"Them that has, gets" (Canadian version)

[RetiredAt63]

When your government rolls out a new program that even the previous finance minister didn't like, you have to wonder.
http://www.ctvnews.ca/politics/income-splitting-among-new-tax-breaks-aimed-at-families-1.2079559
Even the C.D.Howe Institute didn't like it when it was first proposed.
http://www.cdhowe.org/why-income-splitting-for-two-parent-families-does-more-harm-than-good-c-d-howe-institute/15033
There are so many ways this money could have been better spent - sigh.

[daverobev]

It benefits us. I was against it more before they brought in the $2k cap.

The whole thing is crazy, really - $1900 for every child under 6, a year, and $720 after that, PLUS child benefit, PLUS income splitting.

My SIL hates the UCCB too, as it's taxable (they are reasonably high earners, unlike us, so they have to give most of it back).

It'll be interesting to see how it affects our taxes. This year is going to be bonkers with some cap gains for me, wife having been on mat leave EI, etc... but next year I might pay no tax at all. "Great", right? But crazy.

Guaranteed min income and a severe simplification of everything is what's wanted, IMO. Tax here is a tangle. So much easier in the UK - most people don't even do a tax return. If you make cap gains under £10k, you don't declare it.

Fun fun fun. Will Trudles get in and repeal it? Gonna be hard, as it's capped so only a significant boon to poorer folk.

I've seen in described as 'social engineering', trying to get mum to stay at home. I just wonder if NDP's $15 daycare is the same, though. Having a child should lead to responsibility... but should poor people not be able to have children because they can't afford it?

It just amazes me, really, how cheap it is to live here - and moreso if you're frugal.

I guess I'm mildly against it. But I'm looking forward to seeing if we get any benefit with this year's taxes, which are going to be painful.

[Jon_Snow]

I'd much rather they increase the TFSA contribution limit - something that is still on the table as far as I know.

[Bytowner]

I'm not sure why everyone has agreed to call this "income splitting". That, it ain't. Or at least not in any true sense of the word.

Latest word is TFSA will indeed go up to $10k a year, which would be glorious.

[Prairie Stash]

It's hard to argue against tax breaks. I'm not sure anyone had alternatives on the table.

[plainjane]

Latest word is TFSA will indeed go up to $10k a year, which would be glorious.

That would really be great.  What would also be great is if they sorted out the system so dual US citizens could take advantage.

[scottish]

It's hard to argue against tax breaks. I'm not sure anyone had alternatives on the table.

Well we could pay down some of that federal debt from the great recession before interest rates go up.   Just sayin...

[daverobev]

Same thing with the TFSA, though - it's great for the nearly rich, but most people don't use the $5k, let alone would use $10k!

And how will it work in 20 years? Will everyone have $200k of tax free investment room??

Might be better to, yes, pay off some debt, fix Toronto's road system, maybe give OAS a boost or something.

Again, if there is $10k extra room next year, damn straight I'll be using it, but is it really a good thing?

[rocketpj]

It's hard to argue against tax breaks. I'm not sure anyone had alternatives on the table.

You don't cut your income before you pay off the credit card.  Anybody on here retired with a mortage and consumer debt on the books?

I'll benefit from this cut, and certainly from any increases to the CCB, but I don't like it - these guys campaigned on fiscal responsibility, and the first thing they did when they got into power was cut the GST and give us almost a decade of deficit financed government.  Now that they are almost solvent again they want to cut more taxes - and then the next slight bump in the economy and we'll be back to borrowing money - probably at a higher interest rate.

Pay off the damn debt before cutting taxes - especially fiddly taxes like this.  If they were serious about making cuts, just increase the basic exemption, maybe move the brackets up a bit.  But this is just throwing a bone to the social conservative types who helped elect them and want the woman to stay in the home.  Pure pandering to their base at all of our expense.

[blue mutant]

The whole thing is crazy, really - $1900 for every child under 6, a year, and $720 after that, PLUS child benefit, PLUS income splitting.

I had heard that they were scrapping the CCTB in while increasing the UCCB which just makes this jaw droppingly regressive. I have not subsequently heard much about this so I'm unsure if I misunderstood; if true, it will make the whole package very beneficial for my family (single income of about $100,000 +) but, as I say, jaw droppingly regressive.

I work for a Legal Aid program and many of my clients receive approximately $300+ per child in CCTB which clearly can't be replaced by $160. Meanwhile, my family receives basically gets no CCTB (it's means tested) which will increase to $60 x 2 per month.

My understanding is that the income splitting will also only benefit people whose household income is already in the top 10% and even then it is restricted to a certain subset of that population.

The whole thing reeks of cynical political game playing (many families will receive 6 months of "new" UCCB payments by cheque months before the next federal election).

With respect to alternatives, raising the base credits would sure spread the benefit around more equitably. I'll echo the concern that raising TFSA limits is geared toward the wealthy as well.

[RetiredAt63]

Sort of a side note - Gordon Pape wrote a book about TFSAs a few years ago.  He pointed out that for low income people, the TFSA is the way to go for retirement savings.  The two main reasons: 1. Since the income is not taxed coming out, it does not affect income calculation for things like the GIS. Income from a RRIF does.  2. At low incomes there is not much, if any, tax benefit to RRSPs.  Put the money in a TFSA instead (for reason #1).

General comment - we as a country don't seem to have figured out the whole "what happens to the children while parents work/go to school" issue.  And of course those who are "in school/work for someone else/are self-employed" all have varying needs.  I saw an interesting comment in another blog (so can't cite source) pointing out that low-cost daycare in Quebec has had measurable improvements in people's lives - single mothers off welfare, for example, because now they can work/go to school and not worry about daycare.

And yes, blue mutant, this government seems to be "Conservative" only on social policy, they sure do throw the money around.  And they sure are friendly to big business.  Ironic that the Liberals with Paul Martin as Finance minister were more fiscally conservative than the Conservatives.  As a poster on a finance blog that encourages paying down debt, I approved of him!

[MorningCoffee]

I had heard that they were scrapping the CCTB in while increasing the UCCB which just makes this jaw droppingly regressive. I have not subsequently heard much about this so I'm unsure if I misunderstood; if true, it will make the whole package very beneficial for my family (single income of about $100,000 +) but, as I say, jaw droppingly regressive.

I work for a Legal Aid program and many of my clients receive approximately $300+ per child in CCTB which clearly can't be replaced by $160. Meanwhile, my family receives basically gets no CCTB (it's means tested) which will increase to $60 x 2 per month.

My understanding is that the income splitting will also only benefit people whose household income is already in the top 10% and even then it is restricted to a certain subset of that population.

In the news, some articles have confused the Child Tax Credit, which is being cancelled, with the CCTB. The CCTB is not being cut. What is being eliminated is the tax credit parents' received for each child (which gave them a tax break of up to $320 per child, per year). That is being replaced with the higher UCCB payment, which is taxable, so higher income parents won't see much, if any, increase in cash flow with the extra $60 per month. It will benefit lower income families.

The government has done a terrible job naming all of these credits and benefits as they all sound the same.

And the new measures are really not income splitting with this cap of 2K. I think the goal should have been to create a better, more equitable tax structure for all families and couples (I know, how naive and idealistic), and this missed the mark. Proper income splitting (and this new family tax cut) is not "just for the rich" as I keep hearing. It's to fix, for example, the fact that family A (one income earner or single parent) making 60K per year pays more tax than family B (2 income earners) making 60K per year. I'd hardly call a family income of 60K "rich". Yes, the more family A makes, the larger their tax break would be, but that's because they are paying much more taxes in the first place.

[Prairie Stash]

It's hard to argue against tax breaks. I'm not sure anyone had alternatives on the table.

You don't cut your income before you pay off the credit card.  Anybody on here retired with a mortage and consumer debt on the books?

I'll benefit from this cut, and certainly from any increases to the CCB, but I don't like it - these guys campaigned on fiscal responsibility, and the first thing they did when they got into power was cut the GST and give us almost a decade of deficit financed government.  Now that they are almost solvent again they want to cut more taxes - and then the next slight bump in the economy and we'll be back to borrowing money - probably at a higher interest rate.

Pay off the damn debt before cutting taxes - especially fiddly taxes like this.  If they were serious about making cuts, just increase the basic exemption, maybe move the brackets up a bit.  But this is just throwing a bone to the social conservative types who helped elect them and want the woman to stay in the home.  Pure pandering to their base at all of our expense.

There are threads devoted to retiring with a mortgage. It's generally agreed to be mathematically advantageous. The down side is some people dislike the increased risk, everyone's different.

None of the political parties proposed debt payments, of the reported options do you prefer the conservatives, NDP daycare or Liberal black box of "we'll tell you later"? Personally the NDP is best for me, the conservatives 2nd best and the liberals just seem indecisive.

[scottish]

Historically I think the liberals have been more fiscally conservative than the conservatives. 

And the NDP?    If you want to see deficit financing this is who will do it...

If the liberal party doesn't have some policies out by the next election I might change my mind.  I think they're keeping their cards close to their chest on purpose.

Justin Trudeau says alot of things that sound stupid, but I think that many of them are reasonably astute.   He just doesn't communicate them very well.   Anyway, I don't mean to take this thread down a rathole on Canadian politics.   Sorry!  :-)

[RetiredAt63]

Hey, the politicians took Canadian politics down the rat hole, we are just following to see where they went.  No apologies necessary!

  Anyway, I don't mean to take this thread down a rathole on Canadian politics.   Sorry!  :-)

[Prairie Stash]

Hey, the politicians took Canadian politics down the rat hole, we are just following to see where they went.  No apologies necessary!

  Anyway, I don't mean to take this thread down a rathole on Canadian politics.   Sorry!  :-)

A rat hole is a good place to hide money, seems appropriate to look for a rat hole among politics.

[rocketpj]

Historically I think the liberals have been more fiscally conservative than the conservatives. 

And the NDP?    If you want to see deficit financing this is who will do it...

The liberals have been more restrained than the old Tories, or these new ones.  I really don't get how the Conservatives still get to campaign on fiscal responsibility - as if saying it is enough rather than actually doing it.  Republicans get away with the same handwaving sleight of hand for some reason.  Anyone who claims Canadian conservatives are good with money should just look at Alberta - a province that is absolutely awash with money, and (40?) years of conservative rule, and yet they can't seem to balance the checkbook.

As for the NDP, in almost all cases at the provincial level they inherit a deficit and leave behind a surplus - which gets instantly squandered by whichever party replaces them.  It happened in Saskatchewan, BC, Nova Scotia.  Yes, Bob Rae was a stinker, but he is somewhat the exception to the rule.

[scottish]

As for the NDP, in almost all cases at the provincial level they inherit a deficit and leave behind a surplus - which gets instantly squandered by whichever party replaces them.  It happened in Saskatchewan, BC, Nova Scotia.  Yes, Bob Rae was a stinker, but he is somewhat the exception to the rule.

You have a point there.   It's the constant refinancing that Thomas Mulcair does on his house that got my attention.   

http://news.nationalpost.com/2012/05/27/mulcair-has-remortgaged-his-quebec-home-11-times-since-early-1980s/

Really?   11 mortgages?    This just doesn't sound like fiscal prudence in a political leader.   Maybe he's actually very wealthy and is using the financing to minimize taxes, I don't know.

I think I finally understand the Conservative/Republican thing.   The conservative doctrine is that the government isn't there to look after you and nanny you.   The role of the government is to provide a minimum of essential services and to enforce rule of law.    It's almost Libertarian.    This story is probably very appealing to many of us on the forum.   

The problem is that they don't do a great job of living up to this ideal.   The story is very compelling to anyone who isn't paying close attention though.

[rocketpj]

As for the NDP, in almost all cases at the provincial level they inherit a deficit and leave behind a surplus - which gets instantly squandered by whichever party replaces them.  It happened in Saskatchewan, BC, Nova Scotia.  Yes, Bob Rae was a stinker, but he is somewhat the exception to the rule.

You have a point there.   It's the constant refinancing that Thomas Mulcair does on his house that got my attention.   

http://news.nationalpost.com/2012/05/27/mulcair-has-remortgaged-his-quebec-home-11-times-since-early-1980s/

Really?   11 mortgages?    This just doesn't sound like fiscal prudence in a political leader.   Maybe he's actually very wealthy and is using the financing to minimize taxes, I don't know.

There are any number of reasons a household might do that.  That particular bit of dirt was dug up as a way to smear Mulcair without any actual knowledge.  To his credit he ignored it, leaving his personal finances out of the public eye.

I've owned a home for 11 years and have 'refinanced' or done a mortgage contract exactly 5 times.  At no point was I being imprudent or foolish, and every time was for sound financial reasons.  (e.g. 2 of them were when I had 'open' floating mortgages while I waited to sell a property - I didn't want to pay an early payoff penalty for a home that was on the market).  I can easily see it becoming 11 over the 25 or so years the mudslingers are getting the vapors about.

There are things to dislike about the NDP in general and Mulcair specifically, but let's not let the dirt diggers cast aspersions without evidence - that particular piece relies entirely on innuendo and implication without facts or knowledge.  There was a similar canard about Layton and his living in coop housing (he paid over market rates to subsidize his neighbours) but it came up every election anyway.

[scottish]

Ok, I give, you got me again rocket.

I don't like this type of attack from anybody, so I have to apply the same standard to the NDP.    Pretty soon you'll have me voting NDP!