Ed Broadbent has the numbers on what a tax structure tilted towards the rich costs:
According to a recent study in the Canadian Tax Journal, the top 1 per cent of individual taxpayers earn 11.7 per cent of all income, but receive almost all of the benefit of the stock options deduction and 87.4 per cent of the benefit of the capital gains deduction. In the case of both stock options and capital gains, only 50 per cent of income is liable to tax.
The top 1 per cent also receive almost one half (47.8 per cent) of the benefit of special tax treatment of dividends. Even within the top 1 per cent, benefits are heavily tilted to the very rich.
These tax loopholes are costly. Money needed for hospitals, schools and infrastructure is unfairly left in the hands of the rich. Partial inclusion of capital gains in taxable income costs the federal government alone $3.6 billion per year; partial inclusion of stock options costs $725 million per year; and special tax treatment of dividends costs $3.7 billion per year.
The Paradise Papers make clear that Canada treats the rich like most so called "advanced" democracies. And they explain why these democracies are in trouble:
Tax avoidance and evasion by the rich ultimately undermines democracy: it starves social programs and public services, increases after tax income and wealth inequality, and further concentrates economic resources in the hands of a few. The overall message to a majority of Canadians is that the rules of the economic game are rigged against them.
The Liberals campaigned on a platform to restore democracy. But, Broadbent writes, their hypocrisy is "stunning."
Image: taxfairness.ca
12 comments:
Although the spotlight has shone brightly on the Paradise Papers, this too shall pass and nothing will change, particularly with our neighbours to the south touting their big tax heist. Here, we have Justin telling us "nothing to see here" with the Bronfman stash. He is right to a certain extent, what they're doing is mostly legal, but we can take to the "bank" that legality was no accident. Meanwhile the rest of us see much of our measly pay cheques subject to taxes of every form and our savings, via the RRSP, is then double taxed and who can afford even $5K (of after tax income) into a TFSA? Stunning indeed, but the other half of the story is more stunning.
There is nothing acccidental about this inequality, waterboy. It has been carefully planned and executed.
As I read Broadbent's comments this morning,Owen, I was struck to be reminded of all the tax advantages that accrue to our 'betters. His suggestions for redress will never come to fruition, neither by this or future governments. "The little people' will be left holding the tax bag in perpetuity, Justin's increasingly empty rhetoric notwithstanding.
That may well be, Lorne. But, if the Leona Helmsley's "little people" are ignored, we could wind up with a Canadian Donald Trump.
Many years ago we wandered into Grand Cayman. In the main square were Canadian banks. The BNS had a substantial four story building there. In the little BC town where we lived the BNS leased a storefront in a mall. It was pretty obvious where the bank's priority lay.
If the Liberals do the nudge nudge wink wink on this, the NDP will form the next goverment.
Today the Montreal Gazeete part of the post horror I must admit, called the owner of the Ottawa Senators on the carpet for living in the Barbados until he needed a new kidney and now asking the taxpayers to build him a new stadium.
If the Liberals can not confront all the skeletons and bagmen in their closet all is lost.
Those who supposedly know what they're doing always follow the money, Toby.
Our sins always catch up with us, Steve.
On the Oct 2000 capital gains tax reduction, as related by Linda McQuaig in "The Trouble with Billionaires", Viking Canada (2010):
"Listen to Leo on this. Because he is right."
- Jean Chretien
"Without Chretien, this doesn't get done."
- Leo Kolber
...
I didn't realize that the RRSP led to a form of double taxation. Can someone explain?
There's a long history of this stuff, John. That's a good question. I thought RRSP's were about deferred taxation.
RRSPs are about deferred taxation, but problem is, Owen, they didn't warn us that taxes would be more than what we saved in those early year when we were contributing.
Being of the female species, I wasn't allowed to participate in any company pension plan (all the males were, however) until I decided to move to government for less income but the ability to pay into a pension.
I have done some estimated calculations and I figure that in all those years that I put $1,000 into RRSP which at the time saved me $300 in income tax (good deal, right?) I wasn't expecting that over 30 years later, when added to my various small pensions, with say, a basic Fed tax rate of - say 15% - would cost me close to $300 per year, for every year thereof. So was it worth it? maybe not, but without a registered pension plan from my employers who were major well known companies, including banking institutions, school boards, mining and equipment corporations etc. this my best option. At the end of the day, I'm fine financially and am not complaining, but it still rankles that the richest still were offered far more opportunities to reduce their income tax exposure than I was.
By the way, in the mid 70's I can recall an article in our local paper a very interesting piece: it stated, according to CRA, that a single man earning $200,000 per annum paid LESS income tax than a married man with a wife and 2 kids to support, earning a mere $18,000 a year. I think its been ever thus, and it continues to be ever thus. I can only assume that for the rest of us, we can only choose to live within our means and hope that a continued 1.7% interest on our savings/RRSPs will suffice.
For decades, Lulymay, we were sold the lie that, if we gave the wealthy preferential treatment, they would shower their wealth on us. It was a lie. It was always a lie. Your experience bears witness to that fact.
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