What middle class tax cut?

[Rwede]

Isn't that easy. It's the employers fault they don't make enough because they treat their employees well, but if they adjust for cost changes you then feel they are bad or terrible employers.

As for the 200K number those calculations and back ups have all been posted in this thread. As I noted, you want your argument to work, therefore ignore the overall math that counters it as reality when supporting bad policy isn't helpful.

You want to ignore the extra 4% on 28,200 that's fine, but that is part of the changes. The actual figure when adding in employer contributions is $418,485.25 working from 20-60. (and that's generous as it excluded to continued CPP from 60-forever taken from cheques), this is a principal balance the government will hold and your family will never see, this is ONLY the extra costs.

IF some old lady needs to count pennies to get her milk perhaps you should give her the same lecture you apply to employers, which was "she has other problems to worry about and CPP won't fix it"

I know how little my Father has in retirement, and so does he, and he knows why, but he doesn't run around whining about it either, he found a way to live a great life, inside his budget. CPP increases will never help my retirement desired budget, quite the opposite.

I do look forward to seeing you at the grocery store lecture old people the same way you think employers can be lectured. Or do your convictions only hold for one side of an argument?

10/10!!!

No, wait, 11/10!!!

[K_teela]

Isn't that easy. It's the employers fault they don't make enough because they treat their employees well, but if they adjust for cost changes you then feel they are bad or terrible employers.

I still think a business with a multi-million dollar payroll has made some pretty bad choices if something as small as a 35k increase of CPP is going to put them in the red. There is something to be said about treating your employees well, but there's also a lot less job security if the company will all of a sudden have to start laying people off, or be unable to purchase new equipment/materials (whatever the business is) because they choose to tread such a fine line (in my opinion it would be better to have a bit more profit/money saved for a rainy day, and offer bonuses instead when things are going well, and then you can afford to not fire your staff during a slight dry-spell). Any company should have at least something saved up for a rainy day, or strive to become more efficient to reduce costs at that point. That's my opinion, and if you're offended just because someone has a different opinion...it's not my problem (I swear people in here don't actually like democracy, and that they would prefer a dictatorship that caters to their own views as they get pretty upset if someone has views different than their own). The increase isn't even happening all at once, it starts in 2019 and the full 1% comes into effect in 2025.

As for the 200K number those calculations and back ups have all been posted in this thread. As I noted, you want your argument to work, therefore ignore the overall math that counters it as reality when supporting bad policy isn't helpful.

No calculations or backups have been done to show that the increase would amount to this much. It's just a number you spat out here.

People accept CPP as it is but they are looking at a sizable increase to lifetime contributions. (around 200,000 personally after 5% interest.) That is a nice condo that people can no longer afford all so they can get an extra 20 bucks a month in 40 years. NEver mind the 200K employers are out as well.

Whereas I actually provided you with some basic calculations/reasoning which I believe to be accurate and not biased...which you choose to ignore.

You want to ignore the extra 4% on 28,200 that's fine, but that is part of the changes.

You mean the expansion of paying 4% (not even the full 5.95%) on income between $54,900 and $82,700? It's not ignored, just not used in the last example....but here, just for you.

The extra 4% between that salary range equates to a maximum of $1112 per year. Combined with the increase from $0-$54,000 is a total increase of $1628 per year. So an individual making $82,700 a year pays $135.66 more a month. Now if you factor in the income-tax adjustments due to CPP it becomes an extra $107 per month for someone grossing $6891 a month is not too bad.
If you even want to factor the income tax change as some others on this forum wanted to bring up, it removes another $657 from that amount, making the average monthly change is just paying an extra $52.25 a month for someone who grosses $6891 a month, who should already have no trouble already maxing their RRSP/TFSA.

Someone who had contributed at that salary, would receive a CPP pension of $19,900 per year ($1658 per month) in 2016 dollars. An increase of $565.83 per month.

Now since you'll argue for investment sake (what if I grew that money at 5%) I'll go through that too.

The overall difference of the "middle class tax cut and CPP expansion" for someone at this income is $52.25 a month, which if was invested monthly at 5% per year over 40 years adds up to $77,777.50. If you live for 20 years, collecting $19,900 per year...you have drawn out $398,000 total. $135,800 of that is extra from the CPP expansion which is still greater for the individual than a 5% return rate on an investment. The businesses do end up supplementing, but this isnt a fund meant to draw on until 0, it's supposed to carry on. This increase is also required to support the boomers retirement, while also being able to continue on the fund to future generations.


So yes, this is all a net positive for all workers no matter which way you look at it, and also has no effect on your TFSA/RSP contribution room, which you can still take advantage of all 3.

It's not a good sole retirement plan, but since we have a lot of numbers recently like inflation being 2.3%, and nominal wage growth being 0.4% for BC last year...it's a good change as a lot of Canadian citizens are struggling to save in todays market.

this is a principal balance the government will hold and your family will never see, this is ONLY the extra costs.

IF some old lady needs to count pennies to get her milk perhaps you should give her the same lecture you apply to employers, which was "she has other problems to worry about and CPP won't fix it"

They actually added a survivor benefit to the CPP as well, so for example...if the husband worked all his life and is collecting CPP dies, it would get passed on to the spouse...so that "old lady" struggling to buy some milk would have a much higher quality of life.

I know how little my Father has in retirement, and so does he, and he knows why, but he doesn't run around whining about it either, he found a way to live a great life, inside his budget. CPP increases will never help my retirement desired budget, quite the opposite.

Nobody is complaining (well some are...and they also blame the government and require assistance from more social programs...which drains the federal budget, if they had a bit more from the CPP they wouldn't need to drain as much from the federal budget either), and your father is a perfect example of the type of people who would benefit most from this expanded CPP. Even if he isnt whining, that extra bit of money would allow him a bit more freedom to improve his quality of life, as it would forced him to save slightly more than he did, for a better quality of life today.

I do look forward to seeing you at the grocery store lecture old people the same way you think employers can be lectured. Or do your convictions only hold for one side of an argument?

See now you're just being rude with your underhanded insults, I say if an elderly person living near poverty had a bit more it would improve their quality of life...and you choose to turn it around into some lame insult about lecturing old people. I thought you were one of the more level headed people on this forum but apparently I was wrong....so there's no point in really discussing this anymore if you're unwilling to have a respectable discussion yourself. So I'm done with this thread, and going to go enjoy the sun before turns into rain again :) I suggest you do the same, there are more important things to life than arguing over some minor CPP changes.

I understand some people won't like it, they're in their 50's and will see a bit of an increase with not much of a benefit, but this generation is also most likely to have a pension of some other sort which are more difficult to come by now as most companies have cut them...but people need to have a less selfish view on things. Just because it doesn't benefit you, but benefits someone else does not make it a bad thing.

Anyways, have a good weekend

[Veovis]

I still think a business with a multi-million dollar payroll has made some pretty bad choices if something as small as a 35k increase of CPP is going to put them in the red. There is something to be said about treating your employees well, but there's also a lot less job security if the company will all of a sudden have to start laying people off, or be unable to purchase new equipment/materials (whatever the business is) because they choose to tread such a fine line (in my opinion it would be better to have a bit more profit/money saved for a rainy day, and offer bonuses instead when things are going well, and then you can afford to not fire your staff during a slight dry-spell).

And everyone else supporting your position in this fashion call employers who do that greedy pigs. You do understand small business is the main employer across Canada and they don't pull $200,000 a year profits after paying themselves right. Watch Shark Tank all you like but those are hand picked companies for TV purposes and aren't the norm and a pile of them get slapped for the "not having paid yourself" profit line crap you think exists.

Even IF, BIG IF, that was the case you feel employers netting $200,000 can give up another $32,500 on a comfortable profit line as casual. Now I know you wouldn't cheer to lose 16.25% of ever doller you earn, but then you would just tell everyone it was because you had a bad employer I am sure.

As for the rest. You didn't read and then posted failed math excluding the entire picture, but that's what helps you support your flawed side and that is fine. I hope you enjoy your weekend as well.

[sooperphreek]

The employer's thought process is, "This employee can only cost me X dollars. That X dollars is made up of salary and benefits. CPP is a benefit cost. That benefit cost is going up for me, so no raise to the employee so that I can stay on budget of X dollars for this employee." I know, because I do this exercise every year with my employees, and so do other businesses.

Employees are going to lose out on raises in lieu of the extra CPP cost to the employer. Period.

And the employees are going to have to fork over their portion of the cost, which comes right off their paycheques. Period.

Employees will have less money to pay the rent and buy food. Period.

perhaps the employer should stop looking at an employee as a cost. the employee is the reason you have a business. if you dont like it just hire from labour ready. they pay the cpp and you dont.

[hobbyguy]

I agree. My observation was that businesses/business units that viewed employees as a cost center/liability failed to reach their potential and underperformed. Businesses/business units that viewed their employees as assets to be maximized always did better.

[Veovis]

Did you guys work for free your whole life, did you think your wages, benefits, CPP, EI, WCB, LTD, Health, Dental, MSP etc came from magical land or did you at some point realize those things actually COST money?

Most employers are great people who provide good jobs and all you have is scorn and rudeness towards them and yet after they take all the risk, spend all the money, and provide people with jobs somehow, SOMEHOW you think the employee is the selfless noble warrior somehow.

What a terrible attitude towards the people that literally put food on your table. Without employers, there are no jobs for you to be so callous about.

[sooperphreek]

Did you guys work for free your whole life, did you think your wages, benefits, CPP, EI, WCB, LTD, Health, Dental, MSP etc came from magical land or did you at some point realize those things actually COST money?

Most employers are great people who provide good jobs and all you have is scorn and rudeness towards them and yet after they take all the risk, spend all the money, and provide people with jobs somehow, SOMEHOW you think the employee is the selfless noble warrior somehow.

What a terrible attitude towards the people that literally put food on your table. Without employers, there are no jobs for you to be so callous about.

thats not true at all. the savior complex is comical. besides - its businesses with their hands out to the government for corporate welfare at every turn. being subsidized and taxed less than needs be just to satisfy their pouts. if i choose to work for someone it doesnt mean that there isnt work out there i cant find on my own. i just know how modern capitalism hates competition. so i help them out by not competing.

[hobbyguy]

veovis - you make assumptions.

I come from a family business background, and went on to run businesses and business units for others. I have also been tapped to do business unit turnarounds - and was successful in doing so. The businesses I have been involved in managing ranged from retail through to manufacturing and wholesale trade. Both non-union and union.

The principles that I outlined regarding viewing employees as assets to be maximized and looked after are well established and proven.

[Veovis]

veovis - you make assumptions.

I come from a family business background, and went on to run businesses and business units for others. I have also been tapped to do business unit turnarounds - and was successful in doing so. The businesses I have been involved in managing ranged from retail through to manufacturing and wholesale trade. Both non-union and union.

The principles that I outlined regarding viewing employees as assets to be maximized and looked after are well established and proven.

Yet you accuse employers of seeing them only as costs in a very dismissive and rude way. How you feel you must have been the only person to treat employees well is quite arrogant. Those types of comments really do show what little respect you have, it's not an assumption, it's been shown by yourself. I'm glad you ran some decent businesses, I will note you worked for family business never actually had your own cash on the line and perhaps you did well at your job and good for you, but it still clarifies your views of "spending other people's money is easy" no matter what real math and damage those real costs equate to.

It is quite simple that you don't feel depriving the new generation of hundreds of thousands of dollars each for a program they will see little benefit from as bad and against their future ability to own anything and retire at anything other than really old age, I don't think that is a positive route for my kids and so I disprove.

The problem with idealistic feelings is when the real math of things crushes them. Reality sucks, but some people, especially the next generation have to live with the real affects of what made a few people already set in life "feel better".

[hobbyguy]

My statement regarding how employees are viewed by employers was binary. I did not imply the singular view you portray.

I am fully aware of the work involved in running a business, and the elements of risk involved. I did not intend to imply that entrepreneurial employers do not deserve a good ROI.

What I am implying is that a good business plan views employees as assets to looked after and maximized. That view is not new, and goes back to likes of the Cadbury family and Henry Ford. It goes back even further to Confucius, whom I can paraphrase "If you do everything for profit, you will generate great resentment".

The dichotomy between the "Wall St." economy and the "Main St." economy is one that needs resolving. As it is currently constituted it creates a lot of tensions that can not lead to anything good.

Amongst other things, I am of the opinion that the "Wall St." economy is actually bad for small and medium businesses, killing opportunities for small and medium businesses. In examining the details of the Legatum Prosperity Index, I noted that Canada's worst ranking (and Canada is a highly rated country) was in the category of Economic Opportunity. In looking for the reasons behind that, I think we kind of get to "the Walmart effect". http://www.businessnewsdaily.com/2405-real-cost-walmart.html

IF you are a retailer, these days it is almost impossible to avoid "the Walmart effect". You may want to pay your employees more, but having a deliberately low wage and powerful competitor like Walmart forces you to follow suit. What that then does is it reduces the customer potential of both the Walmart employees and yours. They just don't have as much to spend. I only chose Walmart because they are the obvious and discussed example. For another example, think of the impact of a "Wall St." decision on Leamington, Ontario http://www.cbc.ca/news/canada/windsor/h-j-heinz-co-leamington-1909-2014-1.2686019 and what that meant to small and medium businesses there.

In essence, "Wall St." (the likes of Bain et al) have and are destroying the "Main St." economy one step at a time. Remember, it isn't China or Bangladesh or whomever that moves production facilities to low wage countries, it is "Wall St.".

So indeed, I understand the challenges that small and medium businesses face. It may seem "a slap in the face" to them to deal with increased CPP payments, but "Wall St." has to pay them too, and the competitive level will rise resulting in little net effect.

But for the "Main St." worker, there is no choice but to demand such a change. "Wall St." doesn't care about them, and does not wish to pay them enough that they can effectively contribute to RSPs, let alone TFSAs. http://www.macleans.ca/economy/economicanalysis/the-most-important-charts-for-the-canadian-economy-in-2016/ Have a look at the "spider" chart of family assets by quintile. And have a look at the "More inequality in the slices of the economic pie". 40% of the population has lost economic ground for 20 years. They need that CPP increase. The 50% in the middle have just been treading water for 20 years. Probably "no harm nor foul" there with a CPP increase, although context matters.

If you need someone to blame for the need for an increased CPP, blame "Wall St.".

[The Green Barbarian]

perhaps the employer should stop looking at an employee as a cost. the employee is the reason you have a business.

Thank you Vladimir Lenin. Yes, that's exactly it. The guy who takes all of the risks and creates the business and makes all of the decisions and gets all of the start-up capital has nothing to do with the success of the business. It's all the highly replaceable minimum wage schlub's responsibility, and therefore should get all of the benefits.

[Veovis]

So HG is all these evil companies that employ Canadians pay so little as to allow them to save in a TFSA or RRSP, how do you justify the reduced take home pay from increased CPP, of which goes into a government bank account never to be seen again but for a promise of a maybe someday I will give a small portion back.

Why not create real reform for retirement planning. CPP currently is a reasonable tool used to help the fiscally negligent through their lives have a better retirement, not comfortable, not full of all their dreams, but better than it would have been. Why not see the new changes as a way to create actual reform and long term income growth for all Canadians even the negligent ones. Why have all the money go to a government account to disappear?

What if they made a new type of RSP, in fact we should lower CPP costs and it's benefits and pair it with the new LRSP (locked Retirement savings plan) This plan is linked to the Canadians SIN number and inheritable by their estate to be distributed as desired, children, charities, or their pet dog, who cares. Heck you praise the governments management of CPP we could even let them have this control as well. IT would be an additional payroll deduction same as CPP, a blended matching by employer to be less of a strain from the proposed CPP plans (which are bad the math clearly chowed it) and we create an actual retirement account for individuals all across Canada and the government doesn't get to keep the cash......if the government hates the idea of not keeping peoples money, a big BIG why? has to happen.

In fact people who additionally contribute to RRSP's and TFSA (withdrawals noted and netted as well as well) could actually receive a rebate from those accounts that their additional went to as they have already done so. This means, the Canadians that just don't bother, will have greater retirement funds and savings, and those that do, will get to keep what they already had.

Now CPP exists, people have better retirement options, and greater wealth for all when they retire. It basically takes the responsibility of saving for retirement away from those that don't bother, what all of it really means is more and more Canadians need a babysitter to not waste a pile of money, but heck, with little thought I think I have the grounds for a system that would actually meet the term reform, and be better.

Or we could just applaud taking more and more off paycheques and pretending it actually helps.

[hobbyguy]

Actually, what I am saying is that for the prudent employee who plans for retirement, there will be little difference if they simply take the CPP contribution as part of their conservative portfolio allocation.

What I am also saying, per the article I posted before, is that for most folks, having a portion of their retirement savings in an annuity is a very good idea. The CPP fulfills that function, and folks will always know that they will have basic living costs covered (low "on the hog"). Every annuity plan works that way, you do not get your capital remainder when you pass. Those that pass early lose, and those that pass late gain. However, you get a constant and indexed amount of "living money" and it is larger versus the variable and often declining pay out from RIFs etc.

I am also saying that increased CPP will help to keep taxes down by taking pressure off the GIS system.

A "locked RSP" plan operated in the same way would yield a lower pay out and therefore folks - and employers - would have to contribute more to yield the same guaranteed income. Especially considering it would not be indexed.

It is a difficult balance. The idea behind CPP is provide basic living at a reasonable standard, and the cheapest incremental way to do that is through an annuity set up. In that fashion it means that if you live to be 85 or 90 or 95 or 100 or 105 you always have an income.

By the way, that is also how defined benefit pension plans (the ones I am aware of) work. Your descendants get nada when you pass.

[Veovis]

Why would it provide a lower payout when run by the same group you say do a bang up job?

And how do you still think that over $200,000 at retirement is "little difference" ? If the employer portion is counted it is around $420,000. Those are massive amounts that would change a persons retirement, yet the government gets to keep and hold those balances.

CPP isn't bad, but the changes are, it will not help the financially negligent, and makes it harder for the financially prudent, but it sure move an obscene amount of money from the hands of the people to the hands of the government though doesn't it?

IF we feel we need to make government the full babysitter of peoples bank accounts, let's add spending allowances by income level as well. IF you make under $25,000 only one cell phone per household and no tablets or subscription games.....etc etc etc. Increasing CPP is just more argument of "helping" by making people have less than they could have forever.

Understand, I say COULD have. Many people SHOULD have a lot more than they do but they don't, now is that the governments fault? Not often if ever, yet people have this "let's blame the system for my crappy actions" I think we should have a system for Canadians, not a punishment for the good ones to help the crappy bad ones.

My plan?....to not rely on CPP as I don't trust the program. Sure it will always be there but I don't have blind faith they will treat me right and pay out all these piles of money some of you think will happen, heck even my retirement plan they forcast CPP amounts I highly doubt, I'll take it if it happens, but counting on that is just plain foolish.. The people crappy now will have a crappy retirement, that won't change.

Taxes are good, CPP, is good, EI, WCB, many many programs are very good, but paying a decent value and paying to let the government hold the bulk of your financial assets and keep them isn't. ON a 40 year scale, this will not be a benefit the people hoped for, and more will need it as less will have had as much to save.

[hobbyguy]

The reason that an annuity pays out more than an RIF is essentially risk.

An RIF is not guaranteed, the payouts are not guaranteed, but the capital is yours (as are capital losses). If you invest that funding today, and you do so in a conservative fashion, you will get roughly 3 to 3.5% return that you can draw without depleting capital. Additionally, because you are on average going draw all of the returns out, the amount of the returns is not indexed, and over time will lose a lot of purchasing power. And don't forget you will most likely be paying fees on the RIF account.

CPP as an annuity set up has less risk. They have no obligation to return your capital. Actuarial tables allow them to spread the payout risk (folks living to be 110 etc.) across the entire working population, which then presents very little if any risk. Additionally, if they are able to generate returns in excess of payouts, they get to apply those to contingency funds. Those lack of risk factors etc. allow them to guarantee payouts on the order of 6.7%. But wait, they also index those payouts to the CPI (imperfect, but better than nothing) which means you actually get closer to 8%. And don't forget that CPP now pays out 60% as a survivor benefit to your spouse.

So, even if you go "semi-conservative" on a RIF and get 5% return, you would need to deplete your capital 3% per year and increasingly more as you capital depletes to match CPP payouts. Surprisingly, unless my formulas are off, if you take the first year's capital and pay out 8%, with a 5% return on the declining balance, you wind up having used up ALL of the capital after 21 years. Retire at 65, run out of money at 86. And that's assuming that your additional risk taken always pays out (unlikely over 21 years).

My conclusion is that for the individual, CPP is a great deal.