Personal Finance

Income Over $150k To Be Heavily Taxed

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  • Sep 15th, 2014 8:25 pm
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Sr. Member
Apr 6, 2007
506 posts
58 upvotes
EugW wrote:
May 6th, 2014 2:21 pm
Yeah, everyone here should be concerned. That payroll health tax dings most employees, but independent contractors don't pay this.

Technically, it's the employer that pays the EHT, but it's funding that could be used better, including used towards pensions or just as regular pay.
The employer may pay it, but I remember it as a direct payroll hit when it came in, $1k less take home per year.
Member
Nov 25, 2011
422 posts
60 upvotes
201-8 Sampson Mews, …
^ Yeh as I mentioned in this thread I'm not totally convinced about $150k. $250k is probably better. Probably doesn't need to be as steep an increase too, could be phased in.
Member
Nov 25, 2011
422 posts
60 upvotes
201-8 Sampson Mews, …
On the subject of stupid things in the budget, the Ontario Pension Plan is probably up there. Would do waaay more damage that the tax over $150k. Talk about stabbing small business in the back...
Deal Expert
Mar 23, 2009
16559 posts
3590 upvotes
Toronto
I agree that a lot of high paid workers are overpaid.

However, I also think that some mid-paid are also overpaid, esp. if we consider some perks, such as the scam which is bankable sick days. I also find that repeated absenteeism is more common in the lower paid and mid-paid positions, but of course that's not universal either.

Note: In my previous job as an employee I had bankable sick days. It was crazy. I took no sick days so when I got a new contract at a different place all of a sudden I got a large payout, which is stupid. I took it of course though. ;)
michty6 wrote:
May 6th, 2014 4:36 pm
^ Yeh as I mentioned in this thread I'm not totally convinced about $150k. $250k is probably better. Probably doesn't need to be as steep an increase too, could be phased in.
I also think a mild increase could be reasonable, esp. at a higher pay. However, that wouldn't work for the Wynne budget. Not enough money. They needed a decent sum of money, and promised not to increase taxes in the lower and middle class. However, they added large amounts of spending, so they needed large amounts of new taxes. A good chunk of that is coming off the backs of the upper middle class and upper class, although I guess Wynne as defined all of them as upper class, even at $151000.
Sr. Member
Apr 6, 2007
506 posts
58 upvotes
Hey Michty, when you said taxes are lower than they were in the past, do you mean that someone at $50 or 100k pays less now than they did in the past? Does this account for inflation? IE if we take 2014 dollars back to 1990 or 1975, would you pay a higher percent of taxes in equal dollars today or in the past? I don't honestly know, but my bet is we pay more due to bracket creep with the odd reduction to keep it in control.
Deal Addict
Jan 28, 2014
2989 posts
455 upvotes
michty6 wrote:
May 6th, 2014 4:36 pm
^ Yeh as I mentioned in this thread I'm not totally convinced about $150k. $250k is probably better. Probably doesn't need to be as steep an increase too, could be phased in.
Agreed - and thank you for posting this. I strongly believe that $150,000 was too low. People who earn this who work 12 hour days, without overtime pay, with minimal pensions and health benefits are not "wealthy".
Deal Addict
Jul 15, 2009
1486 posts
593 upvotes
Blanche123 wrote:
May 6th, 2014 5:52 pm
Agreed - and thank you for posting this. I strongly believe that $150,000 was too low. People who earn this who work 12 hour days, without overtime pay, with minimal pensions and health benefits are not "wealthy".
Or people who support a family of six on 90k take-home.
Member
Nov 25, 2011
422 posts
60 upvotes
201-8 Sampson Mews, …
florch wrote:
May 6th, 2014 5:29 pm
Hey Michty, when you said taxes are lower than they were in the past, do you mean that someone at $50 or 100k pays less now than they did in the past? Does this account for inflation? IE if we take 2014 dollars back to 1990 or 1975, would you pay a higher percent of taxes in equal dollars today or in the past? I don't honestly know, but my bet is we pay more due to bracket creep with the odd reduction to keep it in control.
I believe the tax brackets are now inflation-indexed but there was a small period when they weren't. So some of the many, many decreases in taxes we've seen in the past decades are slightly offset by tax brackets not keeping up with inflation. But not enough for there not to have been a pretty significant decrease in tax over time, even after adjusting for inflation.

Now when you try to put taxes up at all there is significant backlash and people forget times gone by when taxes were much higher and considerably more progressive (weighted towards upper levels) than they are today. Reagan and Thatcher really drilled trickle down economics into everyone's head and here we are a few decades later with lower tax rates, greater inequality, Governments in deficit and infrastructure spending constantly postponed as there is no money to spend...
Deal Fanatic
Nov 24, 2013
5528 posts
2128 upvotes
Kingston, ON
michty6 wrote:
May 6th, 2014 4:36 pm
^ Yeh as I mentioned in this thread I'm not totally convinced about $150k. $250k is probably better. Probably doesn't need to be as steep an increase too, could be phased in.
Well, as proposed it's a 1% (nominal) increase in the $150k-220k bracket. The rest of the change is moving the bracket that currently starts at $514k down to $220k, having the effect of +2% (nominal) on $220k-514k.

From the budget:
These measures would only apply to the top two per cent of Ontario tax filers — those with taxable incomes above $150,000 — and would not apply to 98 per cent of tax filers. About 220,000 people would pay more Ontario PIT in 2014 on their taxable income above $150,000. Of these:

About 115,000 people with taxable income between $150,000 and $220,000 would pay $425 more Ontario PIT, on average, or about 0.2 per cent of the average taxable income of this group; and
The remaining 105,000 people, with taxable income above $220,000, would pay about $5,500 more Ontario PIT, on average, or about one per cent of the average taxable income of this group.
It's the very nature of increasing spending and making other people pay for it, but that is a relatively small number of individuals impacted by the change. The meat of the increase would be for those with $220k or higher individual incomes.
Deal Addict
Nov 24, 2004
3776 posts
465 upvotes
Toronto
florch wrote:
May 6th, 2014 2:18 pm
Do you have examples of upper middle class salaried workers in the private sector that don't produce more than they take? I'd like to learn from you.
Sure, how about an example that's been in the news lately. The expansion of Target into Canada is widely accepted to have been a huge blunder, that has reportedly cost the company close to a billion dollars. Presumably there was a highly paid marketing / strategy team that put this plan together, and they still got paid (the CEO took the fall for it this week -- and was handsomely compensated with a multi-million dollar package despite being at the helm while billions of dollars of shareholder value was wiped out -- that's another story).

What bothers me more is the blanket statement that high-income earners got that way because of sacrifice and risk. That is usually true of entrepreneurs, but the degree of risk depends on what kind of financial shape they were in to begin with. Someone who inherits a profitable family business certainly doesn't achieve their income through their own sacrifice and risk. Many or most large companies allow employees to move up the ranks without a lot of sacrifice or risk. Probably many more examples out there as well.
Deal Addict
User avatar
Dec 31, 2011
2715 posts
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Yellowknife
ItemFinder wrote:
Apr 30th, 2014 10:43 pm
You guys just need better accountants.
agree
those making that income have appropriate financial counsel and tax shelters already in place
Banned
User avatar
May 6, 2014
832 posts
154 upvotes
Westmount, QC
Most of them have tax havens overseas anyways ..lol ..they will be saved.

Our politicians are probably one of them with money stashed overseas.
Sr. Member
Apr 6, 2007
506 posts
58 upvotes
JHW wrote:
May 6th, 2014 8:15 pm
Sure, how about an example that's been in the news lately. The expansion of Target into Canada is widely accepted to have been a huge blunder, that has reportedly cost the company close to a billion dollars. Presumably there was a highly paid marketing / strategy team that put this plan together, and they still got paid (the CEO took the fall for it this week -- and was handsomely compensated with a multi-million dollar package despite being at the helm while billions of dollars of shareholder value was wiped out -- that's another story).

What bothers me more is the blanket statement that high-income earners got that way because of sacrifice and risk. That is usually true of entrepreneurs, but the degree of risk depends on what kind of financial shape they were in to begin with. Someone who inherits a profitable family business certainly doesn't achieve their income through their own sacrifice and risk. Many or most large companies allow employees to move up the ranks without a lot of sacrifice or risk. Probably many more examples out there as well.
Thank you.

Can I counter with another example? We've mentioned doctors, but there are also lawyers, accountants, engineers, vets and many other professions, as well as lots of skilled and semi-skilled workers in the oil field who work in brutal conditions but get a handsome cheque. Do they earn it? Obviously their employers think so, qualified people aren't lining up to do it for less than 6 figures. How about an airline Captain. Usually has a 4 year degree or a 2 year aviation diploma. Pays his dues working docks, or loading airplanes or instructing on small planes, working his way up to bigger planes over years. It might take 10 years or more to get to a major airline, during which time he makes subsistence level pay, unless he finds a good job in another specialized part of the industry. After and if he reaches an airline his pay is now liveable but modest and will be comfortable after a few years. Every different type of airplane he flies will require a super intense 3 month course. Depending on his seniority and growth or retirements in the company, he will eventually become a Captain and be responsible for the airplane he commands - 100, 200, 300 lives and tens of millions of dollars of equipment that goes 500 miles an hour. He puts his license on the line twice a year in recurrent training and simulator testing and once more during an evaluated flight. He also has to maintain a medical and is examined twice a year. At this point he might make close to what his co-pilot and all of the flight attendants make combined. Is he worth that much?
Deal Expert
Mar 23, 2009
16559 posts
3590 upvotes
Toronto
Many people have issues with pay practices in certain parts of the finance industry.

However, even if that is a real issue, not everyone making $150000+ is in finance. In fact, most aren't. Furthermore, many of those making that much in finance aren't getting their entire pay as regular employees anyway, so there are generally more ways for tax avoidance in that context.
Sr. Member
Apr 6, 2007
506 posts
58 upvotes
JHW wrote:
May 6th, 2014 8:15 pm
Sure, how about an example that's been in the news lately. The expansion of Target into Canada is widely accepted to have been a huge blunder, that has reportedly cost the company close to a billion dollars. Presumably there was a highly paid marketing / strategy team that put this plan together, and they still got paid (the CEO took the fall for it this week -- and was handsomely compensated with a multi-million dollar package despite being at the helm while billions of dollars of shareholder value was wiped out -- that's another story).

What bothers me more is the blanket statement that high-income earners got that way because of sacrifice and risk. That is usually true of entrepreneurs, but the degree of risk depends on what kind of financial shape they were in to begin with. Someone who inherits a profitable family business certainly doesn't achieve their income through their own sacrifice and risk. Many or most large companies allow employees to move up the ranks without a lot of sacrifice or risk. Probably many more examples out there as well.
Executive compensation, and people being rewarded for failing ventures are crazy examples, and I agree, there is not much fairness in this. I just gave examples of people who make it into higher paying jobs that have large barriers to entry. Inheritance or inheriting a business, well that's just the way the wiener rolls I guess, but this too is not the most common way to make lots of money. Of course not everyone who has a high salary goes through the same struggle to get it, but there are many, many who do, and I think they deserve to be rewarded when they succeed. I don't know how to make salaries justified to what people bring to the table, but I don't see why you should punish everyone because some people got a lucky break. People who make from the bottom up within a company may not have the same levels of sacrifice or risk, but they generally must have to do something either to get the job in the first place or to earn their promotions, no? They must have came qualified and started at the bottom, or worked hard, or taken extra courses, or shown some ability to allow them to get to a high station before Peter's Principle kicked in. Who am I to say what they are worth to their company. Obviously someone values their contribution.

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