instead of demanding gov't help. However, I do see a big need for some changes in this area for the reasons I mentioned above.

Especially in a labour shortage economy.

When my wife was working I was forced to work fewer hours because I had to take care of my kids. She does not work now which frees me to work many more hours. So I feel it is simplistic to assume that having one parent stay at home is worse for the economy because there is 'one less worker'. You have to take into account the additional labour that working parent (usually in a higher paying/higher skilled job) is able to do because they have a stay at home partner.

[Saturn]

Personally, I think it is absurd to allow a dual income family to deduct the cost of childcare but, at the same time, prevent a working spouse from paying the non-working spouse to provide the same service. We don't need to have complete income splitting - simplying allowing single income spouses to claim the $7000/year childcare deduction would be a big help.

Single income spoused DO claim that credit. It's called "Spouse or Common-Law Partner Amount" and it's $7500.

[Saturn]

The only beneficiaries here will be people in very stable relationships with very healthy spouses earning high income in secure positions, who wouldn't want/need to work anyway

There are many families that have much more flexible work arrangements. For example, many have a jobs which do not require a 40 hours/week. Providing a tax deduction would all these families to choose to work fewer hours in order to better care for their kids. We need policies in this country to encourage the middle class majority to take care of their own kids instead of demanding gov't subsidized daycare.

Very bright idea. Give people money to work less in an economy with labour shortages. Do you have any idea how much this is going to cost?

[Topaz]

IF Harpo was smart, which he isn't because he has the former Ontario finance minister that left a 5 BIL debt, he would target the "middle-income" voters. The rich always look after themselves and the low -income is always looked after too, but the "middle-income" always pays. Manufacturing jobs are leaving this country and what is Harpo going to do about that. Good thing there alots of money in the unemployement, because Canadians are going to need it! Can he come up with a budget better than the one Martin had??

[Riverwind]

Single income spoused DO claim that credit. It's called "Spouse or Common-Law Partner Amount" and it's $7500.

That deduction is only available if one spouse makes zero income. Two income families get a full deduction no matter what their income is.

Very bright idea. Give people money to work less in an economy with labour shortages. Do you have any idea how much this is going to cost?

I already pointed out that having one spouse stay at home allows the other spouse to work more. If the working spouse happens to have skills that the econony needs then the economy ends up with more skilled labour available - not less.

[Saturn]

Very bright idea. Give people money to work less in an economy with labour shortages. Do you have any idea how much this is going to cost?

I already pointed out that having one spouse stay at home allows the other spouse to work more. If the working spouse happens to have skills that the econony needs then the economy ends up with more skilled labour available - not less.

The economy ends up with more workers when both parents work, not when one gets to stay home. To claim that there will be more workers when you give them incentives to stay home is absurd.

[Riverwind]

The economy ends up with more workers when both parents work, not when one gets to stay home. To claim that there will be more workers when you give them incentives to stay home is absurd.

I said more productive labour - not more workers. For example, assume one parent is has skills and can can produce 100 units of production a week but the other parent can only produce 25 units of production per week. This means they can only contribute 125 units/week if they both work. However, if the less produtive parent stays home and this allows the more productive parent to work 50% more then the two can contribute 150 units/week. In other words, the economy is much better off if one parent stays home.

Your economic case are even less compelling if you add the cost of gov't subsidized childcare.

Your problem is not economics - it is prejudice. You appear to despise stay at home parents as much as some people despise same sex couples.

[geoffrey]

While I agree with Riverwind's assessment to a large degree anyways, I still think there are more effective means of reducing taxes.

Personally, I'm highly favourable to the productivity increasing flat tax concept, but outside of Alberta (the only province with a flat tax), people generally hate being productive or something, so we'll never see that. We have to look away from income equality and towards generating productivity in whatever means possible.

I don't think that Income Splitting will have any great positive impacts on productivity, it may allow highly skilled workers to work more having their less skilled spouse at home, and we'll see margin benefits there.

But none of this comes close to the huge difference a flat tax would make. Or how about a complete elimination of all corporate taxes upon small businesses. There's two good choices for productivity and economic growth in Canada... however I fear instead we'll see more of the same old and we'll remain a fading star when compared to our economic rivals.

[Saturn]

I said more productive labour - not more workers. For example, assume one parent is has skills and can can produce 100 units of production a week but the other parent can only produce 25 units of production per week. This means they can only contribute 125 units/week if they both work. However, if the less produtive parent stays home and this allows the more productive parent to work 50% more then the two can contribute 150 units/week. In other words, the economy is much better off if one parent stays home.

Let me translate: One parent earns $100K and the other $25K = $125K. If the less productive parent stays home, this would allow the more productive parent to earn $150K. If they were interested at all in having more income, they would choose the second option WITH or WITHOUT income-splitting, so the economy doesn't gain anything from income-splitting. If they wanted to maximize their income, they would put the kids in daycare for $10K and earn $165K (after daycare), with the economy having 2 workers worth $175K.

A more likely scenario than the one you propose is the following: Spouse A earns $150K, Spouse B - $40K. Income-splitting comes into effect and they decide that there is no point in working for B because their tax cut from income-splitting + daycare savings will amount to $30K and working for extra $10K just isn't worth it. The economy loses one worker worth $40K.

Your problem is not economics - it is prejudice. You appear to despise stay at home parents as much as some people despise same sex couples.

My problem is not stay at home parents because parents with small children who will benefit from income-splitting will be roughly 20-30% of the people who benefit from income-splitting and they will also benefit less than average. In reality, if you wanted to help these people, you could do it with a fraction of the money. With income-splitting, the bulk of the benefit will accrue to couples where one spouse earns an awful lot and the other doesn't need to work (and those are typically more mature families whose kids are grown up) and you'll blow a huge hole in the budget. And then there are a lot of other negative side-effects of income-splitting but I'll leave them to you to figure out.

[geoffrey]

March 19th = Budget Day.

[Saturn]

March 19th = Budget Day.

And since Harper will want to be defeated on the budget, I would not be surprised to see income-splitting in it at all. It will certainly get him a lot of votes and he doesn't have to implement it.

[geoffrey]

March 19th = Budget Day.

And since Harper will want to be defeated on the budget, I would not be surprised to see income-splitting in it at all. It will certainly get him a lot of votes and he doesn't have to implement it.

Flaherty has insisted it's chalk full of personal and corporate income tax cuts and it corrects the fiscal imbalance (I read that as more Alberta money going to Quebec, but whatever). It might be a strong budget to run on.

[Spike22]

Heard they are speeding up some of the major projects in DND to get out before the budget announcement. Look on the Merx site for the RFP for the Tactical airlift project (www.C-130J.ca )on or about 10 March.

In fact all the govenment departments are looking to burn their money before the yearly 31 March fiscal year end.

[jdobbin]

Income trusts tax to be included the budget.

http://ca.news.yahoo.com/s/reuters/070228/...nada_trusts_col

I guess this mean the Liberals could vote against it and the NDP and Bloq for the budget.

[geoffrey]

Income trusts tax to be included the budget.

Dirty move. I really don't see Jack voting for the budget though, it'd be the end of him in the eyes of most NDP supporters. Gilles will decide based on Bosclair's poll numbers.

[Saturn]

Many speculate that this is a budget that Harper wants to go down over. I wouldn't be surprised to see massive spending and tax cuts he cannot afford because you can put anything in a budget that will not be passed. Of course the more goodies you put in it, the more votes you'll get. But you still don't want to appear as an irresponsible fool (in the eyes of the business community). So it will be a balancing act but I expect massive tax cuts for corporations and some tax cuts for individuals. Whether those tax cuts (at least in part) will take the form of some type of income-splitting remains to be seen.

[Saturn]

Dirty move. I really don't see Jack voting for the budget though, it'd be the end of him in the eyes of most NDP supporters. Gilles will decide based on Bosclair's poll numbers.

I don't see Jack voting for it either but I can see Gilles declaring that it solves the fiscal imbalance and voting for it (to get out of an election when his numbers don't look good).

[Remiel]

So, what if they end up passing a potentially crippling budget because one of the opposition parties voted with it when they expected them to vote against it?

Is there an inheritent moral or ethical difference in loading up a budget you expect to pass with " goodies " and loading up a budget you don't expect to pass with " goodies " for that matter?

[Saturn]

So, what if they end up passing a potentially crippling budget because one of the opposition parties voted with it when they expected them to vote against it?

Is there an inheritent moral or ethical difference in loading up a budget you expect to pass with " goodies " and loading up a budget you don't expect to pass with " goodies " for that matter?

They know in advance how each party is going to vote. They can ensure that either there are exactly enough goodies to pass it if they want to pass it, or that there are enough MPs who disagree with it if they want it to fail.

[Topaz]

MY guess is the Conservative will talk about but won't do it because its too expensive for the whole country BUT he could give it to the ones that got hurt in the Interest Trust. There is an election coming after all and he needs all the votes he can get. When they lowered the GST, they raised taxes else where, they took 51 Billion out of the IE and they are paying for the war out of the "General" revenues.

[Wilber]

they took 51 Billion out of the IE and they are paying for the war out of the "General" revenues.

When did the present government take 51B out of EI? Link please and how else do you think they should pay for the war?

[geoffrey]

I don't see Jack voting for it either but I can see Gilles declaring that it solves the fiscal imbalance and voting for it (to get out of an election when his numbers don't look good).

If Gilles were to say that, he'd sign away the BQ to oblivion forever. He'll never admit that a Federalist government has done good for Quebec.

[Saturn]

I don't see Jack voting for it either but I can see Gilles declaring that it solves the fiscal imbalance and voting for it (to get out of an election when his numbers don't look good).

If Gilles were to say that, he'd sign away the BQ to oblivion forever. He'll never admit that a Federalist government has done good for Quebec.

He has said before that if it's good for Quebec, he will support it. Obviously, there will be a lot of goodies in the budget for Quebec. He can always say that it's a good budget for Quebec (thanks to his party's efforts in Parliament) but there is more work to be done. Or if his numbers don't look good, he'll say that the budget doesn't go far enough to solve the fiscal imbalance, so he'll vote against it. Quebeckers need to send him back to Parliament with a bigger caucus, so that he can fight for them.

[blueblood]

I don't see Jack voting for it either but I can see Gilles declaring that it solves the fiscal imbalance and voting for it (to get out of an election when his numbers don't look good).

If Gilles were to say that, he'd sign away the BQ to oblivion forever. He'll never admit that a Federalist government has done good for Quebec.

He has said before that if it's good for Quebec, he will support it. Obviously, there will be a lot of goodies in the budget for Quebec. He can always say that it's a good budget for Quebec (thanks to his party's efforts in Parliament) but there is more work to be done. Or if his numbers don't look good, he'll say that the budget doesn't go far enough to solve the fiscal imbalance, so he'll vote against it. Quebeckers need to send him back to Parliament with a bigger caucus, so that he can fight for them.

Everytime he gets a caucus big enough, more useless crap starts up in Quebec that is funded by the ROC. If they seperate they are legitimately screwed if they want all their little perks.

[jdobbin]

One of the big ticket items left in the budget talk is the "fiscal Imbalance." It seems very likely that a compromise cannot be met on this and that provinces like Newfoundland and Saskatchewan are going to be furious. Politically, in a minority, the Conservatives can only afford to write off those provinces in terms of support if they can make gains in Ontario and Quebec.

So far Quebec remains a black spot but the budget might help retain and gain in that province.

Likewise, if Ontario makes out well on the deal, it might help with support.

One thing is certain though and that is the provinces are rarely happy with any money the Feds give and will squawk regardless. The question is how much they will complain and whether votes in the provinces will side with the provincial governments in opposition to Fed spending in regards to the imbalance.

http://ca.news.yahoo.com/s/capress/070311/...iscal_imbalance

Ontario officials are confident the budget will give their province its full per capita share of post-secondary education funding. But no immediate resolution is expected on health transfers since Flaherty refuses to reopen the 10-year, $41-billion health care accord signed in 2004.

Saskatchewan Premier Lorne Calvert and Newfoundland Premier Danny Williams are more likely to be bitterly disappointed. In a bid to prevent their provinces' oil and gas wealth from being clawed back through reduced equalization payments, both premiers are adamant that Harper stick to his original promise to exclude such revenue.