Personal Finance

Trudeau going after Personal Services Corps disguised as small businesses

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  • Oct 17th, 2018 11:49 am
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Jan 15, 2017
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onthefence wrote:
Nov 3rd, 2017 1:24 am
I make a decent income and don't have a wife. Why should you pay less tax than me?
Why should your colleague who has a wife who also makes a decent income pay more tax than you?

It seems reasonable that a couple who both make $50k deserve to pay less tax than a $100k earner with a stay at home wife with no kids.
I guess the argument on pension splitting is a non working spouse actually earned half of that pension. In a divorce they would get half after all. I personally don't agree with this logic and think it was cynical politics by the Cons for introducing it and Liberals for keeping it.
Your two guy-with-a-wife scenarios seems to contradict each other.

A person with a spouse pays the same tax rates as you. The reason their total tax liability might be less is because he gets a credit for a spouse. Should the tax system just ignore his family status? Never gonna happen.
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Jan 18, 2012
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onthefence wrote:
Nov 3rd, 2017 1:24 am
It seems reasonable that a couple who both make $50k deserve to pay less tax than a $100k earner with a stay at home wife with no kids.
I don't understand your logic here. Why does that seem reasonable? Both families are taking in 100k; it seems to me that fair would be them both paying the same amount in taxes.
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Mar 16, 2014
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You know the US system has "single" "married filing separately " and "married filing jointly brackets". Seems a bit more logical to me, would satisfy both camps above.
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May 7, 2012
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pdntspa wrote:
Nov 3rd, 2017 12:30 pm
I don't understand your logic here. Why does that seem reasonable? Both families are taking in 100k; it seems to me that fair would be them both paying the same amount in taxes.
Seems to be missing a key point: FAIR is not the objective of the wonks. More taxpayers is better. Can hire more CRA!
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May 7, 2017
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pdntspa wrote:
Nov 3rd, 2017 12:30 pm
I don't understand your logic here. Why does that seem reasonable? Both families are taking in 100k; it seems to me that fair would be them both paying the same amount in taxes.

I think it is pretty clear who is upper middle class and who is working class in this scenario. We are talking about for example a lawyer or middle manger with a stay at home spouse vs. a couple where one is maybe a waitress and the other a house painter. It is of course debatable but virtually every government in the world agrees with my perspective.
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taxrage wrote:
Nov 3rd, 2017 9:26 am
Your two guy-with-a-wife scenarios seems to contradict each other.

A person with a spouse pays the same tax rates as you. The reason their total tax liability might be less is because he gets a credit for a spouse. Should the tax system just ignore his family status? Never gonna happen.
I don't see why we would tax the family unit especially for people without kids. In fact most of the world doesn't do this either. Even the US only partially benefits married couples. It is never going to happen either by the way. 10 years of a conservative government that cut a lot of taxes and near the end of the mandate they begrudgingly offered a $2000 tax credit. So the full splitting is never going to happen. For somebody to pay less taxes somebody else has to pay more, unless you are in never never land like US tax proposals.

I make a little over a $100k and I am single. I pay the same as each part of a couple I work with who both make the same as me. Only the guy with a stay at home spouse pays less so again if we are talking about fairness that seems unfair. It's not 1950 who has a stay at home spouse anymore? (mostly I mean without kids but even with kids it is less than typical in middle class families). I certainly don't think we want the tax system to encourage the stay at home spouse to not work when there are no kids.
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Mar 16, 2014
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onthefence wrote:
Nov 3rd, 2017 3:33 pm
I make a little over a $100k and I am single. I pay the same as each part of a couple I work with who both make the same as me.
Here's my issue with your argument. For a progressive tax system supposedly based on the ability to pay the couple you work with has a much higher disposable income then you. Rent/cars/travel life etc are all cheaper for couples vs singles. Thats why the US approach is better, slight advantage to singles, a bit of income splitting advantage. In reality the 90-150K crowd in Canada is getting it too easy. Your coworkers take home 200K, thats quite well off on a global scale, yet they are paying a tax rate of about 25% before any deductions, will still get OAS etc.
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onthefence wrote:
Nov 3rd, 2017 3:33 pm
I don't see why we would tax the family unit especially for people without kids. In fact most of the world doesn't do this either. Even the US only partially benefits married couples. It is never going to happen either by the way. 10 years of a conservative government that cut a lot of taxes and near the end of the mandate they begrudgingly offered a $2000 tax credit. So the full splitting is never going to happen. For somebody to pay less taxes somebody else has to pay more, unless you are in never never land like US tax proposals.
The full splitting is already happening with pension income.

If you want to understand the arguments for taxing family vs individual income, you have to read the report of the Carter Royal Commission on Taxation, volume 3: http://publications.gc.ca/collections/c ... -1-eng.pdf

It's all based on ability to pay, and for just about everyone that can easily be measured by the family's aggregate income. Carter refers to tax unit.
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May 7, 2017
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tdiddy23 wrote:
Nov 3rd, 2017 5:53 pm
Here's my issue with your argument. For a progressive tax system supposedly based on the ability to pay the couple you work with has a much higher disposable income then you. Rent/cars/travel life etc are all cheaper for couples vs singles. Thats why the US approach is better, slight advantage to singles, a bit of income splitting advantage. In reality the 90-150K crowd in Canada is getting it too easy. Your coworkers take home 200K, thats quite well off on a global scale, yet they are paying a tax rate of about 25% before any deductions, will still get OAS etc.
These are fair points. That said I haven't seen a current estimate of what rates would be who would pay more and who would pay less. The two income couples would clearly pay more and those with stay at home spouses would clearly pay less but what about other family configurations. How many more women would choose to stay home with the added tax incentive and what would the impact on the economy (and revenues) be of that? All of these and more are why tax reform in a democracy is very difficult to implement. I suppose when we had a surplus income splitting could have been introduced instead of for example the GST cut, but it is telling that they chose the simpler easier to explain tax cut that benefited everyone (even if economists would say it is the worse tax to cut).
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onthefence wrote:
Nov 4th, 2017 1:56 am
The two income couples would clearly pay more and those with stay at home spouses would clearly pay less but what about other family configurations. How many more women would choose to stay home with the added tax incentive and what would the impact on the economy (and revenues) be of that?
Two income couples would pay more and those with stay at home spouses would clearly pay less...than who?
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taxrage wrote:
Nov 4th, 2017 9:01 am
Two income couples would pay more and those with stay at home spouses would clearly pay less...than who?
Than current policy. This is the problem with huge reforms. Even if you agree your family taxation method is better it makes huge winners and losers and losers fight harder than those that would gain.
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Jul 20, 2017
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unless you offer the couple discount, they will decide not to marry...the spouse with no income will qualify for welfare, and will rent a room in the house....

however it raises some troubling questions...if one lives with his mother, why they can file taxes as a couple...
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onthefence wrote:
Nov 4th, 2017 12:33 pm
Than current policy. This is the problem with huge reforms. Even if you agree your family taxation method is better it makes huge winners and losers and losers fight harder than those that would gain.
A joint return could be made optional. In the US, couples can file as individuals or as couples. Canada could do the same.

Currently, families with one spouse earning most/all of the income pay a lot more tax - as much as $30K more. This problem is why this entire thread exists. Business owners have used family members who have no involvement in the business to reduce their personal tax liability. They'll continue to try and exploit this "loophole" forever. Eventually, government will see the light.
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Apr 14, 2015
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taxrage wrote:
Nov 4th, 2017 5:17 pm
A joint return could be made optional. In the US, couples can file as individuals or as couples. Canada could do the same.

Currently, families with one spouse earning most/all of the income pay a lot more tax - as much as $30K more. This problem is why this entire thread exists. Business owners have used family members who have no involvement in the business to reduce their personal tax liability. They'll continue to try and exploit this "loophole" forever. Eventually, government will see the light.
I think you’re too optimistic about the government. Right now we have guys who think the best way to keep people from avoiding tax increases by incorporating is by increasing their incentive to incorporate with higher personal taxes and lower business taxes. Even when the government changes, I think you’ll just keep seeing small changes aimed at preferred voter groups and trying to plug holes every little change opens up.
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Operatime wrote:
Nov 4th, 2017 6:33 pm
I think you’re too optimistic about the government.
I would not expect a Trudeau government to address the issue of family taxation. He was chomping at the bit to get rid of the evil FTC, which only reduced the tax disparity between a bus driver with a stay-at-home spouse and two spouses each earning below the median Cdn income from $7,000 to $5,000 (the bus driver still paid $5K more tax). Thank the heavens, the bus driver now pays $7,000 more than the two spouses.

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