What middle class tax cut?

[Rwede]

What middle class tax cut?

In reality, people will be paying more under the federal Liberals’ tax changes

CHARLES LAMMAM, BEN EISEN AND MILAGROS PALACIOS

FIRST POSTED: SATURDAY, JULY 09, 2016 07:16 PM EDT


On the campaign trail, the Liberals promised to cut taxes for middle-class Canadians to ensure that “middle-class Canadians have money in their pockets to save, invest and grow the economy.”

Once elected, the Liberals did reduce the income tax rate on the second-lowest federal tax bracket from 22% to 20.5%.

On its own, this tax relief would be welcome, especially since the average Canadian family currently pays more than 40% of its annual income in taxes.

However, since assuming power, the Liberals have also implemented or announced a host of tax hikes that will more than wipe out the benefits of the income tax cut.

Far from leaving more “money in their pockets,” the federal government will actually reduce the take-home pay of middle-income Canadians.

The latest tax increase announced is the payroll tax hike that will be used to finance the expansion of the Canada Pension Plan (CPP).

Once fully implemented in 2025, the total CPP contribution rate (which is split notionally in half between employees and employers) will increase from the current rate of 9.9% to 11.9% of eligible earnings up to a maximum of $72,500.

In addition, earnings between $72,500 and $82,700 will also be subject to the CPP tax, albeit at a lower total rate of 8%.

These changes represent a substantial tax increase that will more than wipe out the benefits of the recent income tax rate reduction for middle-income Canadians.

Consider, for example, someone with taxable income of $54,900— the current maximum earnings threshold for CPP contributions.

The income tax rate reduction will reduce this person’s income tax by $144.

However, if we assume the CPP changes are fully implemented this year, that person will pay an additional $514 in CPP taxes.

And this doesn’t account for the additional CPP taxes paid by the employer on his or her behalf (another $514).

Yes, the federal government has said that additional contributions to the CPP will be tax-deductible for income tax purposes, so this worker would get some of their increased CPP contributions back by claiming a tax deduction.

But it’s clear that the net effect of these tax changes is a tax hike— not a reduction.

Things look even worse for a Canadian with taxable income of $45,282 — the lowest income level of the tax bracket where the Liberal tax cut applies.

This person will receive no benefit from the income tax reduction but will have to pay $418 in additional CPP contributions ($836 including employer contributions).


Rest of the sad reality is here: http://www.torontosun.com/2016/07/09/wh ... ss-tax-cut

[K_teela]

What middle class tax cut?


The latest tax increase announced is the payroll tax hike that will be used to finance the expansion of the Canada Pension Plan (CPP).

The CPP isnt a tax, it's a pension fund.

Pay more into it, get more out of it. It's clear that most Canadians aren't saving for their own retirement, and this is slightly helping that issue so people will be less likely to rely on other forms of assistance (and thus draining public funding).

[Rwede]

The CPP isnt a tax, it's a pension fund.

Pay more into it, get more out of it. It's clear that most Canadians aren't saving for their own retirement, and this is slightly helping that issue so people will be less likely to rely on other forms of assistance (and thus draining public funding).

It's a tax. I know, you're uncertain what that means. It means money taken from you with no direct, equal benefit back to you.

Just look at a big drop in the take home portion of your paycheque (if you in fact get one) and realize that the guy who promised you a bigger paycheque lied his *bleep* off for your vote.

[GordonH]

Individual earning $1900 biweekly on September 1, 2015 and today has a drop of $4.90 on Federal income tax amount.
Don't spend it all in one place

[K_teela]

It's a tax. I know, you're uncertain what that means.

It isn't, and you know better than that. You can actually claim a tax deductible for your portion of CPP contributions. Would you consider a defined pension plan or company pension plan to be a tax as well?

[Veovis]

Under the current governments changes to "help" middle class families, middle class families will have less money from now on. Do you see how that is a bad thing?

CPP increases will not save people from having a poor retirement when they are negligent their entire lives towards their retirement. CPP is not and should not be your planned retirement fund.

[hobbyguy]

The middle class never gets a real tax break. If you haven't figured that one out...

[Rwede]

The middle class never gets a real tax break. If you haven't figured that one out...

Exactly. Yet Justin's campaign cornerstone was a middle class tax break.

The only "break" was breaking his promise. Again.

[fluffy]

The CPP deduction is not a tax. And lets not lose sight of the fact that those who will see an increase in their CPP contributions will also see an increase in their benefits once they get old enough to collect.

[Rwede]

The CPP deduction is not a tax. And lets not lose sight of the fact that those who will see an increase in their CPP contributions will also see an increase in their benefits once they get old enough to collect.

What qualifies you to disagree with every professional economist in Canada?

[Veovis]

The CPP deduction is not a tax. And lets not lose sight of the fact that those who will see an increase in their CPP contributions will also see an increase in their benefits once they get old enough to collect.

And that increase will never even come close to paying back the principal people lost in the long run. The changes are pretty much trying for votes by promising a little more money to people in 20-40 years and taking far more from them in the mean time and all the foolish here is "oh good the government is fixing it so I can be even more irresponsible now and have a big paycheck later". When later comes they are often the same people crying "Why didn't the government do more for me?"

[TimmyE]

Yes, technically not a tax, but I am only interested in what my take home pay is. I'll probably win some and lose some, but in the end, it doesn't make much difference.

And you should also remember, the tax cut in the middle also benefited the high end as well. Such that this boondoggle of a policy is costing us taxpayers a billion dollars in lost tax revenue.

[Lady tehMa]

The CPP deduction is not a tax. And lets not lose sight of the fact that those who will see an increase in their CPP contributions will also see an increase in their benefits once they get old enough to collect.

I have a theory that they government is trying to stress us middle income (or barely middle income) earners so badly that we'll drop dead before or shortly after retirement, so we don't end up touching the CPP.

[fluffy]

What qualifies you to disagree with every professional economist in Canada?

Please elaborate.

[Hurtlander]

What qualifies you to disagree with every professional economist in Canada?

Every professional economist in Canada ? Are you really suggesting that Federal Liberal cabinet minister John Mccallum who not only has Ph.D. In economics, but is the former chief economist for RBC, and was a senior VP for RBC, isn't a professional economist ?