Liberals' tax increases draining the pockets of middle class

[Merry]

I just received a communique from one of my investment brokers, advising me that they believe Trudeau is now set to jack the tax inclusion rate on capital gains from 50% to either 66% or even 75% in his upcoming budget. There goes the retirement savings of the struggling middle class, and there goes the investment funds we so badly need to the other side of the border. Trudeau's clueless taxing of everything is rapidly killing Canada's economy and driving the middle class into poverty.

The problem with allowing large amounts of capital gains to be tax free is that it is a policy which favours the more "well heeled" as opposed to being a tax benefit easily accessible to all.

That doesn't mean to say that there aren't lots of "middle class" folks who have benefited from this particular tax exemption but, for the most part, the biggest beneficiaries are the most well off in our society.

I know folks whose entire income is from dividends and capital gains, both of which are taxed at a much more favourable rate than income tax. Why should folks like that (who have a 6 figure retirement income) pay a lower tax rate than someone who is earning the same amount of money via a salary?

People with a 6 figure income are hardly good candidates for such Government largesse.

[rustled]

I calculated it out, and the way BC does it, the carbon tax costs me nothing. However, our carbon footprint lower than average.

Then you must not buy anything that arrives on a truck.

Or requires heated or cooled storage, or requires heat or cooling in its manufacture, or is supplied by people who work in a heated or cooled building, or....

C'mon, hobbyguy, you're all about the numbers. How can you possibly believe it isn't costing you anything? My own carbon footprint is willfully miniscule, and I can see the effects of the carbon tax everywhere I look, driving up the cost of everything I must pay for every day. A few cents here, a few cents there, it all adds up. And when it comes to paying for basic necessities, a few cents means a lot more to some folk than it does to others.

[rustled]

I just received a communique from one of my investment brokers, advising me that they believe Trudeau is now set to jack the tax inclusion rate on capital gains from 50% to either 66% or even 75% in his upcoming budget. There goes the retirement savings of the struggling middle class, and there goes the investment funds we so badly need to the other side of the border. Trudeau's clueless taxing of everything is rapidly killing Canada's economy and driving the middle class into poverty.

The problem with allowing large amounts of capital gains to be tax free is that it is a policy which favours the more "well heeled" as opposed to being a tax benefit easily accessible to all.

That doesn't mean to say that there aren't lots of "middle class" folks who have benefited from this particular tax exemption but, for the most part, the biggest beneficiaries are the most well off in our society.

I know folks whose entire income is from dividends and capital gains, both of which are taxed at a much more favourable rate than income tax. Why should folks like that (who have a 6 figure retirement income) pay a lower tax rate than someone who is earning the same amount of money via a salary?

People with a 6 figure income are hardly good candidates for such Government largesse.

There's that wealth envy I mentioned in another thread. In my experience, people who focus on being self-reliant don't care much about the wealthy. They care most about having decent opportunities to earn a decent living, and then about getting to keep what they themselves have fairly earned.

People who are hell-bent on taking from the wealthy "to make things more fair" are mucking it up for the middle classes, too. Using government channels to suck money from anyone doesn't seem to be solving any of our social justice problems. We're just dumping more and more money into a giant sucking hole that never stops sucking, and never produces the results we're told to expect. (Maybe it's because we've reached a critical mass of people who have been convinced they should be handed everything and therefore value nothing?)

I'm guessing most of the ordinary working middle classes are far less put-out by the wealthy than they are by having to foot the bill for every social program some theorist somewhere deems necessary "to save the planet" or "for the good of all". I think that's what drove the backlash against the Democrats in the US, and I'm betting if JT can't get a handle on this, we can expect the same groundswell backlash here in Canada come the next election.

[hobbyguy]

On the BC Carbon tax: https://en.wikipedia.org/wiki/British_Columbia_carbon_tax

"A report by Sustainable Prosperity entitled BC’s Carbon Tax Shift After Five Years: An Environmental (and Economic) Success Story suggested that the policy had been a major success. During the time the tax had been in place, fossil fuel consumption had dropped 17.4% per capita (and fallen by 18.8% relative to the rest of Canada). These reductions occurred across all the fuel types covered by the tax (not just vehicle fuel). BC’s rate of economic growth (measured as GDP) kept pace with the rest of Canada’s over that time. The tax shift enabled BC to have one of Canada’s lowest income tax rates as of 2012. The aggregate effect of the tax shift was positive of taxpayers as a whole, in that cuts to income and other taxes exceeded carbon tax revenues by $500 million from 2008-12"

http://www.macleans.ca/economy/economicanalysis/heres-how-much-carbon-pricing-will-likely-cost-households/

"Different governments will choose different ways of using revenue from carbon taxes. The B.C. government is committed to ensuring the tax is revenue neutral. By lowering other taxes, the province ensures pricing carbon is not the tax-grab that many suppose it is."

That's been established above. Now consider the indirect costs (higher goods costs etc.).

"With direct costs averaging close to $600, from before, that suggests indirect costs are about $500 per year."

That's for a family.

That's for $50/tonne. BC is at $30/tonne. So roughly $300 per year in indirect costs.

So, 500 million in offsetting tax cuts and rebates net. 4.5 million population. 500/4/4.5 = $28 per person. During that period the average carbon tax was $20/tonne, which implies that the indirect cost per family was $200. If a family of 4, then $112 per year on average. So, the implication is that the extra indirect cost is roughly $90/year for average carbon footprint families.

The last time I did our carbon footprint we were just over half of the Canadian average carbon footprint. The rebates we receive exceeded the extra costs on our utility bills and we are not heavy consumers of gasoline, and the differential in taxes pays for the addition $90 and then some. Also, we are generally not big consumers, and that means we probably don't even experience the full impact of the minor increases to indirect costs.

So the tax itself is revenue neutral, in fact revenue negative from the BC government perspective.

In terms of individuals, the net neutrality is significantly effected by choices made. Exactly as intended, use less carbon, costs you nothing. Use even less carbon, and you may even come out ahead. Use a pile of carbon - yup, you pay extra.

[hobbyguy]

I would venture say that the vast majority of Canadians, especially middle class Canadians, receive no tax break at all from capital gains tax relief. If they hold equities, virtually all of them will be held within TFSA, RRSP, RIF, or other such vehicles. Probably the biggest being RRSP.

If you hold a stock in an RRSP, and it rises for a capital gain - you pay no tax. When you withdraw funds from an RRSP, they are taxed as regular income. You do NOT get a capital gains relief. The same is true of RIF, LIF accounts - and probably the other vehicles as well.

Therefore, the effect of changes to capital gains tax relief should have no effect on middle class Canadians.

[maryjane48]

but that doesnt fit the justin is the devil story haha

[hobbyguy]

rustled - it is NOT wealth envy. That is a silly epithet spawned by those who do not wish to pay their fair share.

I paid top tax rates for a number of years, and never felt it was unfair that I paid more. It was just a matter of my civic duty to pay into this country in proportion to my ability to so.

[rustled]

rustled - it is NOT wealth envy. That is a silly epithet spawned by those who do not wish to pay their fair share.

I paid top tax rates for a number of years, and never felt it was unfair that I paid more. It was just a matter of my civic duty to pay into this country in proportion to my ability to so.

Ah, no. It's a term I used to describe what I see, not something I picked up somewhere from someone who didn't wish to pay the share you and mj consider fair.

Personally, I've never been wealthy, and will never be wealthy. It's simply not important to me. I'd rather live simply and as self-reliantly as possible. Weird, I know, not wanting material stuff, not wanting others to do for me what I'm clearly capable of doing for myself. (Lest you think I'm completely self-absorbed, the time I don't spend earning wealth I spend volunteering and pitching in for the neighbours, or just living a relatively non-consumptive lifestyle. Much preferable to chasing the brass ring.)

It's nice that you believe in all the things the government uses your money for, and generous that you didn't mind paying for all this. But do you really have the right to be so generous with the earnings of others?

Not all of us agree that everything the governments use our money for is necessary, or even important, even though it's important to you. Meanwhile, we see there are important issues they could be addressing instead. Many of us consider the governments' spending practices and priorities shameful and wasteful, and are not happy to encourage more of same.

I realize we're not all in agreement here, but my guess is there are a lot of people who aren't being heard by folks who think the way you do. That's where this whole thing has fallen apart in the US.

I'm afraid if you feel your carbon tax example is accurate, nope. Using the piece you referenced, the number $1,100 didn't make it into your own analysis. All your theoretical "we get it all back" doesn't wash. I see money out every time I spend. I've yet to see any of that money back. It's that simple when no one is spinning it, and I'll bet that's exactly what most people see. (And if you think it's efficient to move huge sums of money through government channels, well, what can I say?)

On top of which, there is still no proof, anywhere, that taxing carbon or forcing people to fund this exercise has made one whit of difference to the climate. The modeling that predicted imminent catastrophe as a result of man-made CO2 has been long since falsified, so why do we continue to travel mindlessly down the path those models set us on?

People who think the way you do can laud this exercise in money changing to service a falsified theory until the cows quit farting, but it seems reprehensible to me for governments to continue to form policy around that falsified theory.

As yet, there's no proof the carbon tax will change the climate in any meaningful way. Some day, maybe, and then you can cheerily tell me I was wrong. But for now, it's clear there's no imminent danger after all, no reason to focus so many resources on this issue. Until there is some reasonable proof the carbon tax can make a difference to the climate, surely we have better ways to use our resources.

[hobbyguy]

It is called representative democracy. We all contribute, we all benefit, we all get a vote on the representative that matches our belief system most closely.

We try to avoid "free riders" and have a fair system that reflects the values of the electorate. I never agree with everything that any government does, nor do I disagree with everything.

It is a system of give and take. But one that benefits all.

(And as for the carbon tax, have you forgotten that your income rates went down by up to 1% upon implementation? You may not "see" that as a physical cheque, but you get it. It is one of the reasons that BC has the lowest income tax rates in the country.)

No matter how you slice it, Canadians and BC residents are among the prosperous in the world. We did not get there by not paying taxes.

[rustled]

It is called representative democracy. We all contribute, we all benefit, we all get a vote on the representative that matches our belief system most closely.

We try to avoid "free riders" and have a fair system that reflects the values of the electorate. I never agree with everything that any government does, nor do I disagree with everything.

It is a system of give and take. But one that benefits all.

(And as for the carbon tax, have you forgotten that your income rates went down by up to 1% upon implementation? You may not "see" that as a physical cheque, but you get it. It is one of the reasons that BC has the lowest income tax rates in the country.)

No matter how you slice it, Canadians and BC residents are among the prosperous in the world. We did not get there by not paying taxes.

What happens when a significant part of the population feels the representative democracy does not represent them? Perhaps this is exactly what's at play to the south.

You seem to continue to miss my point entirely. We, who do not share your vision of what's most important, see money for the carbon tax coming out of our pockets. We don't see it return, and we don't see it being put to good use. We see waste.

One percent of our family's BC income tax doesn't compensate us for the $1,100 your piece says it's costing us. Even if it did, surely you can understand that ordinary people, people who don't spend their times crunching numbers the way you do, see this situation.

What's most clear to us is that we have to tighten our belts more each year, and when the government announces new taxes, it matters very much to us why.

There may indeed be a great many prosperous people in this country, and in this province, but those of us who aren't oriented toward prosperity, who simply want to be reasonably comfortable, are struggling more each year. No matter how you slice it, we see our comfort diminishing, and our resources wasted by a government that is out of sync with our practical values.

Nobody's suggesting we should stop paying taxes. How does what I posted translate to not paying taxes? We simply want our taxes to be used sensibly and efficiently, the same sensible efficiency we apply when spending what's left in our pockets after taxes.

[Merry]

people who focus on being self-reliant don't care much about the wealthy. They care most about having decent opportunities to earn a decent living, and then about getting to keep what they themselves have fairly earned.

For your information rustled my spouse and I ARE self reliant (if by that you mean we support ourselves and don't rely on Government programs). We do earn a decent living and, just like you, are concerned about getting to keep as much as we can of what we've fairly earned. Which is why we're concerned about how giving undeserved tax breaks to one particular well heeled segment of society, results in the rest of us having to pay even more taxes than we currently do.


Every time the Government gives one group a tax break, they have to charge the other groups more to make up for the shortfall.

If everybody earning the same amount paid the same amount of tax, regardless of the source, most folks would be paying a lot less tax than they're paying right now.

[rustled]

people who focus on being self-reliant don't care much about the wealthy. They care most about having decent opportunities to earn a decent living, and then about getting to keep what they themselves have fairly earned.

For your information rustled my spouse and I ARE self reliant (if by that you mean we support ourselves and don't rely on Government programs). We do earn a decent living and, just like you, are concerned about getting to keep as much as we can of what we've fairly earned. Which is why we're concerned about how giving undeserved tax breaks to one particular well heeled segment of society, results in the rest of us having to pay even more taxes than we currently do.


Every time the Government gives one group a tax break, they have to charge the other groups more to make up for the shortfall.

If everybody earning the same amount paid the same amount of tax, regardless of the source, most folks would be paying a lot less tax than they're paying right now.

I also said people who are hard left are very focused on taking from the wealthy and redistributing it to those with less because that's what they believe is fair. Perhaps it's your world view of what's fair that has you so driven to taking from the wealthy? You may not be hard left, but some of your views here are in sync with hard left leanings.

Like hobbyguy, your focus seems to be primarily on who pays the taxes, and on how much they pay.

My focus is on what the government needs more taxes for, and how they manage their spending, and whether or not the taxes are being used effectively. That's where I'd start my reforms. Because no matter how much you take to waste, or who you take it from, it's still wasted.

You must mean we should all be paying the same rate, rather than the same amount? What you and hobbyguy aren't considering there is that taking ten percent of a poorer person's income hits them a lot harder than ten percent of a wealthier person's. They don't pay less per litre of milk, or litre of fuel, or kwh of electricity. It seems to me hobbyguy uses a lot of numbers to distract himself from looking hard at the people affected. But there actually are numbers out there that explain just this.

I think focusing on the numbers is a huge mistake. Blending blinds. When something's numerically good for 450 people and absolutely terrible for 50, going ahead with the something that's terrible for 50 people is still terrible. But just blend those numbers and you can remain blissfully aware of the hardship you're causing real people. It's a bad habit to get into. Just as it's a bad habit to get into focusing on who pays the taxes instead of examining how much tax really needs to be collected in the first place.

[Merry]

I also said people who are hard left are very focused on taking from the wealthy and redistributing it to those with less because that's what they believe is fair. Perhaps it's your world view of what's fair that has you so driven to taking from the wealthy? You may not be hard left, but some of your views here are in sync with hard left leanings.

You're mixing "apples and oranges" rustled. Wanting a fairer tax system so that the majority of us can pay less than we currently do is NOT the same thing as wanting to tax the rich to pay for more social programs.

They are two completely different arguments.

I don't want to tax the rich more than everybody else. I want everybody with the same income to pay the same rate of tax regardless of the source of their income.

In our current system, those making $125,000 a year salary pay a heck of a lot more tax than those with the same income who are getting it mainly from dividends and capital gains. Even though anyone making that much money from unearned income is likely a lot wealthier than the working stiff making the same annual amount.

I can think of many examples where retired wealthy individuals (with no mortgage or any kind of debt) are paying less tax than working stiffs who do have debts, plus kids still at home, even though the annual income of the two groups is about the same. How is that fair?

Your tax rate should be based on your income, NOT on the source of that income.

My focus is on what the government needs more taxes for, and how they manage their spending, and whether or not the taxes are being used effectively. That's where I'd start my reforms. Because no matter how much you take to waste, or who you take it from, it's still wasted.

On this we can agree. There is an awful lot of Government waste, and that needs to be addressed. But unfortunately, sometimes the attempts to address the issue just wind up leading to even more Government waste (in the form of more red tape and unnecessary bureaucracy). It's a very difficult problem to solve.

You must mean we should all be paying the same rate, rather than the same amount? What you and hobbyguy aren't considering there is that taking ten percent of a poorer person's income hits them a lot harder than ten percent of a wealthier person's. They don't pay less per litre of milk, or litre of fuel, or kwh of electricity.

No, I am not in favour of a "flat" tax, and for the very same reasons that you are. The graduated income tax system we currently have is a much better system, but if it is to work well we need to remove all the boutique tax credits and loopholes that make the system overly complicated and result in very large inequities.

Naturally everyone is in favour of this, until you target a tax credit that they are currently benefiting from, and then all of a sudden their support melts away. But the fact remains that if we simplified our graduated tax system to say that those who make the same amount pay the same rate, regardless of the source of their income, the majority of us would probably wind up paying less than we're paying right now.

[madmudder]

The government taxing the crap out of the middle class is the BC Liberals. Trudeau is copying the BC Liberals yet most of you defend the Christy Liberals.

[The Green Barbarian]

The government taxing the crap out of the middle class is the BC Liberals. Trudeau is copying the BC Liberals yet most of you defend the Christy Liberals.

I don't see too many people defending the BC Liberals. We just lament the fact that the only other option to vote for is a total joke and a complete disgrace to poltical parties.