Personal Finance

Trudeau going after Personal Services Corps disguised as small businesses

  • Last Updated:
  • Nov 23rd, 2017 11:07 am
Newbie
May 7, 2017
67 posts
27 upvotes
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.
Member
Jul 20, 2017
269 posts
67 upvotes
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...
Member
User avatar
Jan 15, 2017
373 posts
174 upvotes
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.
Member
Apr 14, 2015
476 posts
109 upvotes
Tsuu T'Ina, AB
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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Jan 15, 2017
373 posts
174 upvotes
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.
Newbie
May 7, 2017
67 posts
27 upvotes
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 don't think you understand my point or how taxation works as a closed system. If all these families with one spouse earning more get a new tax break (up to $30k as you say) there will be $XBillion less in revenues. A responsible government will need to raise somebody else's taxes to make up that money. Unlike cutting top marginal rates or corporate taxes this change would also not have any economic benefit. In fact it is likely to discourage some spouses from working so would further decrease revenues and the labour force.
I think if we are going to cut income taxes we should be incentivizing work not dis-incentivizing it.
Deal Expert
Feb 29, 2008
16467 posts
1764 upvotes
Montreal
onthefence wrote:
Nov 5th, 2017 2:45 am
I don't think you understand my point or how taxation works as a closed system. If all these families with one spouse earning more get a new tax break (up to $30k as you say) there will be $XBillion less in revenues. A responsible government will need to raise somebody else's taxes to make up that money. Unlike cutting top marginal rates or corporate taxes this change would also not have any economic benefit. In fact it is likely to discourage some spouses from working so would further decrease revenues and the labour force.
I think if we are going to cut income taxes we should be incentivizing work not dis-incentivizing it.
If one spouse stops working, there are a whole slew of deductions that disappear like the child care deduction.
Member
User avatar
Jan 15, 2017
373 posts
174 upvotes
onthefence wrote:
Nov 5th, 2017 2:45 am
I don't think you understand my point or how taxation works as a closed system. If all these families with one spouse earning more get a new tax break (up to $30k as you say) there will be $XBillion less in revenues. A responsible government will need to raise somebody else's taxes to make up that money. Unlike cutting top marginal rates or corporate taxes this change would also not have any economic benefit. In fact it is likely to discourage some spouses from working so would further decrease revenues and the labour force.
I think if we are going to cut income taxes we should be incentivizing work not dis-incentivizing it.
That's why the FTC represented a reasonable compromise. The $85K bus driver with a stay-at-home spouse had his extra $7K in tax (vs a couple each earning $42.5K) reduced to just an extra $5K.

Trudeau wants the bus driver - and everyone else - to ante up...unless your a pensioner, or a business owner who can find a way to shift income to a trusted person...or even a single parent, who receives an equivalent-to-spouse credit as their equalizer.

Canada already has more seniors than persons under-15. Just wait a few more years until seniors represent 25% of the entire population. There will be a hue and cry to reform the current 50/50 pension split, possibly along the lines of a joint return.
Newbie
Mar 16, 2014
23 posts
3 upvotes
Toronto
onthefence wrote:
Nov 5th, 2017 2:45 am
I don't think you understand my point or how taxation works as a closed system. If all these families with one spouse earning more get a new tax break (up to $30k as you say) there will be $XBillion less in revenues. A responsible government will need to raise somebody else's taxes to make up that money. Unlike cutting top marginal rates or corporate taxes this change would also not have any economic benefit. In fact it is likely to discourage some spouses from working so would further decrease revenues and the labour force.
I think if we are going to cut income taxes we should be incentivizing work not dis-incentivizing it.
Not sure why it would have to be an absolute tax cut with less revenue? As in, they take your spouses income, and if together you are >200K for example, then you pay a portion in a higher bracket.

Not exactly my priority for tax changes in this country, I agree I'd rather see changes that encourage productivity such as limiting top tax bracket, but hypothetically there is room here for couples that are probably undertaxed.
Member
Jul 20, 2017
269 posts
67 upvotes
Jermyzy wrote:
Nov 5th, 2017 3:22 pm
Yeah, let's go after small business, but let the big fish swim free.


https://www.theguardian.com/news/2017/n ... ise-papers


"Trudeau was contacted at his official prime ministerial residence, 24 Sussex Drive, but chose not to respond"
Just watched the same report on CBC. Trudeau and the liberals will not touch any taxes in the near future...No more mention in the liberal propaganda of loopholes, unfairness till the election...it would remind people that they are so tainted...
Deal Addict
Oct 7, 2007
3036 posts
676 upvotes
Sebastian6300 wrote:
Nov 5th, 2017 10:20 pm
Just watched the same report on CBC. Trudeau and the liberals will not touch any taxes in the near future...No more mention in the liberal propaganda of loopholes, unfairness till the election...it would remind people that they are so tainted...
Can you please elaborate? Are you saying that Trudeau and co. are going to drop the whole plan to overhaul the tax system on small businesses that they have been pushing for the last 12 months or so?
Member
Jul 20, 2017
269 posts
67 upvotes
choclover wrote:
Nov 6th, 2017 10:14 am
Can you please elaborate? Are you saying that Trudeau and co. are going to drop the whole plan to overhaul the tax system on small businesses that they have been pushing for the last 12 months or so?
I think they will stop trying to make any new changes....they are so vulnerable because of all this revelations, that they will concentrate on the spending projects...transit, social projects, aboriginal etc
the usual one announcement a day, also some climate change stuff

Once they open their mouth about taxes. the opposition will start asking them about these things....and they will keep reminding the public how twisted this government is...
Member
Apr 14, 2015
476 posts
109 upvotes
Tsuu T'Ina, AB
onthefence wrote:
Nov 5th, 2017 2:45 am
I don't think you understand my point or how taxation works as a closed system. If all these families with one spouse earning more get a new tax break (up to $30k as you say) there will be $XBillion less in revenues. A responsible government will need to raise somebody else's taxes to make up that money. Unlike cutting top marginal rates or corporate taxes this change would also not have any economic benefit. In fact it is likely to discourage some spouses from working so would further decrease revenues and the labour force.
I think if we are going to cut income taxes we should be incentivizing work not dis-incentivizing it.
It sounds like you’re saying that having one half of a couple not work, or even work less than their spouse, is something to be discouraged at all costs. Consider that these people often have much to contribute to their children, families, aging parents, communities, local schools and maybe even the career of their spouse. Maybe we should be making it easier for people to be able to make these unpaid contributions to society, instead of more expensive?

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