Personal Finance

Trudeau going after Personal Services Corps disguised as small businesses

  • Last Updated:
  • Aug 24th, 2018 11:56 am
Newbie
May 7, 2017
86 posts
35 upvotes
Operatime wrote:
Nov 6th, 2017 4:43 pm
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?
Should doesn't really enter into it for me. It is about revenues. If you give a tax break to one earner familes. Not only do you lose whatever you give but also you will have people drop out of the workforce. This is an immediate loss of revenues and as their skills degrade a longterm loss as well. The opposite effect is seen with childcare benefits or programs. Women go to work and the programs almost pay for themselves.

I don't really know what is "better" for kids and don't really care that much. I do think evidence is mixed.
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Jan 15, 2017
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onthefence wrote:
Nov 11th, 2017 12:43 pm
If you give a tax break to one earner families. Not only do you lose whatever you give but also you will have people drop out of the workforce.
We already give breaks to 1-earner families. A virtual spouse is conjured up for single parents to treat them just like a 2-parent family with a stay-at-home spouse. That break is worth about $2,000. Pensioners can split pension income with their spouses. That break can be worth up to $30,000.

So, the question is not if, but whether all families with the same total income should have the same tax liability.
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May 7, 2017
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taxrage wrote:
Nov 11th, 2017 10:24 pm
We already give breaks to 1-earner families. A virtual spouse is conjured up for single parents to treat them just like a 2-parent family with a stay-at-home spouse. That break is worth about $2,000. Pensioners can split pension income with their spouses. That break can be worth up to $30,000.

So, the question is not if, but whether all families with the same total income should have the same tax liability.
Pension splitting is totally unfair but they vote so c'est la vie. The virtual spouse to me demonstrates the whole folly of taxing a family vs an individual. Of course it seems unfair to tax a single mom more than a couple with a stay at home spouse. Why can't a single pensioner split their pension with a virtual spouse? If the millenials are too stupid to organize and vote and would rather protest I guess they will continue to get shafted as they move into prime earning ages.
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onthefence wrote:
Nov 12th, 2017 2:08 am
Pension splitting is totally unfair but they vote so c'est la vie. The virtual spouse to me demonstrates the whole folly of taxing a family vs an individual. Of course it seems unfair to tax a single mom more than a couple with a stay at home spouse. Why can't a single pensioner split their pension with a virtual spouse? If the millenials are too stupid to organize and vote and would rather protest I guess they will continue to get shafted as they move into prime earning ages.
Taxing a family isn't folly. It's what the US and other countries do. Benefit eligibility is based on family income, isn't it? Why should a family that pays $12,000 more in tax on the same total income receive the same benefit payments?

There is no virtual spouse conjured up for single pensioners because they don't have any dependents. The ITA conjurs one up to try and equalize the tax burden between a single parent and couple family. Under any tax system - except flat tax - singles will always pay more, since their ability to pay is higher for a given income level (no dependents).

Clearly there is a problem with tax rates and how they are applied (individual). It is the impetus for the whole small business tax package introduced by Morneau. When the tax differential can be close to 30% at what are arguably middle/upper-middle class family income levels, the system is broken. It needs to be reformed.
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May 7, 2017
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taxrage wrote:
Nov 12th, 2017 9:05 am
Taxing a family isn't folly. It's what the US and other countries do. Benefit eligibility is based on family income, isn't it? Why should a family that pays $12,000 more in tax on the same total income receive the same benefit payments?

There is no virtual spouse conjured up for single pensioners because they don't have any dependents. The ITA conjurs one up to try and equalize the tax burden between a single parent and couple family. Under any tax system - except flat tax - singles will always pay more, since their ability to pay is higher for a given income level (no dependents).

Clearly there is a problem with tax rates and how they are applied (individual). It is the impetus for the whole small business tax package introduced by Morneau. When the tax differential can be close to 30% at what are arguably middle/upper-middle class family income levels, the system is broken. It needs to be reformed.
Let's agree to disagree on this point. I would hesitate to hold up the US as a model for anything taxation related though. They as in most things they are the outlier. Even though the US has joint brackets, 2 people making $100k each are still taxed very differently than one person making $200k.
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Feb 26, 2008
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onthefence wrote:
Nov 12th, 2017 9:23 am
Let's agree to disagree on this point. I would hesitate to hold up the US as a model for anything taxation related though. They as in most things they are the outlier. Even though the US has joint brackets, 2 people making $100k each are still taxed very differently than one person making $200k.

Why castigate the US just because you can? It's a favourite activity of the intelligentsia in Canada and it's nothing more than intellectual laziness.

So, turn to the issue. What did the Carter Commission say about income averaging (this was a made in Canada report if it makes you happier)?

It really comes down to a pretty basic question, " Is a family an economic unit which shares resources, or are individuals firewalled from each other?". If you believe that a family is an economic unit which shares resources, then that is the appropriate unit for the state's intervention with policy tools. On the other hand, if you think that a family is not an economic unit and that individuals organize themselves independently for financial purposes then, the individual should be the appropriate unit for the state's intervention with policy tools.

What do we have in Canada? In my view, we have a god awful mess. For taxation purposes, we claim that individuals are firewalled from each other and are autonomous economic units. But then we turn around and declare that families are the economic unit when it comes to collecting benefits from tax and social policy.

So which is it? Does a family pool and share resources, or doesn't it? If spouses do not pool and share resources, then we should be completely comfortable to have a situation where one spouse makes $200k and the other collects welfare. And we should be comfortable with a situation where one spouse makes $500k and the other gets a HST credit due to a lower personal income. We should be comfortable with one spouse having a pension of $75k and the other collecting the Guaranteed Income Supplement. And we should be completely comfortable with kids getting student loans and bursaries even if their parents are rolling in it. But, you know what? None of those things are possible because we *know* that a family is an economic unit that pools and shares resources.

So let's be consistent, if a family is an economic unit, then tax it as such. Either that, or make all benefit programs available on the basis of individual income...

But in all cases, please do not automatically crap on something the US does. There's both good and bad south of the border and we don't help ourselves by dismissing something just because the Yanks do it.
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Jan 15, 2017
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onthefence wrote:
Nov 12th, 2017 9:23 am
Let's agree to disagree on this point. I would hesitate to hold up the US as a model for anything taxation related though. They as in most things they are the outlier. Even though the US has joint brackets, 2 people making $100k each are still taxed very differently than one person making $200k.
Who are the people you're referring to? A family with 2 x $100K income would pay the same tax as one with a 1 x $200K income if both are filing jointly, would they not? In the 1990s they almost had a tax revolt over a $1,000 marriage penalty resulting from couples having to file jointly. Canadians would rejoice at only having to pay a $1,000 tax differential when family incomes are the same.

There are a lot of things wrong with the US tax system, but two families with the same aggregate incomes having the same tax liability is definitely not one of them.
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Jul 20, 2017
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taxrage wrote:
Nov 12th, 2017 3:13 pm
Who are the people you're referring to? A family with 2 x $100K income would pay the same tax as one with a 1 x $200K income if both are filing jointly, would they not? In the 1990s they almost had a tax revolt over a $1,000 marriage penalty resulting from couples having to file jointly. Canadians would rejoice at only having to pay a $1,000 tax differential when family incomes are the same.

There are a lot of things wrong with the US tax system, but two families with the same aggregate incomes having the same tax liability is definitely not one of them.
-first of all there should be a a charter of the fundamental principles,
-things should be simplified.,..there is no point to have this unenforceable complicated rules
-the language of tax laws should be brought into the 21-st century... what is the point of having this layer limbo used for the rules???
-there should be a new class of corporations created with a simpler accounting...flat kind of tax...
-the whole concept of trusts and their legitimacy should be reviewed..
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Nov 24, 2013
5082 posts
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Kingston, ON
onthefence wrote:
Nov 12th, 2017 9:23 am
Let's agree to disagree on this point. I would hesitate to hold up the US as a model for anything taxation related though. They as in most things they are the outlier. Even though the US has joint brackets, 2 people making $100k each are still taxed very differently than one person making $200k.
taxrage wrote:
Nov 12th, 2017 3:13 pm
Who are the people you're referring to? A family with 2 x $100K income would pay the same tax as one with a 1 x $200K income if both are filing jointly, would they not? In the 1990s they almost had a tax revolt over a $1,000 marriage penalty resulting from couples having to file jointly. Canadians would rejoice at only having to pay a $1,000 tax differential when family incomes are the same.

There are a lot of things wrong with the US tax system, but two families with the same aggregate incomes having the same tax liability is definitely not one of them.
To clarify, in the US two households each making $200K HHI can have very different tax burdens depending on their itemized deductions: mortgage interest, State And Local Tax deduction, medical expenses, etc. It also varies on whether they itemize versus take the standard deduction.

The same household (i.e. with the same list of deductions) should have roughly the same tax burden whether it's single earner or dual earner to reach its given HHI.

I still agree the US system may not be the model to hold up...
Deal Addict
Oct 7, 2007
3833 posts
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I agree that it is difficult to compare U.S. and Canadian taxation because the U.S. is a capitalist country while Canada is more socialist.

A lot of U.S. taxes goes to fund military spending while a lot of Canadian taxes goes to fund socialized health care.

There is a lot of waste, fraud and abuse by government of our taxes on both sides of the border so not sure if that cancels out.
Sr. Member
Jul 20, 2017
510 posts
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BrianV wrote:
Nov 15th, 2017 5:04 pm
Wow, so a business making $500k net every year can save $5k to offset the potential $30-$50k in extra salary expenses? How generous of them...
actually they only save if they have profits
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Dec 7, 2012
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Sebastian6300 wrote:
Nov 15th, 2017 4:47 pm
Ontario is reducing the small business tax by 1% from 4.5% to 3.5% on first 500k to compensate for minimum wage increase.
http://www.cbc.ca/news/canada/toronto/s ... -1.4402074
BrianV wrote:
Nov 15th, 2017 5:04 pm
Wow, so a business making $500k net every year can save $5k to offset the potential $30-$50k in extra salary expenses? How generous of them...
Small business tax cut never promised to offset minimum wage hike: Wynne
http://toronto.citynews.ca/2017/11/15/s ... ike-wynne/
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Apr 2, 2008
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Sebastian6300 wrote:
Nov 15th, 2017 7:46 pm
actually they only save if they have profits
If you make 500k and but 0 profit , you should not be in this business

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