Canadian Election - Financial Impact

[Le Barbu]

James Fitz-Morris, CBC News earlier this week:

"The Liberals campaigned hard on a promise to lower the second income-tax bracket — which in 2016 will cover earnings between $45,282 and $90,563. Right now the rate for income in that range stands at 22 per cent; the Liberals intend to move it to 20.5 per cent.
For individuals at the top of the income bracket, the tax cut will save them $680 a year starting in 2016."

Is it me but a 1,5% tax cut for a $90,563 earner would be $1,358 instead of $680? What am I missing here?

[RichMoose]

James Fitz-Morris, CBC News earlier this week:

"The Liberals campaigned hard on a promise to lower the second income-tax bracket — which in 2016 will cover earnings between $45,282 and $90,563. Right now the rate for income in that range stands at 22 per cent; the Liberals intend to move it to 20.5 per cent.
For individuals at the top of the income bracket, the tax cut will save them $680 a year starting in 2016."

Is it me but a 1,5% tax cut for a $90,563 earner would be $1,358 instead of $680? What am I missing here?

Its only on the income above $45 282.

[Le Barbu]

James Fitz-Morris, CBC News earlier this week:

"The Liberals campaigned hard on a promise to lower the second income-tax bracket — which in 2016 will cover earnings between $45,282 and $90,563. Right now the rate for income in that range stands at 22 per cent; the Liberals intend to move it to 20.5 per cent.
For individuals at the top of the income bracket, the tax cut will save them $680 a year starting in 2016."

Is it me but a 1,5% tax cut for a $90,563 earner would be $1,358 instead of $680? What am I missing here?

Its only on the income above $45 282.

Thank you Tux!

Do you think they will remove the income splitting for 2016 while cutting this bracket rate?

[RichMoose]

Honestly I think of lot of things are up in the air right now. The Libs are already saying the budget didn't look as good as they thought, with the oil prices, economic slowdown, and the ever looming potential of a real estate price correction. Their big campaign promise was $10B more in infrastructure spending to kickstart the economy. In order to accomplish this without running massive deficits they will have to try generate more revenue.  I would not be surprised if, in the next two years, we see the elimination of income splitting, a small increase in the GST/HST, a moderate increase to the $90000 - $140000 bracket, and/or an elimination of a lot of corporate grants and accelerated write-offs.
It's either this, or renege on the promise to spend on infrastructure. I can't see them doing that as every provincial and municipal politician will fume.

[Le Barbu]

Honestly I think of lot of things are up in the air right now. The Libs are already saying the budget didn't look as good as they thought, with the oil prices, economic slowdown, and the ever looming potential of a real estate price correction. Their big campaign promise was $10B more in infrastructure spending to kickstart the economy. In order to accomplish this without running massive deficits they will have to try generate more revenue.  I would not be surprised if, in the next two years, we see the elimination of income splitting, a small increase in the GST/HST, a moderate increase to the $90000 - $140000 bracket, and/or an elimination of a lot of corporate grants and accelerated write-offs.
It's either this, or renege on the promise to spend on infrastructure. I can't see them doing that as every provincial and municipal politician will fume.

They could also decide to shoot for a $20B deficit instead of $10B with low interest rates they can get...

[daverobev]

Honestly I think of lot of things are up in the air right now. The Libs are already saying the budget didn't look as good as they thought, with the oil prices, economic slowdown, and the ever looming potential of a real estate price correction. Their big campaign promise was $10B more in infrastructure spending to kickstart the economy. In order to accomplish this without running massive deficits they will have to try generate more revenue.  I would not be surprised if, in the next two years, we see the elimination of income splitting, a small increase in the GST/HST, a moderate increase to the $90000 - $140000 bracket, and/or an elimination of a lot of corporate grants and accelerated write-offs.
It's either this, or renege on the promise to spend on infrastructure. I can't see them doing that as every provincial and municipal politician will fume.

Family Tax Cut is dead I believe (for 2016). Tax cut is as they campaigned, but a shitty deal - for the vast majority. TFSA is back to the old method.

Still. Better than more Harper, eh? Looking forward to seeing the UCCB/CCTB replacement.

[okits]

Honestly I think of lot of things are up in the air right now. The Libs are already saying the budget didn't look as good as they thought, with the oil prices, economic slowdown, and the ever looming potential of a real estate price correction. Their big campaign promise was $10B more in infrastructure spending to kickstart the economy. In order to accomplish this without running massive deficits they will have to try generate more revenue.  I would not be surprised if, in the next two years, we see the elimination of income splitting, a small increase in the GST/HST, a moderate increase to the $90000 - $140000 bracket, and/or an elimination of a lot of corporate grants and accelerated write-offs.
It's either this, or renege on the promise to spend on infrastructure. I can't see them doing that as every provincial and municipal politician will fume.

Family Tax Cut is dead I believe (for 2016). Tax cut is as they campaigned, but a shitty deal - for the vast majority. TFSA is back to the old method.

Still. Better than more Harper, eh? Looking forward to seeing the UCCB/CCTB replacement.

I found this informative.

http://www.theglobeandmail.com/report-on-business/video/video-drawing-conclusions-how-the-canada-child-benefit-credit-works/article27475581/

Looks pretty good for low-income families.

[daverobev]

I found this informative.

http://www.theglobeandmail.com/report-on-business/video/video-drawing-conclusions-how-the-canada-child-benefit-credit-works/article27475581/

Looks pretty good for low-income families.

Heh they'd be more helpful putting a simple calculator in, than a vid with examples that apply to nobody. Still, it lays out the equations.

I think we'll be marginally better off, but it's hard to compare as we'll have vastly differing household incomes.

Still, if you're a min. wage worker with two children, an extra $1k a month is a hell of a lot of tax free money.

[Le Barbu]

I found this informative.

http://www.theglobeandmail.com/report-on-business/video/video-drawing-conclusions-how-the-canada-child-benefit-credit-works/article27475581/

Looks pretty good for low-income families.

Heh they'd be more helpful putting a simple calculator in, than a vid with examples that apply to nobody. Still, it lays out the equations.

I think we'll be marginally better off, but it's hard to compare as we'll have vastly differing household incomes.

Still, if you're a min. wage worker with two children, an extra $1k a month is a hell of a lot of tax free money.

On the Lib's website, there is a easy to use calculator. I entered the numbers and our household will benifit a net 2,600$/year (2 kids 8 and 12 and total taxable income 90k$) Hum, a least I hope they use taxable income...the one after RRSP contribution etc.

About the income splitting, we will loose 1,200$ advantage when it stops but then get a 300$ reduction on my income tax rate, a net loss of 900$

At the end, we gain a net 1,700$, I think...

[YoungInvestor]

I found this informative.

http://www.theglobeandmail.com/report-on-business/video/video-drawing-conclusions-how-the-canada-child-benefit-credit-works/article27475581/

Looks pretty good for low-income families.

Heh they'd be more helpful putting a simple calculator in, than a vid with examples that apply to nobody. Still, it lays out the equations.

I think we'll be marginally better off, but it's hard to compare as we'll have vastly differing household incomes.

Still, if you're a min. wage worker with two children, an extra $1k a month is a hell of a lot of tax free money.

On the Lib's website, there is a easy to use calculator. I entered the numbers and our household will benifit a net 2,600$/year (2 kids 8 and 12 and total taxable income 90k$) Hum, a least I hope they use taxable income...the one after RRSP contribution etc.

About the income splitting, we will loose 1,200$ advantage when it stops but then get a 300$ reduction on my income tax rate, a net loss of 900$

At the end, we gain a net 1,700$, I think...

Do you have a link to this? Might be the mobile version but I can't find it.

[scottish]

That's the first suggestion I've heard about raising the GST.  I think it's a good suggestion.  Harper was premature in cutting it while we still had all that debt & right before his big deficit spends.

[Retire-Canada]

That's the first suggestion I've heard about raising the GST.  I think it's a good suggestion.  Harper was premature in cutting it while we still had all that debt & right before his big deficit spends.

It's a good way to raise money as it punishes you for spending more, but I don't think even the libs with their solid win have the political capital to raise the GST at the current time. Had they wanted to do so it should have been an election issue.

[Le Barbu]

I found this informative.

http://www.theglobeandmail.com/report-on-business/video/video-drawing-conclusions-how-the-canada-child-benefit-credit-works/article27475581/

Looks pretty good for low-income families.

Heh they'd be more helpful putting a simple calculator in, than a vid with examples that apply to nobody. Still, it lays out the equations.

I think we'll be marginally better off, but it's hard to compare as we'll have vastly differing household incomes.

Still, if you're a min. wage worker with two children, an extra $1k a month is a hell of a lot of tax free money.

On the Lib's website, there is a easy to use calculator. I entered the numbers and our household will benifit a net 2,600$/year (2 kids 8 and 12 and total taxable income 90k$) Hum, a least I hope they use taxable income...the one after RRSP contribution etc.

About the income splitting, we will loose 1,200$ advantage when it stops but then get a 300$ reduction on my income tax rate, a net loss of 900$

At the end, we gain a net 1,700$, I think...

Do you have a link to this? Might be the mobile version but I can't find it.

https://www.liberal.ca/realchange/helping-families/

[human]

I don't get these benefit payments. For folks between 45k and 90k why not just give them a bigger tax deduction at the end of the year? Isn't that easier to manage than paying out money and tracking it? I get for under 45k the benefit seems to be more than what they may even pay in taxes so why not just pay the difference?

[lostamonkey]

I don't get these benefit payments. For folks between 45k and 90k why not just give them a bigger tax deduction at the end of the year? Isn't that easier to manage than paying out money and tracking it? I get for under 45k the benefit seems to be more than what they may even pay in taxes so why not just pay the difference?

One of the liberal incentives is the enhanced child tax benefit. These benefits are paid out to families. Individuals, childless couples, and older people don't get anything.

The middle class tax cut is another liberal incentive. The 45-90K tax bracket decreased from 22% to 20.5%. This benefits all people whose make more than 45K. The liberals also introduced a new 33% bracket for people who make more than 200K. Previously, the highest tax bracket was 29%.

[human]

I get that lostamonkey. What I should have said is why pay out a child benefit when you could just give a tax deduction for parents, families, people with dependents. It would be more efficient, all you would have to do is fill out one line on a tax return and done. Instead of the government issuing checks and making sure the benefit is spent properly. For lower incomes not even paying tax I suppose a payment would need to be made, I guess that's why they do a benefit rather than a tax deduction?

[okits]

I get that lostamonkey. What I should have said is why pay out a child benefit when you could just give a tax deduction for parents, families, people with dependents. It would be more efficient, all you would have to do is fill out one line on a tax return and done. Instead of the government issuing checks and making sure the benefit is spent properly. For lower incomes not even paying tax I suppose a payment would need to be made, I guess that's why they do a benefit rather than a tax deduction?

The monthly direct deposits make sense.  A family with two little kids and an income under $30k does not have anywhere near $12,800 worth of annual taxes owed.  Lower-income families are the ones receiving the lion's share of benefits so the system must work for their situation.  A lump sum tax refund paid out every spring is less likely to last the year (and pay for necessities 11 months later) than doling out cash every month. I don't know that the gov does anything to control what the money is spent on (does anyone know for sure?  My impression was it was left to the recipient to spend as they wanted.)

[human]

by spent properly I meant the program is properly distributing the benefit to actual families, not what families are spending the money on. Programs are usually evaluated to ensure no fraud etc. is taking place and that in itself can cost money. The tax system already has an audit system in place. The big problem with my suggestion for a tax deduction is for lower incomes like I already mentioned. Everyone in the higher tax brackets would likely see a benefit that eliminates some or all of their taxes payable.

In the end just raise tax deductions for families and create a benefit for lower family incomes instead of writing checks to as many people as possible. To me it seems like an obvious ploy, here's a check! Don't forget who gave it to you!

I'm not suggesting less money be spent, just that it be done more efficiently. Why pay full taxes on your income and then just get this benefit every quarter (or how often its done, I'm not sure)? People that prep their taxes properly could just reduce the amount that comes off their pay check every pay day. The tax system and benefit system is so convoluted in this country, all so every possible group can see the "hard" work the latest government is doing for them.

[okits]

by spent properly I meant the program is properly distributing the benefit to actual families, not what families are spending the money on. Programs are usually evaluated to ensure no fraud etc. is taking place and that in itself can cost money. The tax system already has an audit system in place. The big problem with my suggestion for a tax deduction is for lower incomes like I already mentioned. Everyone in the higher tax brackets would likely see a benefit that eliminates some or all of their taxes payable.

In the end just raise tax deductions for families and create a benefit for lower family incomes instead of writing checks to as many people as possible. To me it seems like an obvious ploy, here's a check! Don't forget who gave it to you!

I'm not suggesting less money be spent, just that it be done more efficiently. Why pay full taxes on your income and then just get this benefit every quarter (or how often its done, I'm not sure)? People that prep their taxes properly could just reduce the amount that comes off their pay check every pay day. The tax system and benefit system is so convoluted in this country, all so every possible group can see the "hard" work the latest government is doing for them.

It may be more efficient just to have one payment mechanism for everyone. 

I think tax planning is pretty sexy, but I am a huge weirdo.  Lots of people look at their taxes only when they absolutely have to (usually the deadline to file last year's taxes) and think a big tax refund is a win (or a gift from the government.) Asking people to estimate/pre-prepare their taxes is not going to have huge uptake.  So you're running into the problem of a once-a-year payout at tax time, vs. the current monthly disbursements that mean, for at least a day or two every month, money is available if the family is otherwise short for necessities for the kids.  If you're not going to restrict what the child benefit money can be spent on, at least give families 12 opportunities a year to make good choices, vs. one opportunity a year (where the money could get misconstrued as "my tax refund to enjoy" vs. "subsidy to benefit our children.")

Child benefits are paid out to the entire population, so policies need to work for everyone (including non-Mustachians and people who pay no taxes or are bad about filing tax forms.)

[human]

I suppose that makes sense, I guess I'm just a proponent for simplifying taxes in general and eliminating payouts for the middle class if we can just reduce their taxes instead. I don't want to bore people with this tangent, but just reduce the 45-90k income tax bracket by another percent or two and then pay out the benefit to those under 45k. Full disclosure - I don't have kids, ha!

[scrubbyfish]

I don't want to bore people with this tangent...

I'm not bored! Very interested. I found it very helpful to read okits' thoughts on the benefit of 12 monthly payments vs 1 for families receiving cash, and agree with it wholeheartedly. It's not something I had ever thought of. I prefer working with an annual budget, but it's not for everyone.

I too wrote something on this forum once questioning the incredible complexity of some tax credits, asking if there wasn't a simpler, cheaper way for the govt to create the intended benefit. Totally get it :)

[okits]

Well, you're all just so lovely and reasonable.  You're just feeding those pernicious stereotypes of Canadians being nice, you know!  ;)

And big sigh, taxation and subsidies (and the behaviour they are trying to incent) are ridiculously complex.  Lots of head-scratching and frustration to go around.  Then you get politicians in the mix, trying to curry electoral favour with policy changes that are bribes...  What a CF.  :)

[daverobev]

I'd much prefer a taxable benefit than a means tested one.

Why? Because *next year* I am going to have low income, but child benefit based on *last year's* income.

If you get UCCB, it is taxed on *this* year's earnings. It makes way more sense to me.

Say wifeypon goes on a year long maternity in January. Made a reasonable amount of money, but some self employed, the previous year. Pops a sprog in Dec.

From June that year she will get new child benefit based on the previous year, not the current low income (maternity EI) year. With UCCB, you get all the money, then have to pay back whatever in addition to your other tax the following year.

It's even worse if for whatever you don't get EI - you have zero income on mat leave, and low child benefits. The following year - nearly 18 months later - you'll suddenly be drowning in money as you will presumably have gone back to work, but the means testing says "oh, shit, you earned *nothing* last year!".

I don't like how it's all so middle class focussed. If you're earning $12k, then you're in a whole other place from someone earning $35k.

But, still. Better than Harper. Perhaps. Environmentally, certainly.