POLITICAL STATEMENTS AGAINST THE NDP PARTY ARE BLATANTLY FALSE AND FINANCIALLY DISCRIMINATORY

Posted on November 29, 2016 by ffswpadmin

POLITICAL STATEMENTS AGAINST THE NDP PARTY ARE BLATANTLY FALSE AND FINANCIALLY DISCRIMINATORY

(These thoughts are purely the blunt, no nonsense personal opinions of the author about financial fairness and discrimination and are not intended to provide personal or financial advice).

A recent opinion letter in a local newspaper prompted this blog post. The letter again targets the Alberta NDP party for socialism of the rich instead of the Conservative party. “Westhead must be too busy to read history books” (since) he states: ‘Albertans do want to return to the past; but not to this misfit ideological premise about socialism for the rich and austerity for everyone else that the NDP conjured. While Mr. Westhead mistakenly believes there was socialism for the rich in Conservative Alberta, his solution is a failing socialist ideology for all. Your government has downloaded a debt, taxes and policies that are a burden to families….voting Conservatives in again in 2019 – Alberta will return to the free enterprise, socially reliable province it once was”. He is referring to many Harper oil pipelines (good) and NDP carbon tax (bad).

Re statements on socialism and left-wing politicians, analysis shows federal and provincial Conservative and Liberal policies surreptitiously and purposefully eliminate the middle class, thus practising selective social democracy (socialism). Advertently or inadvertently, future class system will consist mainly of the poor, upper-middle class and wealthy while favouring married or coupled family units with multiple ‘marital manna benefits’.

During federal Conservative and Liberal party reigns, even while reducing social programs helping vulnerable populations of aboriginals and veterans, introduced programs like TFSAs (Harper 2009) pension splitting (Harper 2007) and OAS clawback (Harper 2011) particularly benefit the wealthy and married or coupled family units. In OAS clawback only about five percent of seniors receive reduced OAS pensions, and only two percent lose entire amount. Why should married or family units who have never had children (double income, possible double TFSA and RRSP) be able to ever use pension splitting, no OAS clawback plus tax avoidance schemes for couples while singles get nothing comparable?

During provincial Conservative party forty year reign and oil boom, just 1,048 new affordable housing units in Calgary were built over the past 14 years. Two thirds of shelter beds in Canada are filled by people who make relatively infrequent use of shelters and are more likely forced into shelters by economic conditions (due to structural factors, the state of housing and labour markets that destine the very poor to be unable to afford even minimum-quality housing). In 2001, Alberta Conservatives brought in 10% flat tax, raising the tax rate from 8% to 10% for lowest income Albertans. There never has been an Alberta Advantage for the poor.

Federal Liberals have continued Conservative benefit programs like Canada Child Benefit in perpetuity which is based on income and number of children, but not net worth and assets, so families may receive large tax free child benefits and continue increasing wealth even while already having huge assets.

Elimination of the middle class is also evident in Liberals’ proposed Canada Pension plan enhancements without an increase in minimum wage (canada-pension-plan). Persons with highest YMPE of $82,700 (massive jump from 2016 $54,900) and forty years of contributions may receive 33 percent CPP benefit or about $2,300 per month, while those making a minimum wage of $15 per hour, $30,000 annual income with forty years of contributions may receive about $800 per month. CPP pensions are dependent on salaries. CPP contributions are not collected on boutique tax credits. Low salary equals low CPP retirement pensions.

Calculations of a simplistic nature on $10 minimum wage and 2,000 hours shows that Alberta family with two children and each spouse earning $20,000 without any other deductions or benefits will pay about 15% Federal tax and 10% AB tax for a total of $5,000 each and receive full Canada Child Benefits (CCB) of $12,800. Family income will equal about $42,800. CPP pension at age 65 in 2016 dollars may equal about $5,000 per person annually. If $15 minimum wage or $30,000 each is applied, total Federal tax and AB tax will be $7,500 each. Family income will equal $57,800 with full CCB $12,800 benefits since reductions only begin at $30,000. CPP pension might equal about $7,500 per person.

Above calculations easily show increased minimum wage income for a poor family benefits everyone through collection of increased taxes, less dependency on government handouts, greater financial well being and CPP retirement benefits for the income earner, and the economy through increased spending on goods and services.

Schizophrenic political systems exist where CPP pension enhancements are controlled federally, but minimum wages are controlled provincially. The continued unwillingness of government and business to promote minimum wage increases to indexed living wages means the poor will remain in poverty even with pension systems that are supposed to improve financial quality of life as seniors. The new NDP childcare program is the right thing to do, but it should be balanced by reductions of other boutique credits. However, this is impossible, again because of provincial versus federal control. Continuing to add monetary programs for select family groups will continue to drain the financial system if boutique tax credit programs and tax avoidance schemes where upper-middle class and wealthy benefit the most are not eliminated in their entirety. Net worth and assets need to be included in any financial program so that the poor and lower class benefit the most from these programs.

The effects of this ‘income redistribution’ and ‘culture of dependency’ that the right claims they are not guilty of will result in future generations being ridden with high taxes because of high debt level to service these programs. Where are the economists and financial advisors for the government so that outside the box solutions for financial equality of Canadians regardless of marital status and using a balanced approach so that all financial programs are reviewed against each other for financial validity and fairness? Canadians deserve much better financially from their political parties.

Upside-down financial systems and marital manna benefits have created a nanny state where families want it all and once these benefits are in place, it is very difficult to eliminate them because of voter entitlement. Upper middle class and wealthy married/coupled persons have been made irresponsible by their own politicians and government. The right keep talking about overspending, but they fail to mention that their boutique tax credits have resulted in upper-middle class and wealthy not paying their fair share of taxes.

Financial silos (tax-credit) are filled to the brim for families and married persons, but remain empty for singles and the poor. Pipelines and boutique tax credits without steady rise of minimum wage and greedy oil salaries without tax avoidance capabilities means less tax revenue to fill financial coffers, less food on the table and demeaningly low CPP pensions in retirement for the poor. Every political party has been guilty of vote getting tactics. Canadians are fed up and disheartened by the divisive nature of politics which seems to serve only the political parties and their wealthy constituents.

(This post was updated on November 30, 2016).

(This blog is of a general nature about financial discrimination of individuals/singles. It is not intended to provide personal or financial advice).

DECEASED CANADIAN SINGLE SOLDIERS AND 9/11 VICTIMS FINANCIALLY WORTH LESS THAN DECEASED MARRIED SOLDIERS AND 9/11 VICTIMS

Posted on November 12, 2016 by ffswpadmin

DECEASED CANADIAN SINGLE SOLDIERS AND 9/11 VICTIMS FINANCIALLY WORTH LESS THAN DECEASED MARRIED SOLDIERS AND 9/11 VICTIMS

(These thoughts are purely the blunt, no nonsense personal opinions of the author about financial fairness and discrimination and are not intended to provide personal or financial advice.)

(singles-need-to-learn-how-to-articulate-financial-discrimination-of-singles)

This post is about the financial discrimination faced by deceased singles. Two cases outlined include Canadian single soldiers and deceased single 9/11 victims. The sources of news articles on which the deceased Canadian single soldiers information has been based are included at the end of this post.

FINANCIAL DISCRIMINATION OF DECEASED CANADIAN SINGLE SOLDIERS

Several complaints on what was felt to be financial discrimination against deceased Canadian single soldiers were brought before Canadian federal human-right tribunals. It appears that these complaints have resulted in gross human rights violations based on marital status. Some of the names of the deceased involved are Cpl. Matthew Dinning, Pte. Braun Scott Woodfield, Pte. William Cushley, Trooper Jack Bouthillier, Trooper March Diab.

The death benefit in question was the $250,000 lump-sum death benefit to be given only to the families of married or common-law soldiers. Revisions to the Veterans Charter were approved in 2005 so that when a married or common-law Canadian soldier is killed in action, the surviving spouse and children are eligible for a one-time, $250,000 lump-sum to help them with the costs of transitioning to civilian life. The cash is on top of whatever life insurance the deceased has (Supplementary Death Benefit-covers all Canadian Forces members at two years salary which goes to the person whom they designate-and Military Life Insurance which they can purchase through SISIP).

Under the old system, the federal government paid a supplementary death benefit, calculated at two times the member’s annual earnings. The cash went to the spouse, or another designated beneficiary of the soldier. If there was no beneficiary, the money would go into the estate.

As of 2011 less than about half of the deceased soldiers in Afghanistan have been single.

The issues behind the complaints are outlined here.

VIOLATION OF CANADIAN LAW AND CANADIAN REVENUE AGENCY (CRA) BY CHANGING MARITAL STATUS

The parents of Pte. William Cushley issued a complaint on why they did not receive same compensation as married or common-law deceased soldiers. The final result of a federal human-rights tribunal rejected the complaint of Lincoln and Laurie Dinning for Cpl. Matthew Dinning because Veterans Affairs abruptly decided to recognize their son’s girlfriend of a couple of months as his common-law spouse, technically making him no longer single even though she had not lived with him for a year (marital-status). “An eleventh hour offer by the Department to recognize Dinning’s girlfriend as a common-law spouse was no doubt done to try to quash the hopes of other families challenging the government on the discrimination related to this death benefit.” Definitions clearly state couples have to co-habitat for a year before declaring common-law status.

Veterans Affairs clearly violated the law by changing the marital status of the deceased single soldier from single to common-law spouse.

2. DECEASED MARRIED SOLDIERS RECEIVE $250,000 DEATH PAYOUTS, BUT DECEASED SINGLE SOLDIERS DO NOT

As stated by one of the parents: “You have four men killed in the same battle, three of them are paid $250,000, (but) William does not qualify because he is single. It doesn’t make any sense to me.”

3. DATE OF DEATH FELL OUTSIDE DATE OF APPROVAL

Relatives of Pte. Braun Scott Woodfield, who died in a military vehicle accident in November, would be sharing a $250,000 tax-free payment specially authorized by cabinet to compensate for his death while on duty…..But records released under the Access to Information Act indicate Woodfield’s family was excluded from the cabinet order, which gave a total of $1 million to four other families grieving over military deaths. That’s because Canada’s new Veterans Charter, which for the first time provides a non-taxable $250,000 death benefit, was passed by Parliament on May 13, (2005) last year but didn’t come into effect until April 1 (2006) this year. Deaths that occurred in the interim were not covered by the charter…. His death benefits were then denied because he was single.

4. DECEASED SINGLE SOLDIERS DO NOT QUALIFY IF THEY DID NOT MEET DEFINITION OF ‘SURVIVOR’

“But Woodfield’s family will not get a red cent because under the Veterans Charter, only “survivors” can receive the $250,000 death benefit. And because survivors are defined only as dependent children, spouses or common-law partners, Woodfield – as a single man with no children – had no “survivors” to receive any cash.

Instead, the cabinet order provided the money to the surviving spouses, common-law partners and children of three men killed in Afghanistan, as well as to the two daughters of Warrant Officer Charles Sheppard, who died in a parachuting accident at Trenton, Ont., on Oct. 3, 2005.”

“Pte. Woodfield is not eligible because he does not have a survivor or any dependent children,” Veterans Affairs spokeswoman Pamela Price confirmed in an interview. Woodfield’s mother said the Veterans Charter policy should be changed to help the next-of-kin of unattached soldIers.

“In a sense, you felt that my son was less of a person, as a single person,”…..

The death benefit under the Veterans Charter is unusual because of its restriction to so-called “survivors,” since single soldiers with no children have long been unconditionally eligible for almost all other death benefits provided by the military.

For example, the Canadian Forces pays for the funerals and burials of all serving members killed on duty, as it did for Woodfield.

National Defence spokesman John Knoll said the Forces also pay supplementary death benefits – two years of salary, tax-free – to the estate of the member or to his or her designated beneficiary. The military will also provide severance pay to the estate or designated beneficiary, seven days’ pay for each year of service.

And any pension entitlements that had been accrued by deceased members go to a designated beneficiary or the estate if there is no spouse, common-law partner or children, he said.”

5. VETERAN AFFAIRS ARGUES THAT THIS DEATH BENEFIT IS NOT LIFE INSURANCE AND IS SPECIFICALLY TARGETED TO HELP FAMILIES AFTER SOLDIER’S DEATH AS SPOUSE OR PARENT

Veterans Affairs has argued that the death benefit is not life insurance and the payout is specifically targeted at families to help them transition to civilian life. Lawyers for the department, in written submissions, have said the federal government isn’t obliged to pay compensation in every circumstance.

Other comments from news articles: “Lincoln Dinning, Matthew’s father, said he would never have filed the human rights complaint, which alleged the government discriminated against single soldiers, had there been a spouse in the picture at the outset”.

“Single soldiers can choose to take out life insurance and make payable, for example, to his or her parents or estate. That kind of insurance can only be obtained through the Service Income Security Insurance Plan (SISIP) Long Term Disability, a government-directed insurance program for the Canadian Forces. But the Royal Canadian Legion, representing 340,000 members across the country, said the one-time death benefit is clearly meant to cover pain and suffering, not economic loss, which is covered other benefit packages”.

“Errol Mendes of the University of Ottawa says it’s clearly established in law that discrimination based on marital status violates the Charter of Rights and Freedoms and he wonders why Veterans Affairs still supports the practice. “There is a compelling case on the part of single soldiers,” Prof. Mendes said yesterday. “Whether or not there is a legal case, there is a huge moral, social, ethical and political reason why the government should be covering this.”

Reader comment-”The stated purpose is to help transition the soldier’s immediate family from a military life to a civilian life, due to the loss of income, housing, support network etc. It is not meant to recognize their sacrifice through a financial payout. That being said, if a single soldier has elderly/infirm parents or siblings that he/she is legally responsible for, the money should be paid out in those instances. And hopefully the member made arrangements beforehand in case this happens (setting up trusts etc.).”

Reader comment-Another aspect that cannot be ignored are these scenarios: “If a single soldier is gravely injured, and an application is subsequently made on their behalf for the Disability Benefit, and they then die more than 30 days later, then the Disability Benefit would be issued to the estate at a rate of 100% disability. If a single soldier is killed instantly, then no Death Benefit is issued, period. A 100% Disability Benefit is exactly the same amount as the Death Benefit, but only one of these scenarios generates a benefit – dependent upon when the veteran dies. Doesn’t sound quite so equal. I can see why there are arguments that the Death Benefit should be paid to the Estate, not to the survivor.”

Other documents dated after the charter’s implementation, showed veterans groups were concerned about the exclusion of single soldiers from the payment, but Veterans Affairs placated them by saying it was prepared to “explore any gaps or omissions” and to “make changes to the (New Veterans Charter) to the extent possible.”

Comments from Veteran Affairs Canada -“Although other family members, such as parents, also suffer from the loss due to the sudden death of the Canadian Forces member, they do not face the same financial impacts as the spouse/common-law partner and/or dependent children of the Canadian Forces member,” Janice Summerby, a spokeswoman for Veterans Affairs Canada, said in an email statement to the Star.

Summerby added that single soldiers can choose to take out life insurance and make payable, for example, to his or her parents or estate. That kind of insurance can only be obtained through the Service Income Security Insurance Plan (SISIP) Long Term Disability, a government-directed insurance program for the Canadian Forces. But the Royal Canadian Legion, representing 340,000 members across the country, said the one-time death benefit is clearly meant to cover pain and suffering, not economic loss, which is covered other benefit packages.

“It is one of the deficiencies that we identified in the new Veterans’ Charter . . . that it is a discriminatory practice that married members receive a death benefit but single members don’t receive a death benefit. The Legion believes that all Canadian forces members killed (in the line of duty) … be granted a death benefit,” Andrea Siew, of the Royal Canadian Legion in Ottawa, told the Star.

Siew said the death benefit is not about financial compensation for the loss of income, “it is an award payment for the non-economic loss associated with pain and suffering. It is very clear in the legislation it’s about that.”

FINANCIAL DISCRIMINATION OF 9/11 SINGLE VICTIMS

“What Is the Life of a Single Person Worth?” from ‘Singled Out, How Singles Are Stereotyped, Stigmatized and Ignored, and Still Live Happily Ever After’ by Bella DePaulo, Ph.D., St. Martin’s Griffin, New York, 2006, page 228 (singlism).

“After the terrorist attacks of September 11, 2001, the U.S. government created a fund to compensate the families of the victims. Compensation was calculated separately for each victim, based in part on projected lifetime earnings and other sources of money. In addition, each family was paid a standard $250,000 for pain and suffering. The final component was an extra $50,000 for spouses and for each child. According to these calculations, the lives of single victims are automatically worth less than those of married victims. The $50,000 that would go to a married victim’s spouse would not go to any living person who cared about the victim who was single.

The Victim Compensation Fund declared in cold, hard numbers that in contemporary American society, the life of a single person is worth less than the life of someone who is married. That’s only one of the reasons I find it interesting. The fund also makes another set of values unusually clear. A relationship with a spouse is considered worthier than any other adult relationship, including even ties to parents or siblings. Said the mother of one of the 9/11 victims, “When they did this formula, why didn’t they consider the parents? My daughter-in-law was married for five years. We had Jonathan for 35 years”

The person in charge of the excruciating task of assigning a dollar value to victims’ lives, attorney Kenneth Feinberg, had second thoughts about the matter after the job was completed. In the book he wrote about his experiences, he concludes that if Congress ever decides to create such a fund again, all victims should be valued equally”.

CONCLUSION:

From examination of these two cases, it is apparent that even in this era of enlightenment where discrimination is supposed to be recognized and eliminated, financial discrimination of singles is as rampant as it ever was decades ago.

Observations include the following:

Financial discrimination of singles continues even when they are deceased. The financial lives of deceased singles are viewed to be worth less than married or common-law deceased persons.
Blatant manipulation of marital status done by Veteran Affairs just to avoid legal ramifications is a violation of the law and human rights of singles.
There is a clear legal process to follow in the distribution of financial assets of singles and married or common-law families. For singles, distribution is determined by wills and estates; for married or common-law families, distribution is determined by spousal and child dependents first, then parents and siblings in accordance with wills, estate and pre-nuptial agreements, so why would Veterans Affairs try to usurp this legal process?
In the 9/11 victims article, the following statement is in the eye of the beholder and can be viewed from different angles: Said the mother of one of the 9/11 victims, “When they did this formula, why didn’t they consider the parents? My daughter-in-law was married for five years. We had Jonathan for 35 years.” First, when children marry, the proper thing for parents to do is to give up their parental rights and allow their children to become their own family units with their own rights, so why should parents feel they are entitled to victim’s benefits over the spouse and children dependents of the victim? Second, as stated above there is a clear legal process for determining who will receive benefits. Spouses and children take first priority followed by parents and siblings further down if spouse and children are all deceased as determined by law.
Kenneth Feinberg, had second thoughts about the matter after the 9/11 job was completed and concluded that if Congress ever decides to create such a fund again, all victims should be valued equally. (Just a little too late, don’t you think)!
It should be very clear how important wills are to prevent possible infighting that can occur over death benefits.
All deceased persons deserve the same death benefits regardless of marital status.

MEDIA ARTICLES

Denying death payment to single soldiers’ families discriminatory, family claims from The Canadian Press-The News June 6, 2010 (Denying-death-payment-to-single-soldiers)

‘Family of Canadian Soldier in Afghanistan not getting death benefit after all’ From Canadian Content at 15:26 on June 18, 2006, EST. By DEAN BEEBY (soldier-family)

Single soldier’s parents denied compensation for his death, The globe and mail, by Dean Beeby, June 19, 2006 (single-soldiers-parents-denied-compensation-for-his-death)

Extending benefits to families of single soldiers would cost $3M, the Canadian Press, March 20, 2011(extending-benefits-to-families-of-single-soldiers-would-cost-3m)

‘Families of single soldiers say death benefit unfair’, CBC News, The Canadian Press, Dec. 1, 2011 (cbc.ca/news)

Parents of fallen soldiers fight for benefits by Kris Sims, Atlantic Bureau, December 1, 2011 (parents-of-fallen-soldiers-fight-for-benefits)

‘Investigation needed into government treatment of veteran’s families fighting for death benefit’ , NDP website, December 1, 2011 (ndp.ca/news)

‘Family fights for soldier’s death benefit’ by Cathy Dobson, Sarnia Observer, December 3, 2011 (family-fights-for-soldiers-death-benefit)

‘No equality’ in not paying death benefit to single soldiers, says father’ by Richard J. Brennan, National Affairs Writer, Dec. 19, 2011 (thestar)

The Death Benefit for Single Members Merged Thread (p. 33 and 44 of 47) Pages: << < (33/47) > >>

(This blog is of a general nature about financial discrimination of individuals/singles. It is not intended to provide personal or financial advice.)

DOING THE MATH ON FAMILY TAX CREDITS SHOW FINANCIAL DISCRIMINATION OF POOR, LOWER MIDDLE CLASS FAMILIES AND SINGLES-Part 2 of 2

Posted on November 10, 2016 by ffswpadmin

DOING THE MATH ON FAMILY TAX CREDITS SHOW FINANCIAL DISCRIMINATION OF POOR, LOWER MIDDLE CLASS FAMILIES AND SINGLES-Part 2 of 2

(These thoughts are purely the blunt, no nonsense personal opinions of the author about financial fairness and discrimination and are not intended to provide personal or financial advice.)

Part 2 of 2 of ‘Doing the math…’ provides further discussion on the comments of the financial analysts in Part 1 of 2. Regarding the Canada Child Benefit, it is difficult once again to understand the financial intelligence of politicians and government and whom they consult when formulating their policies.

Repeated again from part 1 of 2 are the following scenarios from “Doing the child benefit math” by Jamie Golombek (financialpost), Financial Post, September 30, 2016 showing financial evaluation performed by Jay Goodis from Tax Templates Inc. This evaluation shows the impact of CCB on various levels of income in 2016, the after-tax cash they would keep along with their effective tax rates.

‘Scenario 1 – Low-income family

A Manitoba family has two kids under five and two working parents, each earning $15,000 of employment income. They are eligible for the entire CCB of $12,800; after paying CPP, EI, and a bit of tax, they net $39,560 of cash.

What would happen if one parent was able to work more, or was to get a higher paying job, such that she now made $25,000 — an increase of $10,000? While she’s still in the lowest federal and Manitoba tax brackets, once you factor in the loss of CCB, the additional tax, CPP, and EI, her take-home extra cash is only $5,563, resulting in an effective marginal tax rate of a whopping 44 per cent (39 per cent if you ignore the additional CPP and EI contributions.)

As Goodis observed: “The CCB skews the progressive tax system and imposes a high effective tax on low income earners with children.”

Scenario 2 – Median-income family

A British Columbia couple has two children under the age of five. Their family’s income, consisting solely of employment income, is $76,000 split equally between each spouse. Their $12,800 of CCB is reduced to $7,448; and after federal and provincial taxes, CPP, and EI, the family nets $69,135 of cash. In other words, even with the clawback of some of their CCB, the couple has kept 91 per cent of their earned income.

Scenario 3 – High-income earner

Finally, consider an Ontario professional with three kids, two under five and one teen, earning $200,000 annually. His CCB will be about $750 for the year. If he were to earn an extra $1,000 of income, he would keep only just under $400 of it, resulting in an effective marginal tax rate of just over 60 per cent once loss of CCB is taken into account.’

DISCUSSION

Several points of interest will be discussed in regards to the Canada Child Benefit: 1) income tax and marginal tax rates with increased income, 2) CPP contributions and pensions, and 3) the effect of minimum wage and Canada Child benefit on the economy and future entitlements like the Canada Pension Plan (CPP).

NOTE: The marginal tax rate is the tax rate paid on last dollar of income and rate likely to be paid on next dollar of income-it is usually more than what is actually paid in tax because basic exemptions like CPP contributions and EI, and other benefits on provincial level, GST rebate, etc. have not been taken into consideration.

INCOME TAX RATES FEDERAL AND PROVINCIAL (cra)

The following shows the likely actual federal and provincial tax rates shown in the three scenarios (the federal and provincial rates used in the calculations are shown at the end of the post).

Taxes paid do not show other possible deductions taken off (CPP and EI), non refundable tax credits and additional benefits (GST rebate) added on to income:

In scenario 1 (low-income family), the financial analyst makes the statement that if one spouse earned an extra $10,000 she would pay an effective marginal tax rate of a whopping 39 per cent factoring in the loss of the CCB and without additional CPP and EI contributions. Her take-home extra cash is only $5,563. However, with calculation of possible additional actual tax rate of $2,580, and reduction of $12,800 CCB by $896, her take home income with the additional $10,000 would be $10,000 minus $2,580 minus $896 for CCB for total extra cash of $6,524. Whether it is an additional $5,500 or $6,500 why is this not considered to be a good thing, when even though she has more income tax deductions and small decrease in CCB, she has much more money to spend on her family while benefitting the Canadian economy through additional use of goods and services and additional income tax to be used for public services?

In scenario 2 (middle-income family), the financial analyst states that ‘ even with the clawback of some of their CCB, the couple has kept 91 per cent of their earned income’. That is a very good rate of return all because of tax-free CCB. Another reason why they are able to keep such a large per cent of their earned income is that Province of BC has a 5.06% tax rate on first $38,210 while Manitoba in Scenario 1 has a provincial rate of 10.8% on first $31,000.

In scenario 3 (high earner) the financial analyst states that with just an additional $1,000 income the person will only take home an extra $400 using the marginal tax rate. For poor people, the reaction might be “so what?” when take home income is already at level of $8,000 to $10,000 per month plus he has been able to use Liberal reduced income rate of 1.5% for income between $44,401 to $89,401 that scenario 1 and 2 have not been able to use.

For single person, income after tax would be approximately $30,377 or about $15 per hour. This does not equal living wages to prevent homelessness for singles, examples of which are usually greater than $15 per hour (singles-finances).

CPP CONTRIBUTIONS AND PENSIONS

In scenario 1 (low-income family) it has been estimated that this family will have about $7,500 annual CPP benefits. With the addition of just $10,000 income (and YMPE), resulting extra CPP contributions and reduced $896 CCB annual benefits, the CPP (using 2016 rates) annual benefits will jump from about $7,500 to $10,000. This should be viewed as a good thing as the extra CPP benefits outweigh the reduced CCB benefits and will reduce poverty in retirement.

THE EFFECT OF MINIMUM WAGE AND CANADA CHILD BENEFIT ON THE ECONOMY AND FUTURE ENTITLEMENTS LIKE CPP

The more poor are taken out of poverty, the greater the benefits to everyone because the poor will be using less government boutique tax credits and handouts (CCB).
Increased minimum wage benefits income earners in retirement years through increased CPP contributions during working years.
Increased minimum wage benefits everyone through collection of increased taxes, financial well being of income earner, and the economy through increased spending on goods and services, thereby, increasing value to the economy.
Boutique tax credits that benefit only certain segments of society (families and married or coupled persons) and failure to increase the minimum wage are financially discriminatory and detrimental to low income persons and singles.

CONCLUSION

Why do we continue to allow politicians and governments to make bad financial decisions like forever increasing boutique tax credits, increasing the wealth of the rich and not increasing the minimum wage when it can clearly be shown that increasing the minimum wage benefits everyone? The creation of financial silos (financial-illiteracy) where one financial decision is made (example: CPP enhancements) without looking at how this impacts other financial processes makes for very bad financial decisions. ‘Selective’ social democracy (selective) where some family groups benefit more than other family groups only produce financial discrimination while benefitting the upper-middle class and the wealthy most.

The upside down financial decisions where boutique tax credits are brought in by one political party, eliminated or changed on election of another political party and increasing CPP benefits, but not increasing the minimum wages at the same time does nothing to provide financial stability for Canadian families, married or coupled persons and singles.

Outside the box and critical thinking like tri-partisan (all political parties) cooperation in financial decisions for all Canadians would create better decision making across the board and prevent schizophrenic political processes like CPP increases being controlled by federal governments and minimum wage increases being controlled by provincial governments. All Canadians deserve better from their politicians and governments in financial decision making.

INCOME TAX RATES by FEDERAL AND PROVINCE (cra)

(This blog is of a general nature about financial discrimination of individuals/singles. It is not intended to provide personal or financial advice.)

DOING THE MATH ON FAMILY TAX CREDITS SHOW FINANCIAL DISCRIMINATION OF POOR, LOWER MIDDLE CLASS FAMILIES AND SINGLES-Part 1 of 2

Posted on November 7, 2016 by ffswpadmin

DOING THE MATH ON FAMILY TAX CREDITS SHOW FINANCIAL DISCRIMINATION OF POOR, LOWER MIDDLE CLASS FAMILIES AND SINGLES-Part 1 of 2

(These thoughts are purely the blunt, no nonsense personal opinions of the author about financial fairness and discrimination and are not intended to provide personal or financial advice.)

The Canada Child Benefit (CCB) consists of tax-free monthly payments that began in July, 2016 and provide maximum annual benefit of up to $6,400 per child under the age of six, and up to $5,400 per child ages six through seventeen. This benefit is income-tested (but not net worth and assets tested), such that the amount depends not only on the family income, but also on the number of children and their ages. (These amounts start being reduced when the adjusted family net income (AFNI) is over $30,000 and also is dependent on number of children in the family. On the portion of adjusted family net income between $30,000 and $65,000, the benefit will be phased out at a rate of 7 per cent for a one-child family, 13.5 per cent for a two-child family, 19 per cent for a three-child family and 23 per cent for larger families. Where adjusted family net income exceeds $65,000, remaining benefits will be phased out at rates of $2,450 and 3.2 per cent for one-child family, $4,725 and 5.7 per cent for two-child family, $6,650 and 8 per cent for three-child family and $8,050 and 9.5 per cent for larger families on the portion of income above $65,000).

The following scenarios from “Doing the child benefit math” by Jamie Golombek (financialpost), Financial Post September 30, 2016 shows financial evaluation performed by Jay Goodis from Tax Templates Inc. This evaluation shows the impact of CCB on various levels of income in 2016, the after-tax cash they would keep along with their effective tax rates.

Scenario 1 – Low-income family

As Goodis observed: “The CCB skews the progressive tax system and imposes a high effective tax on low income earners with children.”

Scenario 2 – Median-income family

Scenario 3 – High-income earner

$child-benefit-math-3-scenarios$

ANALYSIS

With a fuller analysis of the information the following assumptions can be made:

Minimum wage-most minimum wages in provinces range between $10 and $11 per hour, so it is hard to imagine that family in scenario 1 (low-income family) only makes combined income of $30,000. At 2,000 annual hours of work per year per person, each person’s hourly rate only equals $7.50. One must assume they are working part time jobs and are unable to find full time work. Net income after deductions and with CCB of $39,560 still equals net hourly wage of only about $10 per person. (The other possibility is that this family is wealthy by having huge net worth and assets that are not considered in the CCB and, therefore, do not need to work at full time jobs). For scenario 2 (medium-income family) the net wage after deductions and with CCB earned per hour equals about $17 per person. For scenario 3 (high-income earner) and assumed 50% tax plus $750 CCB on $200,000 the net wage earned per hour equals about $50 per person.
Income tax reductions-in scenario 1 (low-income family) get none of the 1.5% Liberal tax reduction because each of their incomes do not fall in the $44,401 and $89,401 range. The same applies to scenario 2 (medium-income family). Scenario 3 (high-income earner) gets the 1.5% tax deduction for income between $44,401 and $89,401. Only upper middle-class families with individual spouse’s income over $44,401 to $89,401 would quality for income tax reductions in these scenarios.
Canada Pension Plan (CPP)-both scenario 1 and 2 families will not receive maximum CPP retirement benefits because their individual incomes fall below the 2016 YMPE $54,900 individual income level. In scenario 3 (high-income earner), he will earn full CPP benefits. (Fact: Canada Child benefit tax-free income will not require CPP contributions, so income excluding CCB was used for calculation of CPP retirement benefits.
Canada Child Benefit (CCB)-For scenario 1 (low-income family) this family receives full Canada Child Benefits. For scenario 2 (medium-income family) reduction is $4,275 and 5.7% for $76,000 income for total $5,352 CCB reduction. Reduction for scenario 3 (high-income earner) is $18,200 minus $6,650 and 8% for $200,000 income which equals total $17,450 CCB reduction.
Understanding other calculations-For scenario 1 (low-income family) it is stated that an additional $10,000 in income would ‘produce take-home extra cash of only $5,563, resulting in an effective marginal tax rate (tax rate paid on last dollar of income and rate likely to be paid on next dollar of income-it is usually more than what is actually paid because basic exemptions, etc. have not been taken into consideration) of a whopping 44 per cent’. (Fifteen percent federal income tax on $10,000 equals $1,500, about 12% Manitoba provincial tax equals $1,200 and 13.5% Canada Child Benefit reduction on $10,000 equals $1,350 for a total of $4,050 not including additional CPP and EI payments).In scenario 3 (high-income earner, ?single parent) it is stated that with only an additional $1,000 income he would keep just under $400 of it, resulting in an effective marginal tax rate of just over 60 per cent once the loss of the CCB is taken into account. When one takes into account that he is possibly taking home over $8,000 per month, it is likely that he will be able to max out his RRSP and TFSA accounts and will have maximum CPP benefits on retirement at age 65 if he works 40 years as well as RRSP and TFSA accounts to supplement his retirement income).
Under-reporting of actual benefits received-Marginal tax rate-Since Canada operates on tax brackets, taxpayer will pay more tax when more is earned. However, it’s worth noting that tax rate paid is based on the income in each bracket. So the marginal tax rate doesn’t reflect the total that is paid on income. In fact, what taxpayer actually ends up paying, in terms of a percentage of income, is probably going to be lower than the marginal tax rate. It should be noted that further possible provincial child assistance and family employment, GST rebate benefits and basic exemptions are not included in these examples. Therefore, each scenario likely has more benefits than have been described in the examples.

CONCLUSION

As stated above by the financial analyst, statement is repeated here again: “The CCB skews the progressive tax system and imposes a high effective (marginal used in these examples) tax on low income earners with children.” Unfortunately, they create financial silos by including only one benefit without taking into consideration of the effect of other benefits. In this post, attempt was made to include Liberal income tax deductions and possible retirement benefits to provide a better ‘across the board’ analysis of how upper-middle class families and wealthy benefit most.

While many families may view the CCB to be a wonderful program, boutique tax credits when taken into consideration with other programs can be shown to be less financially beneficial to low income and middle income families, especially with a stagnant minimum wage. A stagnant minimum wage (minimum-wage) with a Canada Child Benefit may provide a better income for low income families for twenty or twenty five years during child-rearing, but will result in lower Canada Pension Plan benefits for seniors during their twenty years as seniors. A higher minimum wage during child-rearing years will result in a higher income during child-rearing years, lower CCB along with higher CPP during senior years. It is in the eye of the beholder and financial analysts to determine which is the better scenario. A higher minimum wage appears to be the better scenario.

Another negative thing that can be said about the Canada Child Benefit program is that reductions of the benefit appear to decrease slightly with the addition of each child (resulting in a little more CCB being paid out with addition of each child). This progression in CCB reductions appear to not follow equivalence scales (finances) where it is shown that cost of living per family does not increase times each additional child, but rather decreases per addition of each child. (Example: cost of living square root equivalence scale one adult 1.0, two adults 1.4, two adults one child 1.7, two adults two children 2.0, two adults three children 2.2). In scenario 2 (medium-income family) CCB benefit would be $3,598 for 1 child under 5, $7,448 for 2 children under five and $11,670 for three children under 5. So, in fact scenario 2 family with three children would receive $292 more per child than family with one child even though equivalence scales show the cost of living per child is less for three children than it is for one child.

As has been stated in past blog posts, both the Liberal and Conservative parties, while handing out marital manna benefits and family benefits, have at the same time handed out benefits that favor upper-middle class families and wealthy the most. (Singles get none of these family credits and are unable to purchase homes and max out RRSP and TFSA accounts unless they have substantial incomes.) Some of these benefits include Liberal income tax reductions, maximum CPP benefits and exclusion of net worth and assets testing while failing to increase the minimum wage to an indexed living wage. Politicians and governments continue to financially discriminate against singles and the poor while allowing the upper-middle class and wealthy to increase their wealth.

(This blog is of a general nature about financial discrimination of individuals/singles. It is not intended to provide personal or financial advice.)