COLLATERAL DAMAGE AND FUTURE CONSEQUENCES OF POLITICAL FINANCIAL FORMULAS

COLLATERAL DAMAGE AND FUTURE CONSEQUENCES OF POLITICAL FINANCIAL FORMULAS

(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.)

In the last post of October, 2018 the Alberta Conservative proposal of a teen entry level wage was discussed.  This post discusses the collateral damage or unintended consequences such an action could have on future financial lives of teens.

Every action taken can have consequences reaching far into the future.  An example is the teen entry level wage suggested by Alberta Conservative candidates.  The collateral damage and consequences of this action may impact financial programs such as Employment Insurance in the short term and Canada Pension Plan benefits for those teens forty or fifty years into the future.

CPP is a government defined benefit plan whose benefits are based on contributions deducted based on wage levels.  Employees are required to work forty full time years to receive full CPP benefits. If entry level wage up to 21 years or first five years of employment is implemented this will affect the amount of CPP benefits received for those five years, maybe even as high as 10% lost in CPP benefits (five out of forty employed years and CPP benefits for twenty years from age 65 to 85).  Even if entry level wage up to 21 years was implemented for a number of years and then repealed because of its discriminatory nature, the CPP benefits for this minority group (and only for this group) will be affected forever if CPP benefits are not fully restored for those years.

Approximately 520,000 Albertans and 4.5 million Canadians were adolescents and young adults aged 15 to 24.  If the teen entry level wage is implemented only in in Alberta Conservatives will be forcing their Alberta teen constituents to earn less wages and CPP benefits than teens in all other Canadian provinces and territories.  How can Alberta Conservatives see this as morally and ethically fair?

Conservative goals on labour policies (Jason Kenney’s teen entry wage, Doug Ford’s broken promise on basic income pilot project, Trump’s tax cut for the wealthy) seem to try to circumvent and subvert in any way possible a decent minimum wage, a basic wage or living wage without concomitant tax loophole reductions for the wealthy and without evaluating the full consequences of those actions now and in the future.

It is time for Conservatives to use forward thinking instead of narrow mindedness in problem solving related to labour.  If small businesses are having difficulties then solve the small business problems instead of targeting labourers.

Jason Kenney needs to provide full details on the proposed teen wage reduction so voters can make informed choices.

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

CONSERVATIVE REGRESSIVE PENSION INCOME SPLITTING GOLDMINE FOR WEALTHY MARRIED PERSONS

CONSERVATIVE REGRESSIVE PENSION INCOME SPLITTING GOLDMINE FOR WEALTHY MARRIED PERSONS

(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.)

Regressive tax expenditures cannot be blamed on just one political party, however, some implemented by Conservatives are the most egregious of all.

The Canadian Centre for Policy Alternatives (CCPA) “Out of the shadows” (policyalternatives)is a must read for all taxpayers.  It examines benefits distribution from 64 of Canada’s personal (business not included) income tax expenditures and provides egregious and shocking facts on how wealthy minority benefit the most.  Only five were considered to be progressive. Remaining 59 regressive expenditures cost $100.5 billion in 2011 while providing more benefit to those above the median individual income level (based on CCPA individual income, not combined couple income, of $30,000 or $15/hr. wage based on 2000 worked hours) and in some cases benefit top decile of wealthy the most.  The monies doled out in these expenditures equals same amount of all monies collected in taxes.

Stephen Harper, former Canadian Conservative Prime Minister, introduced the hastily and poorly planned regressive pension income splitting (P.I.S.) partly as appeasement for the controversial crackdown on income trusts (another regressive tax expenditure).

Fact Check:  First, married seniors, who have never had children, using P.I.S. pay less taxes just because they are married even though it costs singles more to live (Market Basket Measure – MBM).  Second, married seniors with equal incomes cannot use P.I.S. and, therefore, pay more taxes.  Third, poor married seniors benefit less as they have less income to split.  Fourth, senior singles and lone parents cannot use P.I.S., ever.  So, the wealthy married benefit most (?including Stephen Harper worth $7million when he becomes a senior). Exactly how many Canadian taxpayer households are completely left out of this formula?  – Certainly more than 50% or the majority. Just speak the truth, it is impossible for singles and low income seniors to achieve financial equality with this regressive tax expenditure.

Compounding effect of regressive expenditures ensures wealthy become even wealthier. Tax savings from P.I.S.means full contributions can be dumped into Tax Free Savings Accounts (TFSA) (another regressive tax expenditure implemented by Stephen Harper where maximum contributions now total $11,000 per year for married households).  Wealth ripple becomes ever wider because investments earned from TFSA contributions without capping of individual limits are never taxed.

CCPA states P.I.S. is the most regressive tax expenditure costing government $975 million annually – that is almost $1 billion a year.  Eighty-three per cent (83%) of benefit goes to top 10% and maxes out at $11,700 (equivalent to $6/hr. wage) when $128,800 (equivalent to $64/hr. wage) of pension income is transferred from higher earner to spouse with no income (10 times the maximum benefit to Canada’s poorest from only five progressive tax expenditures).

Over ten years the P.I.S. amount to wealthy married people could total almost $120,000.  It is not possible to calculate the wealth achieved from TFSA investments. And, it is apparent that there is no shame on the part of the wealthy that they are robbing from the poor to pay themselves.  Singles and poor seniors deserve to feel righteously angered at the gross financial discrimination of this formula.

CCPA states that from an aggregate perspective $103 billion lost annually to 64 tax expenditures is an embarrassing failure of Canadian tax policy.  Many of those in poorest deciles are singles and lone parents.

When critical thinking brings sunlight to financial discrimination and selective socialistic (Conservative) financial privileging for the wealthy, it also demands financial discrimination be changed or eliminated.  Taxpayers need to educate themselves on how they are impacted by these expenditures and contact their government officials demanding change. Although Federal Liberals have successfully eliminated some regressive tax expenditures, so far, they have refused to eliminate P.I.S. Transferral of P.I.S. tax expenditures to increased OAS and GIS based on MBM and net worth and assets would ensure greater financial fairness for all Canadian seniors.

P.I.S. has been submitted to the Canadian Human Rights Commission for adjudication of financial discrimination based on marital status and income levels and once again to the Liberals for elimination.

CONCLUSION

Canada is supposed a democratic country where fairness prevails at all levels including financial.  Why aren’t regressive tax expenditures such as stock option reduction, dividend gross-up and tax credit, and partial inclusion of capital gains for the wealthy enough that we have to introduce further regressive tax expenditures such as pension income splitting, income splitting, and Tax Free Savings Accounts which again benefit wealthy the most?

Plutocratic capitalism, as discussed by many authors including Thomas Piketty, is no different than other egregious philosophies such as communism, dictatorships, far right and far left idealism which all eventually rob the poor to pay the wealthy.  Balanced social justice is the answer to plutocratic capitalism and far right and left ideologies.

Thomas Piketty quotes (quotes):

  • When the rate of return on capital exceeds the rate of growth of output and income, as it did in the nineteenth century and seems quite likely to do again in the twenty-first, capitalism automatically generates arbitrary and unsustainable inequalities that radically undermine the meritocratic values on which democratic societies are based.
  • It’s important to realize that innovation and growth in itself are not sufficient to moderate inequality of wealth.
  • We want capitalism and market forces to be the slave of democracy rather than the opposite.
  • When inequality gets to an extreme, it is completely useless for growth.
  • No hypocrisy is too great when economic and financial elites are obliged to defend their interest.
  • I don’t think there is any serious evidence that we need to be paying people more than 100 times the average wage in order to get high-performing managers.
  • What was the good of industrial development, what was the good of all the technological innovations, toil, and population movements if, after half a century of industrial growth, the condition of the masses was still just as miserable as before, and all lawmakers could do was prohibit factory labor by children under the age of eight?

(Addendum:  A study of Stephen Harper profile, former Canadian Prime Minister, shows that he claims to be an economist with only a Master’s Degree, a Christian whose right wing financial philosophy appears to be to increase the wealth of the rich, and a family man styled after the 1950’s “Leave It To Beaver”, but never includes singles in the family definition.  It seems one of his goals is to increase capital returns over wages by implementing formulas that benefit wealthy the most since they are the population who have the most capital.

After implementing Pension Income Splitting, he also introduced income splitting for families, another regressive tax expenditure benefiting the wealthy, but this was rejected by the Liberal Party who came into power shortly after.

During his tenure as Prime Minister he often introduced huge omnibus bills to hide controversial bills. His actions over time negatively affected environmental laws, cut health care funding, reduced number of food inspectors jobs, made it harder to qualify for EI benefits, and disallowed scientists to speak freely about their research, this is by no means an inclusive list.  It should be stated that omnibus bills have also been submitted by other political parties. Harper also prorogued Parliament four times for a total of 181 days when he feared he would lose a confidence vote or didn’t want to deal with controversial issues.)

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

RESPONSE TO CONSERVATIVE, PROGRESSIVE THOUGHT OPINION LETTERS

RESPONSE TO CONSERVATIVE, PROGRESSIVE THOUGHT OPINION LETTERS

(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 following post is in reply to two response letters to first August 2, 2017 (why-conservatives-and-progressives-think-the-way-they-think) letter published in a local newspaper .  The two response letters appear at the end of this blog post.  This reply letter was published in local newspaper in abbreviated format on August 16, 2017.

BLOG AUTHOR’S RESPONSE LETTER-August 16,2017

Two response letters on blog author’s August 2, 2017 letter on conservative versus progressive thought only perpetuates bafflegab where imbalance between the two results in wealthy conservative types or anarchists ruling the universe.

One example of inequality of Canadian values is housing.  One condo development in housing complex includes 1 bed, 1 bath, 1 patio 552 sq. ft. micro-condo with starting price of $299,900 or $543 per sq. ft.  Three bed, 2.5 bath, 2 patios, 2 and 3 story 1830 sq. ft. condos in same complex are priced from $649,900 to $749,900 or $355 to $409 per sq. ft.  Ultra-deluxe model master bedroom suite covers entire third 600 sq. ft. floor. Third bedroom is bigger than total square footage of $299,900 condo and sells for $150 to $200 less per square foot for two-thirds more space.  Where is the critical thinking of ripple effects where owners (most likely to be singles) of micro-condos have to proportionately pay more house taxes, education taxes, mortgage interest, insurance and real estate fees on less house and likely less take home pay for their biggest lifetime expense?

Vancouver 100-square-foot apartments rent for $570 a month (again most likely to be occupied by singles).  Renters in the 50 units share 11 bathrooms and laundry facilities over the four floors (approximately 12 units and 3 bathrooms per floor)..

Which of you conservatives who spout family values as a personal issue believes your daughter should go traipsing outside of her apartment to use bathroom in middle of the night?  Which of you believes it is humane to stick anyone into a 100 square foot or smaller units (90 square foot units in Vancouver) plus charge excessive rents?   Who makes the decisions behind loan-shark or pay day loan type pricing where financial targeting of the most vulnerable occurs?  It is private enterprise, land developers and cities (government) that make these decisions, not unions.  Where does conservative bafflegab of neighbor helping neighbor, personal discipline, caring, responsibility and respect as stated in one of the letters fit into these decisions?

Free market enterprise and private businesses under the guise of ‘it is what the market can bear’ purposefully ‘rob’ from the poor to pay themselves and to ensure Wall Street ideology is maintained, used and controlled by lobbyists and wealthy who benefit most from Wall Street.  The act of making disadvantaged pay more for less housing and reducing apartments to the size of jail cells (as just one example) (empty-house-speculator-syndrome) has now normalized these scenarios to where it becomes acceptable to do this.  It becomes acceptable to first make singles and poor families pay more and then to (or at same time) offer them charity when there is nothing left for private enterprise to financially extract from them. The charity logic offered in one of the letters completely turns upside down the financial principles where everyone should be able to live on their incomes first and then charity kicks when these incomes fail.

Families (parents), governments, society, corporations, businesses to date have failed to provide support and responsibility that is needed to ensure all Canadian citizens are able to financially take care of themselves without financial parental aid, inheritances of wealthy parents and without bias of gender, race, marital status or income level.  Many Canadians are fed up with the infighting of politicians and the Trumpian corporate and family greed of the wealthy where wealthy always pay less and get more and never pay their fair share.

There are only so many words one can submit for opinion letters so there was no space to mention moderate or balanced positions.  The original newspaper letter was expanded in blog post by stating:  “It also should be said that extremes on either side whether conservative or progressive can have dire consequences.  Far right conservatism can lead to authoritarian governance and far left progressiveness can lead to communism type governance where freedoms are taken away under guise of all persons are equal.  It also is wrong for governments to hand out tax credits without looking at assets and wealth so that wealthy get tax credits or financial loopholes they don’t need (tax free savings accounts with no limits, OAS Clawbacks that don’t work, and pension income splitting implemented by the Conservatives and perpetuated by the Liberals selective-democratic-socialism).  It is all about balance!”  Where is the balance?

You want me to get to know you as a conservative.  How about getting to know me as a person without making me pay more while getting less?

(end of blog post)

 

READER LETTER #1-August 9, 2017

This is written in response to August 2 letter.  Initially I was with the contributor about how conservatives tend to lean towards the stern father archetype and progressives towards the nurturing mother archetype.  But almost right away the writer does not lay out the positions and instead appeals to emotion as opposed to the intellect.

Conservatives want structure and order so they tend to be wary of rapid change and prefer it to happen slowly.  Progressives are more creative and prefer rapid change as a lack of change causes them to fear society is stagnating.  The extreme of these positions is totalitarianism and anarchy respectively, so in a healthy democracy it is not one or the other, but a combination of the two.

Yet the writer does not make this point and instead goes on about how compassionate progressives are, but you have to look at the words carefully.  Using the government to affect change is not compassionate, you are merely using the cudgel of the state to force people to form to your ideology.  There is no agreement no consensus, merely coercion.

At the end of the day, you have to ask what is the role of the government?  Are they there to  provide a framework to engage in mutual cooperation with their fellow human being or is the government there to regulate the lives of their subjects?

READER LETTER #2-August 9, 2017

The writer of August 2 letter has no idea how conservatives think.  Nearly everything you expound in your letter (including from Professor George Lakoff) is pure drivel. Perhaps you should take some time to really understand what conservatives hold to. Here is just a few examples of what conservatives believe in:

Wealth is created through personal initiative, ingenuity, risk taking and sacrifice, not governments.  In fact almost of of these attributes are either absent in government or discouraged (particularly in public service unions).

Great strides in most facets of our society, industry, medicine, technology and science have not come as a result of government initiatives but individual and private pursuits. Think Microsoft, resource development, telecommunications, transportation, agriculture and the internet.

Conservatives believe the free enterprise marketplace promotes diversity, rewards achievement and hard work and fosters the widest choice of ideas.  On the other hand big government represents monopoly, increasing regulations, and the narrowing of ideas and choice.  It often disparages success in private life and business and its very mantra is to force compliance and uniformity.

Conservatives consider big government as wasteful and often corrupt since career politicians have little regard or understanding of the hard work and sacrifice necessary to create wealth and then seek to confiscate and distribute more of it to get personal credit, secure votes and retain power.  Conservatives believe when they build something through hard work, sacrifice and ingenuity, it not only helps their family but the community as well through jobs, taxes and other contributions.  Conservatives know that fair pay retains valuable employees, but for a business to remain viable this has to be balanced with maintaining competitive prices and services to the public.

Conservatives believe true charity and caring towards others is a personal  issue. Unless it comes from the heart and is voluntary it is not genuine.  Using government to take more from some and create entitlements has nothing to  do with empathy, caring or being charitable.  Bureaucracies are incapable of caring.  Genuine charity and and caring only happens with neighbor helping neighbor directly person to person or collectively through voluntary charities and service organizations.  Conservatives understand that government safety nets are needed at critical times, but when they become entrenched and permanent they lead to dependency and undermines personal initiative and self-fulfillment, and so often politicians cannot resist the temptation to use such programs to garner more power, control and votes.

Conservatives believe values are taught in the family not through government programs or policies.  Personal discipline, caring, responsibility and respect must start in the home.  Conservatives do not believe that society’s moral values and conscience derives from government and therefore social engineering or social agendas should not be imposed on anyone by the government.

Please forget your perceived misguided views of conservatives and get to know one.

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

FORT MCMURRAY FIRE DISASTER ASSISTANCE EQUALS POVERTY FOR SINGLES EQUALS FINANCIAL DISCRIMINATION

FORT MCMURRAY FIRE DISASTER ASSISTANCE EQUALS POVERTY FOR SINGLES

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

Announcements from the  province for Fort McMurray Fire Emergency Assistance state each adult will receive $1250 and each child $500.  The Canadian Red Cross has now added $600 for each adult and $300 for each child.  The total amount now equals $1850 per single adult, $3250 for single parent family with two children, $3700 for married or coupled family with no children and $5300 for married or coupled family with two children.

Singles have once again have been financially short changed.  Common math sense, lowest common denominator critical thinking shows total for single person is equivalent to a poverty wage for a month.  Amount for divorced or separated parent with children is also in question.

The $1850 amount for singles on month of expenses provides temporary assistance equivalent  for $1300 one bedroom apartment rent or mortgage, $250 food, and very little for other necessities such as paying monthly bills (bills will not mysteriously disappear because of the fire). A single parent with two children $3450 amount provides assistance for two bedroom apartment rent or mortgage, $750 food, and some money  left for gas and other necessities.   Married or coupled family unit without children would get $3700 to spend on one bedroom apartment rent or mortgage, $500 for food and a lot of money left for gas and other necessities.  A two parent family with two children would receive $5300. They could, for example, have $2000 mortgage or rent a two bedroom apartment, $1000 for food and $2300 left for gas and other necessities.

With present assistance amounts single parent with two children gets less financial assistance than married and coupled family unit without children.  (Single parents, however will still get same provincial and federal child benefits as they did before the disaster?)

fort mcmurray financial assistance

The poverty level for Canadian senior singles is approximately $20,000 or about $1700 per month (this is not even a living wage).   Fort McMurray was not devoid of seniors.  For these individuals who have worked many years supporting themselves and Canadian families, they deserve more than just subsistent assistance in time of tragedy.  Same disaster assistance equal to financial poverty level for singles of any age is unacceptable.

It is interesting to note that the higher the family unit is on the married or coupled status scale,  the more money they receive in assistance.  If same financial formulation is used with every injection of money (there now has been two injections), the wider the financial disparity will between bottom family unit (singles) and upper family unit (two parent family with two children).

How many times can it be said that it costs more for singles to live?  Studies show that it costs a family unit of a single person 70 per cent of what it costs a married or coupled family unit without children.  Fair financial formulation requires analysis to be based on not just a person to person  basis, but also what it costs each individual family unit to live.

A simple solution to clear up this financial human rights disaster and violation is to give financial assistance based on percentage of average cost of living per month for each family unit of single person, single parent with two children, married or coupled without children, and two parent family unit with two children. Many studies and Statistics Canada should provide enough information to make informed decisions in this regard.

An example of study on living wage income with both parents working in family of four shows that approximately $5500 per month is needed (“Toronto couples with kids must make $18.52 per hour each to get by, report finds” in The Star)The $5500 includes the federal child benefit which parents will still get and child care which many parents will not be using since they likely will not be working during the disaster period while they are away from Fort McMurray.  The 2013 living wage for singles in Guelph and Wellington was deemed to be about $25,000 or about $2100 per month. The living wage has since been raised even further.

Year after year, singles of all ages provide untold financial benefits to their country and families through taxes, volunteer efforts, etc., but never financially get back what they put into financial coffers.  One family unit does not deserve more financial benefits or to become a little richer than another in a disaster.  In a just, humane society singles deserve same financial, psychological and social dignity and respect in emergency situations as married and coupled persons and families.  Just where does government, society and family think singles should go if they are forced by this same government, society and family to not be able to support themselves?

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

 

SENIOR SINGLES PAY MORE -Part 1 of 4

SENIOR SINGLES PAY MORE – Part 1 of 4

These thoughts are purely the blunt, no nonsense personal opinions of the author and are not intended to be used as personal or financial advice.

(The next four posts will consist of four parts. Parts 1 and 2 will be two published Opinion letters, Part 3 will be two Opinion letters published by readers in response to letter in Part 2. Part 4 will be author’s response to the two reader letters in Part 3.)

(This Opinion letter was published in a local newspaper on June 24, 2015. The Conservative party was ousted by the Liberal party in the October, 2015 election. Proper names have been removed. Since published letters are restricted to number of words that can be published, some additional information is added in italics to this article.)

In the June 17, 2015 edition of a local newspaper, a Conservative Member of Parliament states that the Conservatives remain committed to seniors through various measures they have implemented since 2006. This includes targeted tax relief where a single senior can now earn $20,360 and a senior couple $40,720 before paying federal income tax. He states that approximately 400,000 seniors (or 7 to 8% of total Canadian seniors) have been removed from the tax rolls altogether, (he neglects to state federal tax rolls only). This year, he says there is more good news for seniors by reducing the minimum withdrawal for RRIFs (Registered Retirement Income Funds) and introducing a new Home Accessibility Tax Credit (this neglects to recognize that not all seniors own homes).

The above so called tax relief benefit for seniors allows federal tax relief for senior singles equal to $1,697 per month and for senior couples $3,393 per month. The tax relief for senior singles hardly covers a rent or mortgage payment of $1,200 and $250 for food per month (Maslow’s Hierarchy of Need), but amply covers this amount for a senior couple. For a couple $1200 for rent or mortgage and $500 for food leaves $1693 (or 50% of $40,000) for other necessities and maybe even a nice little vacation all tax free.

The BMO Retirement Institute Report-Retirement for One-By Chance or Design 2009 bmo.com/pdf and cifps.ca/Public/Media/PDF states the following:

‘the present tax system is set up to give a huge advantage to married/coupled people with singles who were never married or were divorced at some point throughout their entire working career usually subsidizing married/coupled people’. (It is interesting to note that this statement in the original article appears to have been removed and is no longer present in URL shown above).

From Russell Investments ‘Spending Patterns in Retirement’, February 2010 russell.com it is stated that:

‘government transfers, such as CPP and OAS are generally not sufficient to cover the Essentials of Retirement-less than 70% coverage for the average retiree, and as a little as 30% for higher-income retirees. This problem is magnified for single retirees. For example, in the $35,000-$60,000 income category, couples spend only about 12% more than singles on essentials (i.e. food, housing, and clothing), yet receive about 80% more in government transfers’.

The senior population includes about 13% of ‘ever’ single seniors (never married, divorced or widowed) and divorced single seniors (the younger persons are when divorced, the more likely they are to be poor as seniors) and about 43% widowers, (who receive marital manna benefits like pension splitting while married and survivor pension benefits). It is a well-documented fact that singles require 60 to 70% income of married/coupled people depending on whether they rent or own a home with 70% likely being the more accurate figure (Moneysense, BMO Retirement Institute Report-Retirement for One-By Chance or Design, etc.).

So how does the Conservative tax relief program for seniors help ever-single seniors? It doesn’t. Instead, with the addition of marital manna benefits such as pension splitting and survivor benefits, individuals/singles are financially made to be not even 50% worthy of total married/coupled tax relief, but rather less than 50% of married/coupled tax relief. And immigrant families are also financially made to be more income worthy than Canadian-born and immigrant senior individuals/singles.

Governments, businesses and society all talk about ‘family, family, family’, but singles continue to be ‘kicked out’ or deemed ‘less worthy’ than married/coupled people in the ‘family’. The Conservative Prime Minister, Finance Minister, and Members of Parliament remain financially illiterate in individual/singles financial affairs.

The continued financial discrimination of singles must be eliminated by recognizing what it truly costs for ever-singles and divorced/separated senior singles to live in this country. If programs such as pension splitting for married/coupled seniors and survivor benefits for widows continue to be added, then at the same time, ever-single and divorced single seniors must be given equal financial status through enhanced programs such as GIS and 60-70% enhancement of singles’ income baselines over married/coupled person’s and widow baselines. Sixty per cent of couples’ tax relief $40,720 income equals $24,432 ($2,036 per month) and 70% of $40,720 equals $28,504 ($2,375 per month).

The Conservative Member of Parliament’s article is titled ‘Seniors play an increasingly important role in our society’. Unfortunately, married/coupled and widowed seniors are deemed to play a more financially important role than ever-singles or divorced/separated early in life singles even though singles have supported married/coupled and widowed persons throughout their lifetime through contributions by paying more taxes and getting less in benefits.

The senior population of Canada includes only about 13% of singles and divorced/separated persons, while widows comprise 43% of the senior population. If the marital manna benefits were taken away from the widowed persons (who by the way could now be considered to be living a ‘single’ lifestyle since they are now technically ‘single’) they would be on a more equal instead of a greater financial footing to ever singles and divorced/separated persons. Or, if looked at from another perspective since ever singles and divorced/separated persons comprise only 13% of the senior population, would it really cost that much more to give them the same financial benefits as widows? As citizens of this country senior ever singles and divorced/separated persons deserve and should be treated with same financial respect as widowed seniors.

To continue the common sense and critical thinking of this article, a simple rephrasing of the information is as follows:  Governments need to top up tax free amount for ‘ever’ singles and early divorced/separated senior persons to from $20,0000 to $28,000 (70% of $40,000) plus give to ‘ever’ singles and early divorced/separated persons 70% of whatever benefits are given to widowed persons.  To do nothing or less than this only continues the financial discrimination already been committed against ‘ever’ singles and divorced/separated persons.

LOST DOLLARS LIST’

Since it costs ‘ever’ single and divorced/separated seniors with rent or mortgage about 70% – 75% of married/couple seniors’ income, lost dollars of 70% for $20,000 extra that married/coupled seniors get tax free or $6,000 per year (age 65 to 90) will be added to the list.  Total value of dollars lost will be $150,000 ($6,000 times 25 for years age 65 to 90).

 

The blog posted here is of a general nature about financial discrimination of individuals/singles. It is not intended to provide personal or financial advice.

    

TFSA BOONDOGGLE FOR SINGLES AND LOW-INCOME CANADIANS

TFSA BOONDOGGLE FOR SINGLES AND LOW -INCOME CANADIANS

These thoughts are purely the blunt, no nonsense personal opinions of the author and are not intended to be used as personal or financial advice.    

Comment: This article was previously published in a local newspaper and is available on the internet. There were 51 recommends for this article. The final outcome (dependent on the results of the October 2015 Canadian Election) was that proposed changes to increase the TFSA to $10,000 by the Conservative party election promises was reverted back to $5,500 by the successful Liberal Party under Prime Minister Justin Trudeau . Regardless of what the TFSA limit is, with no cap on the contribution amounts, individuals/singles will still be at a significant financial disadvantage to married/coupled persons. Wording has been slightly changed from the original publication but does not change the thought content of the original publication (changes and additions to wording have been italicized).

The Federal Progressive Conservatives had in their infinite wisdom proposed in an election promise that the Tax Free Savings Account (TFSA) limits be changed from $5,500 to $10,000 per year.

To show the effects of having just $5,500 as a contribution amount for married/partnered versus individual/single Canadians, everybody sharpen your financial pencils and dare to do this simple math exercise-calculator not required.

Step 1 – Create two columns, one labelled married/partnered, the other individual/single. In each column for year 1 enter $11,000 for highest possible contribution for both spouses, and $5,500 for a single. Continue up to year 5 or up to year 40 (suggested number of income producing years). Then total the amounts in each column. At year 5 married/partnered total will be $55,000, single amount will be $27,500.

Step 2 – Now using the ‘Rule of 72’ https://en.wikipedia.org/wiki/Rule_of_72 -calculate the amount of possible compounding interest, investment income that can be generated from amounts in each column. Rate of return of 7 per cent will double the bottom line amount in 10 years and double again in 20 years and so on. Okay, you can use a calculator for this step!

Step 3 – Create a graph for amounts in each column, one for married/partnered totals, another line for individual/single totals. Each step in the graph could be shown for every five years up to forty years.

Results for $5,500 contribution (not including investment or interest amounts) amounts are shown in table below:

 

TFSA MAXIMUM CONTRIBUTIONS PER YEAR FOR MARRIED/PARTNERED VERSUS SINGLES

NOTE: Does not include potential compounded interest/investment income

TFSA TOTAL        Married/Partnered    Individual/Single

Year 5                      $ 55,000                       $ 27,500

Year 10                     $110,000                     $ 55,000

Year 15                     $165,000                     $ 82,500

Year 20                     $220,000                     $110,000

Year 25                     $275,000                     $137,500

Year 30                     $330,000                     $165,000

Year 35                     $385,000                     $192,500

Year 40                  $440,000                    $220,000

tfsa graph

This simple math exercise, which takes TFSA financial amounts down to the lowest common denominator, shows the proposed $10,000 yearly TFSA (all tax free!) would exponentially increase the wealth of married/partnered and high-income Canadians, while flat-lining the wealth of singles and low-income Canadians.

Add in Registered Retirement Savings account (RRSP) amounts with potential investment growth and wealth spread becomes even wider.

Thank you, Progressive Conservative Party for failing this simple math exercise, lining your own pockets just because you are married/partnered and wealthy, lining the pockets of married/partnered and high-income Canadians to levels of untold wealth while kicking off the financial bus individuals/singles and low-income Canadians who are unable to max out TFSA and RRSP contributions or make contributions to both programs.

Shame on Finn Poschmann, V.P. and Director of Research, C.D. Howe Institute for also failing this simple math exercise. In the Calgary Herald, “Popularity of TFSAs could mean lifetime cap in the future”, April 23, 2015, page D3 and business.financialpost.com/personal-finance  he states:

“That is absolutely fantastic, when you picture a world where a huge share of Canadians are retiring and living for a very long time, knowing that they have significant savings on hand. And there will less draw on public support programs which is also great….” He further goes on to state: “When TFSAs do become big, they may be a political target, and a financial target for government. However, it would be morally wrong for government to turn course, then, and go back on the commitment made to savers when they are doing their saving. So changing the tax rules retroactively would be very, very bad”.

Who are your financial advisors that would lead you to such an off-balanced decision and statement? Why would think tank persons, who are supposedly critical thinkers, and politicians make such a morally unfair decision to increase TFSA amounts without a cap in the first place and then think it is morally wrong for government to change course after the morally unfair decision has been made? This decision does nothing to erase the use of public support programs as only the wealthy will benefit from raising the TFSA amount.

It is no wonder that Canadian individuals/singles with and without children and low-income persons are in financial despair, repeat, financial despair. With governments, businesses, society and families giving financial preference and perks to married/coupled people and full complement families with two heads of households, individuals/singles are repeatedly having to pay more and get less and can’t even remotely begin to ever ‘catch up’ or be on an equal playing field with married/coupled Canadians.

Financial discrimination and violation of the human rights of individuals/singles and low income people must stop. There must be a cap on TSFA amounts and the cap must be put in place right now rather than later. It is socially, morally and ethically reprehensible, irresponsible and shameful to consciously make the already wealthy even wealthier at the expense of the poor.

Political parties who fail to use simple math formulations to avoid financial discriminatory policies and promises don’t deserve to be in power. Get out and vote! Individuals/singles and low income Canadians, contact your Members of Parliament regarding the financial discrimination of singles and low income persons! (Election took place in October, 2015 with the Liberal party winning a majority and TFSA amount remaining at $5,500).

Lost Dollars Value List

Stay tuned, this is a work in progress and will hopefully appear in future blog entries.

(This paragraph on lost dollar value for TFSA was added April 10, 2016 – If age 25 to age 65 or forty years and annual contribution of $5,000 is calculated for maximum contribution of TFSA that can be used by spouse number two, then calculated lost dollar value equals $200,000 – $5,000 times 40 years.  This does not include amounts lost through compound interest and investment potential.)

The blog posted here is of a general nature about financial discrimination of individuals/singles. It is not intended to provide personal or financial advice.