Category Archives: minimum wage

BASIC OR LIVING WAGE INCOMES WITHOUT MBM WON’T SOLVE FINANCIAL DISCRIMINATION OF SINGLES

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(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 – financialfairnessforsingles.ca).

There are several solutions that have been proposed to solve the issue of poverty and low income.  Increasing the minimum wage is one solution.  With AI and digital revolutions some proposals include living wage or basic wage as a partial solution to the possibility of maintaining level of job numbers as a result of these revolutions.

Living wage research has been helpful in determining what it costs to live in specific urban and rural areas.  However, a living wage is a bare bones wage with no possibility of saving for emergencies or retirement.  The living wage premise is based on adults working full time (one adult in one person adult family, one adult and one child,  two adults and no children or two adults and two children family unit).   However, if living wages are not based on OECD equivalence scales such as Canadian Market Basket Measure or MBM unattached persons and single parents are often the financial losers in these plans.  (If single person household has a value of 1.0, lone parent, one child or two adult household has a value of 1.4, one adult, two children 1.7 and two adult, two children 2.0.  It costs more for singles to live than couples without children).

“Andrew Yang on Universal Basic Income”

(https://baseandsuperstructure.com/andrew-yang-ubi) Excerpts from this article describes the UBI plan and provides some rather interesting insights from right and left political perspectives.

‘The plan is relatively simple. The government pays all US citizens between the ages of 18 and 64 a UBI of $1,000 per month, or $12,000 per year. For citizens 65 and up, the existing Social Security system would be left in place.

Yang wants to pay for this system using four sources: a.) eliminating existing social spending (e.g., food stamps, disability, WIC, unemployment insurance, et al.), generating $500-600 billion worth of savings; b.) A value-added tax (VAT) that he estimates will generate $800 billion per year; c.) $500-600 billion in new tax revenue from UBI-generated economic growth; b.) $100-200 billion per year in savings from UBI-generated crime reduction and health savings.’

The article states that problems with the plan include: ‘UBI doesn’t pay people nearly enough, would eliminate social programs, encourage low wage and exploitative labor practices, and put more money into the hands of companies who prey on low income Americans.’  “A Leftist take on Universal Basic Income” (leftist-universal-basic-income-ubi) by same author says ‘Here’s what would happen if a UBI proposal got off the ground in the United States: it would get turned into the right-wing version. It wouldn’t apply to everyone, it wouldn’t pay enough to live, it would gut social programs, or possibly all three of these things.’  The author offers suggestions that better solutions are comprehensive health care, housing and food assistance and indexed minimum wage that is increased every year.

It seems that USA plans for social justice and equality of wages never seem to include equivalence scales like MBM outlined above so singles would benefit the least from the plan because it costs singles more to live than a two person household.

Alberta report on basic income

“An Alberta Guaranteed Income:  Issues and Options” (May 2019) by Wayne Simpson and Harvey Stevens, The School of Public Policy at the University of Calgary (https://journalhosting.ucalgary).  Excerpts from the report include:

(From Summary) – ‘For all the job booms and wealth that have benefitted Alberta over the decades, nothing yet has been able to drastically reduce, let alone eliminate poverty in the province.  The prospect of a guaranteed minimum income could help change that, and Alberta is particularly well positioned to roll one out and with relative ease and at a manageable cost.

An Alberta guaranteed basic income could be straightforwardly developed by revising the  existing provincial tax system to make tax credits that are currently non-refundable into  refundable tax credits, such that people earning below the minimum income-tax threshold will still be able to claim them as subsidies.  This can be done while avoiding significant new funding and relying solely on budgetary measures to improve the fairness of the tax system.

Converting just a few non-refundable tax credits into refundable ones can produce a  guaranteed annual income of over $6,000 for a single-adult family and over $9,000 for a  two-adult family, with no significant new funding required. This would improve supports for 37  per cent of Alberta families, with the largest gains properly concentrated among the poorest households, and would reduce the rate and depth of poverty by 25 per cent.

An even more powerful approach would be if Alberta were able to persuade the federal government to combine a similar program federally with the provincial guaranteed basic income, converting non-refundable credits into refundable ones and eliminating the federal GST credit.  A combined federal-provincial guaranteed annual income would increase dramatically to over $13,600 a year for a single-adult family and to over $19,000 a year for a two-adult family.  The disposal income of the poorest 20 per cent of Albertans would increase by more than 50 per cent under the combined plan, while the rate of poverty across all Albertans would be cut by a substantial 44 perr cent.  Among single parents and non-elderly and elderly couples, poverty would be eliminated completely.  And while two-parent families and non-elderly singles would continue to be in poverty, its rate declines significantly and its depth would be reduced by more than half.’

The report ‘offers two models:  one that includes selected non-refundable tax credits but excludes current Alberta refundable tax credits; and one that includes both selected non-refundable tax credits and the refundable credits’ (including Alberta Child Benefit and the Canada Child Benefit in the second model).

The report does talk about Low Income Cut-offs (LICO) and Market Basket Measure (MBM).  They state that LICO has been replaced as Canada’s official poverty measure by the MBM.  However, (page 3) certain versions of statistical reports did not allow them to calculate the MBM measure, so they adopted the traditional LICO measure of the incidence and depth of poverty in the report.

Opinion Letter on above report

In an opinion letter “A basic income that reduces poverty is doable” (alberta-could-afford-a-basic-income-that-reduces-poverty) by Franco Savoia and Jeff Loomis, Executive Directors of Vibrant Communities Calgary and Momentum, respectively, they state:

‘Alberta is a prosperous province, but our poverty rate has hovered around 10 per cent for decades, costing the government more than $2 billion each year….

In recent years, the guaranteed income supplement for seniors and Canada and Alberta child benefits have been credited with reducing poverty rates. Some have gone as far as to call these programs a basic income for seniors and children.

For many in the social services sector, a similar program for adults aged 18-65 is a logical next step…..

Despite this, basic income critics point to the prohibitive costs associated with implementing such a program, noting that governments just don’t have the money. However, new research from the University of Calgary’s School of Public Policy shows that Alberta could actually afford to do it. Supported by a research partnership with Calgary’s Social Policy Collaborative, economists Wayne Simpson and Harvey Stevens have come up with an Alberta basic income program that wouldn’t require the province to spend any extra money or increase taxes…..

….the Simpson and Stevens program is financed entirely through modest changes to tax policy. By turning five existing non-refundable tax credits into a single refundable credit, the authors suggest that the province could achieve a basic income that would increase the incomes of roughly 40 per cent of Albertans, reduce poverty by almost one-quarter and eliminate poverty for single parents.

But, as always, the devil is in the details.

A notable element of the proposal is the decision to keep in place the current income support system — a choice that some basic income advocates may not support. Many envision a basic income as a better — and simpler — alternative to existing income supports, which are complex and often needlessly bureaucratic.

Also concerning is the redistributive impact of the tax reform required to create the program, which would result in increased tax pressures for middle-income earners.

These shortcomings aside, the Simpson and Stevens proposal is proof that basic income is more than a pipe dream in Alberta. And though the proposal wouldn’t eliminate poverty completely — it would leave many non-elderly single Albertans below the poverty line — it would be a significant step forward in our efforts to make poverty a thing of the past. As the basic income conversation evolves, both in Alberta and across the country, the School of Public Policy report has contributed valuable insight. We’re excited to see where the discussion goes.’

CONCLUSION

Shocking statistics show that in one of the richest provinces (Alberta) there were in January 2014, 33,000 Alberta Income Support program (excluding AISH) recipients of all ages.  Alberta Income Support program in January, 2017, had 54,374 recipients and in January, 2018, 57,003 recipients.  Makeup of claimants in 2017 and 2018 include individuals 69%, lone-parent families 24%, couples with children 5%, and couples alone 3%.  Totals do not say how many are turned away and do not include those who on verge of poverty.

It is a sad fact that regardless of what financial manipulations are applied to minimum wage and living wage or basic wage models, singles or unattached persons always appear to come out as the financial losers.  Until Market Basket Measures, etc. are applied so that one person households benefit equally to other households, social injustice and income inequality will remain for single persons.  But then who gives a damn?

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

POLITICAL PARTIES HAVE ‘CHICKENSHIT CLUB’ MEMBERSHIPS BECAUSE THEY TAKE THE EASY WAY OUT ON SOCIAL INJUSTICE AND INEQUALITY

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POLITICAL PARTIES HAVE ‘CHICKENSHIT CLUB’ MEMBERSHIPS BECAUSE THEY TAKE THE EASY WAY OUT ON SOCIAL INJUSTICE AND INEQUALITY

(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.)

(Blog author’s comment:  The topic of financial discrimination of singles and low income families has been addressed from many different angles in this blog.  This particular blog post shows how compounding of benefits on benefits such as Registered Retirement Savings Account (RRSP) combined with a tax free Canada Child Benefit (CCB) allows wealthy families with children who can afford to max out RRSPs to benefit the most from reduced taxes, increased income, and increased wealth.  It also shows how governments and politicians fail to right the biggest social injustices and financial inequalities by going after the easiest targets.

WHAT IS THE ‘CHICKENSHIT CLUB’

Jesse Eisinger in his book ‘The Chickenshit Club’  gives a blistering account of corporate greed and impunity, and the reckless, often anemic response from the Department of Justice.  He describes how James Comey, the 58th US Republican Attorney (appointed by Republican George W. Bush and fired by so called Republican Donald J. Trump) was giving a speech to lawyers of the criminal division.  These lawyers were some the nation’s elite. During his speech, Comey asked the question: “Who here has never had an acquittal or a hung jury? Please raise your hand.” This group thought of themselves as the best trial lawyers in the country.  Hands shot up. “I have a name for you guys,” Comey said. “You are members of what we like to call the Chickenshit Club.”

Comey had laid out how prosecutors should approach their jobs.  They are required to bring justice. They need to be righteous, not careerists.  They should seek to right the biggest injustices, not go after the easiest targets.

This ‘chickenshit club’ has continued to grow.  No top bankers from the top financial firms went to prison for the malfeasance that led to the 2008 financial crisis. And the problem extends far beyond finance–to pharmaceutical companies, tech giants, auto manufacturers, and more.

DPAs (deferred prosecution and nonprosecution agreements) have become the norm in the USA (and now is being legislated in Canada) where high crime perpetrators are being given the easiest way out by ensuring prosecution is carried out by paying a nominal fine and agreeing to minor policy changes, but without serving any jail time.

Political parties have joined the ‘Chickenshit Club’ by taking the easiest way out and failing to promote social justice and equality for all therefore ensuring that wealthy households and corporate elites continue to increase their wealth over single person and low income households.

The ‘Chickenshit Club’ of low income and food insecurity and minimum wage

Living Wage and Minimum Wage

It is a known fact that the Canadian minimum wage in all provinces is not sufficient to bring households up to middle class status.

A major failure of Living Wage research is that it usually only identifies three household profiles, a single person, single parent with children and a family comprised of two adults and children.  The failure to include a household of two adults no children provides only a partial picture of inequality because it costs a single person household more to live than a two adult persons household.

Review of Living Wage profiles shows that even though living wages are higher than minimum wage, living wages are “no walk in the park”.  A living wage which only covers basic needs still leaves low income households, especially those with rent or mortgages, suffering a ‘no frills’ lifestyle with an inability to save for retirement or emergencies or replacement of vehicles.

By excluding the two adults no children household profile from Living Wage profiles the single person household is an incomplete profile since it costs more for unattached person to live than the two adults household as shown in cost of living scales like Market Basket Measure (MBM).  Example:  if single person household has a value of 1.0, lone parent, one child or two adults household have a value of 1.4, one adult, two children 1.7 and two adults, two children 2.0.  It costs more for singles to live than couples without children.

Many politicians, married and financially illiterate believe that a living wage is a good income but it only provides the bare necessities of life. The living wage in Calgary is about $18 per hour and in Metro Vancouver is about $19 per hour.  There is no saving for retirement or maxing out of RRSP and TFSA accounts on a living wage (see example below for single person household with $50,000 income).

In a recent Conservative meeting, a Canadian Conservative Member of Parliament for Alberta stated he did not think the recent increase in minimum wage helped anybody, not even the poor.  When challenged that ‘this was quite the statement’ and ‘what was the answer to low wages?’, he said ‘he didn’t know’. As outlined below, the upside financial chickenshit mess that has been created by government and politicians for single person households and low income families is because more benefits with less taxes and no declaration of assets has been given to the wealthy and the married.  To create more financial social justice and equality, a drastic plan along the the lines of “Elizabeth Warren” and “Bernie Sanders” is needed so that the wealthy, married, and corporations pay their fair share.

The ‘Chickenshit Club’ of Single Person Household Poverty

Present day political parties and married/two person households with no children belong to the ‘Chickenshit Club’ when they fail to recognize, through financial illiteracy and financial discrimination, that single person no children households will likely face more income insecurity in their lifetimes.

From “The Affordability of Healthy Eating in Alberta 2015” by Alberta Health Services (affordability-of-healthy-eating):

(Page 3) “In Alberta, more than 1 in 10 households experience food insecurity and more than 1 in 6 children live in a home where at least one member is food insecure. Nearly 80% of Albertan households who rely on social assistance cannot afford to purchase adequate amounts of nutritious food or regularly endure significant worry about access to food. Furthermore, more than 75% of all food insecure Albertans are actively employed yet still are unable to secure enough money to support both their nutrition needs and other indispensable life necessities, such as housing and clothing.”

(Page 9) The above report provides a more complete picture of income inequality because it identifies four household types – 1) a family with two parents and two children because this composition is used most frequently by other social, income and poverty reports across Canada, 2) a female lone parent due to the high prevalence of food insecurity among this household type, 3) a single adult under age 65 since this demographic experiences the highest rate of food insecurity and the least financial support through social policy, and 4) a single senior to highlight the ability of current social policy to effectively reduce the risk of household food insecurity in this population.  Unfortunately, the two adults person household is still not represented in these profiles.

Quote from the report (page 18): “Although Alberta remains the most prosperous region in Canada, it also maintains the largest gap in income inequality since the wealthiest 1% earns 18 times more than the average income in the province. Thus, the relative economic power of low income households in Alberta is weaker than low income households in all other regions across the country.  Despite a strong economy, the poverty rate in Alberta has remained around 12%, which is only slightly below the national average of 12.5%. Boom and bust cycles, increasing household debt and the high number of temporary, precarious and low-wage jobs put many Albertans at risk of falling into poverty. The Alberta populations at highest risk to experience poverty include:  single persons, families with children under 18 years old, families with more than one child, female lone parent families, women (not an inclusive list).

(Page 24 and 27) These statistical data sources also validated several important characteristics of Canadian and Albertan households that are at highest risk for household food insecurity:  low income households, individuals who rent their home (rather than own their home), women, lone parents, Indigenous Peoples, individuals who receive social assistance, individuals who work for low wages, unattached (single) people, households with children younger than 18 years of age, recent immigrants and refugees (e.g. in Canada for less than five years), people who have a disability.

(Page 28) Single adult – In Alberta, 40.7% of people aged 15 and older are neither married nor living with a common‑law partner and 24.7% of all households are home to only one person.  Unattached persons in Canada experience three times the rate of food insecurity compared to couple households without children.  In Alberta, single people represent five times more food bank users than couples without children.  The rate of poverty among single adults across Alberta is 28% whereas this value drops to only 6% for all couple families.

(Page 29) Single female – Unattached Canadian women are four times more likely than women in families to live in a low income household.  Sixty two per cent of minimum wage earners in Alberta are female.  Across Canada, 3 out of every 4 minimum wage earners older than 24 years of age are women.

(Page 30) Single adult 25–30 years old – Of all Canadian age groups, young adults between 20 and 34 years of age have the highest rates of moderate and severe food insecurity.  Both males and females between the ages of 20 and 29 have the highest nutrition needs of all adult groups and would therefore need to spend a greater proportion of their income on food to support their health and well-being.  By the time Albertans reach age 25, more than 83% are no longer living with their parents, so this age range would best reflect the reality of a young, single person at higher risk for food insecurity in Alberta.

(Page 31) Minimum wage – The percentage of 25–29 year olds who work for minimum wage in Alberta doubled between 2012 and 2014, and this is the largest jump for any working age group across the province.  More than 1 in 4 female minimum-wage earners and nearly 1 in 5 male minimum-wage earners are 25 years or older.  In Alberta, inflation has quickly eroded the contribution of every small increase to hourly minimum wage rates since the early 1980s.

(Page 39) Unattached persons in Canada experience three times the rate of overall food insecurity and seven times the rate of severe food insecurity when compared to couple households without children or with adult children. Single people represent the largest proportion in Canada, at 27.8% of all households, and they also constitute the largest share of food insecure homes at 38.2%. Single people without children also receive the least amount of government social support, as they are not eligible for the financial support of programs like family‑based tax credits and health benefits.

(Page 40) Single-person household based on the after-tax, low-income cutoff measure (LICO), the rate of low income in unattached male and female households has risen over the past decade while all other household categories have experienced a stabilized or decreased rate of low income.  Nearly 1 in 3 unattached people between ages 18 and 64 lives below the LICO in Canada, compared to only 1 in 20 of the same cohort living as part of an economic family.  An economic family refers to a group of two or more people who live in the same household and are related to each other by blood, marriage, common-law or adoption. The rate of poverty among single adults in Alberta is 28% but this value drops to only 6% for all couple families.  More than 40% of Albertans aged 15 and older are neither married nor living with a common‑law partner and nearly one quarter of all homes in the province are inhabited by only one person. Between 1961 and 2011, the proportion of one-person households in Alberta has more than doubled and now nearly matches the number of homes with families or couples without children.  Across the province, single people represent one third of all food bank users, and they outweigh couples without children by three and a half times.

(Page 40) Minimum wage is an important social policy because it intends to help lift low-paid workers above the poverty line so they have adequate income to meet basic needs for overall well-being.  However, unlike Canada Pension Plan (CPP) and Old Age Security (OAS), minimum wage is not regularly indexed to inflation through adjustments to match the increase in the Consumer Price Index.  This can lead to a hidden erosion in the value of this social policy since the general public tends to be unaware of how governments calculate changes to minimum wage rates over time.  In 1965, Alberta’s minimum wage equalled 48.5% of the average provincial income, but by 2010 this proportion had declined to only 35.5%. Alberta’s hourly minimum wage rate had been the lowest of all provinces and territories for several years, but recent increases have raised low-paid workers’ earnings to a minimum of $11.20 per hour as of October 2015.

(Page 41) There is a widespread misconception that most Canadians who earn minimum wage are teenagers who live with their parents, but more than 1 in 4 female minimum wage earners and nearly 1 in 5 male minimum wage earners are actually 25 years old or older. In addition, individuals who are older than 24 years of age are the most likely to live alone while they earn minimum wage.

(Page 42) …. In fact, unattached Canadian men and women between the ages of 18 and 64 are five times more likely to live on a low income compared to their counterparts who live in economic families.  Although the probability of living in a food insecure household is higher for females than males across all age groups and household compositions, income-related food insecurity affects unattached men at the same rate as unattached women.

(Page 44) Among all unattached Canadians, there are twice as many single adults younger than 65 years of age living below the after‑tax LICO compared to single seniors who live below this income.  In addition, the prevalence of household food insecurity is two and a half times lower for the elderly who live alone than for unattached adults who are younger than 65 years old.  However, the likelihood that a single senior will live on a low income is 10 times the rate for seniors who live as part of an economic family. This is significant since 25% of Albertans aged 65 years old and older live alone and unattached individuals are the most likely to rely on OAS and GIS.

“Social assistance soaring in Alberta, even as economy improves”, 2017 – Number of claimants on provincial income assistance programs has climbed to 54,374 in January of 2017, about 20,000 higher than at the start of the recession in 2015.  Makeup of claimants include individuals 69%, lone-parent families 24%, couples with children 5%, and couples alone 3%.  (Note:  Couples with children and couples alone only equal 8% of the total).  The Calgary Food Bank served a record 171,000 clients in 2016.

The real truth about the financial lives of unattached (one person) household

A single person household has to make an extraordinarily high income to achieve the same level of wealth as married with and without children households. A minimum wage means they will be living in poverty and with a living wage barely able to meet the financial necessities of life with no ability to max out RRSP and TFSA contributions.

Example of approximate average cost of living for a single person household (easily obtained from Living Wage Research):  Rent for bachelor apartment (including water, electricity, tenant insurance) $1,000, food $400, vehicle (gas, repair and insurance) $200, phone/internet $300, clothing/footwear $100, dental/eyecare $100, house tax and insurance if a homeowner $250, contingency saving for emergencies and replacement of vehicle (10%) $300.  Total equals $2,650 or $31,800 per year ($16 per hour based on 2,000 work hours). Totals do not include other expenses like bank fees, personal care expenses, household operation and maintenance, pets, vacations, entertainment, computer purchases and expenses, gifts, condo fees and professional association and union fees, etc.  Note: this does not include saving for retirement beyond Canada Pension Plan (CPP) contributions. The living wage for Alberta is about $18 per hour based on 35 hour work week or 1,820 hrs per annum. Single person households receive very little income from government transfers (municipal, provincial and federal).

The following three examples, although simplistic, are real life examples for single persons:

  1. Single person private sector employee with $50,000 income ($25 per hour based on 2,000 worked hours) will pay about $11,000 for taxes, CPP and EI deductions.  This results in a only a barely survivable net or take home living wage income of $39,000 ($19.50 per hour based on 2,000 hrs. or $3,250 per month). Using average cost of living of $32,000 from above paragraph, this person only has a reserve of about $600 per month.  It is impossible for this person to maximize RRSP ($9,000) and TFSA ($6,000) contributions (about $1,200 per month) even though many financially illiterate believe $50,000 is a good income for unattached individuals.  Moreover, as seniors their standard of living will likely be frugal and less equal to that of married/common-law households.
  2. Single person private sector employee with $60,000 income ($30 per hour and 2,000 work hours) will pay about $14,500 in taxes, CPP and EI contributions.  This results in a net income of $45,500 ($22.75 per hour or $3,800 per month). This person will not be able to max out RRSP ($10,800) and TFSA ($6,000) contributions (about $1,400 per month).  This still equals a frugal lifestyle (note expenses like vacations and eating out are not included in the average cost of living).
  3. Single person public sector employee with $75,000 income ($37.50 per hour and 2,000 work hours) will pay about $17,000 in taxes, CPP and EI benefits plus pension plan contribution of $7,500 (10 per cent).  Union dues are not included here. This results in a net income of approx. $51,000 ($25.50 per hour or $4,200 per month). This person may be barely able to max out RRSP ($13,500) and TFSA ($6,000) accounts (about $1,541 per month) at the expense of no vacation and eating out expenses and will have a public pension on retirement, but still will not have a standard of living equal to that of married/coupled households since they pay more taxes than married households and will not receive benefits of married persons (spousal RRSP, pension splitting, etc.)  Market Basket Measure shows it costs single person household more to live than married households.

Lessons learned:  A minimum wage of $15 means single person households will live in poverty and a living wage equals a very frugal lifestyle with no frills.

‘Chickenshit Club of women being paid less for equal work

From the above Alberta Report and Canadian statistics it is evident that a major problem still  exists of women being paid less for equal  work.

From Global News, report finds that women in Canada earn just 84 cents for every $1 earned by men, a gap similar to the one reported in official statistics. In 2017, Statistics Canada said Canadian women were making 87 cents for every $1 earned by men.  [T]he Glassdoor study went one step further, finding a four per cent pay differential between men and women even when factors like education, years on the job, occupation and professional title are taken into account. In other words, Canadian women are making just 96 cents for every $1 earned by men with the same qualifications, job and experience, something Glassdoor is calling the “adjusted pay gap.”

How many years is it going to take before women receive equal social justice on pay equity?  Instead of being ‘chickenshit political parties’ which political party is going to take this issue on?

‘Chickenshit Club’ of Canada Child Benefit

The present day ‘chickenshit club’ Canada Child Benefit does help to bring low income households with children out of poverty and food insecurity (this is a good thing), but only during the first eighteen years of the household’s entire lifecycle.  When children are grown, low income single parent households are back to ‘square one’ of the adult probability of living in poverty.

The Canada Child Benefit was implemented by Stephen Harper, previous Conservative Prime Minister, and was taxed.  Liberal Prime Minister Justin Trudeau made it non taxable.

All political parties have been complicit in perpetuating financial policies that increase middle class wealth to upper middle class status while forcing poor families and single unmarried individuals further into poverty.

Financial Post “Couple needs to cash in rental condo gains to make retirement work” (ditch-rental-condo-to-get-ahead) details a couple age 42 and 43 already having a net worth of $1.8 million, take home pay of $10,936 per month and receiving $286 in Canada Child Benefits for three children.

In 2018, Ontario couple with a child under six years of age would stop receiving CCB payments with a net income reaching $188,437.50 without other deductions such as RRSP (canada-child-benefit-is-a-win-for-most-families).  $188,000??? This is not an income of poverty.

The inequality of family benefits for the upper middle class and wealthy families is perpetuated even further by the compounding of benefits on top of benefits.  The article “Supercharge your Canada Child Benefit by making an RRSP contribution” (supercharge-by-making-an-rrsp-contribution) outlines how RRSP contributions are considered to be a tax deduction; therefore, they lower taxable income and can increase the amount of CCB payments.  The example of Ontario family with 3 kids under age 6 years of age and a family net income of $75,000 with full $13,500 RRSP contribution for the year (18% X $75,000) can expect a CCB payment of $13,215 and will pay approx. $11,814 in taxes.  Because of RRSP contributions in the previous year, their CCB payments increased by $1,465 for the present year. Additionally, they will save $1,401 in taxes and at a marginal rate of 29.65%, their RRSP contribution will also result in a tax refund of about $4,000.  The compounding effects of benefits means they will pay less taxes, get larger CCB payment and increase their RRSP wealth. The total family income with CCB is $88,215 (combined after tax and tax free) and they have increased their wealth by $13,500 RRSP for the year of contribution).

Using turbotax calculator for Alberta family with $250,000 gross income or approx. $160,000 net income ($13,300 per month) they should be able to max out maximum allowable 2019 $45,000 for couple to their RRSPs and $12,000 TFSA for the year.  Through compounding effect of benefits, including marital, they will pay approx.$21,000 less taxes, get larger CCB payment, increase their RRSP and TFSA wealth, own their home, and have approx. $181,000 minus TFSA $12,000 contribution or $169,000 ($84.5/hr.) spending capability annually.

It should be noted that there may be other credits and deductions that can be used which will further increase income available for spending.

What would anyone think that unattached individuals with no children don’t deserve to be angry because they know their hard earned money is used to increase the wealth of upper middle class and wealthy families since these families never pay their fair share in taxes because they can avoid taxes through multiple compounded benefits ???

“Ontario woman’s problem is too much debt and too little income” (forced-to-retire) is a very good example of what singles might face (i.e. on $3,750 income per month) when they are forced to retire early due to illness (doesn’t say if she is divorced or widowed).

Solution:  As per above example of $50,000 income it is impossible for single person household to have a meaningful financial life equivalent to that of married no children households.

Politicians need to get off their chickenshit politics, stop taking the easy way out, and do the hard thing by including assets and Market Basket Measure calculations in financial formulas so that singles and low income households get financial social justice and equality equal to that of wealthy and married households.

How about implementing legislation where never married no children persons should not have to pay any income tax on incomes below $50,000 so that get a benefit equivalent to that CCB and multiple benefits to families with and without children?

Chickenship Club of Climate Change

The Green Party keeps talking about a climate change plan, but like other plans and environmentalists/protesters it is all talk with very little information.  When is the Green Party (they are after all the Green Party) going to come up with a plan, for example, a line graph that shows what will happen in year one, year two, etc.  What is going to happen to all the gas combustion vehicles, gas furnaces and water tank heaters. Where are you going to dump them?  Apparently some gas combustion vehicles can be converted to electric. What are you doing about that? Are you going to shut very expensive oil refineries down that are still able to be used for another fifty years?

Many green earth technologies use rare earth minerals some of which are very toxic.  At the present time China produces 80 per cent of the rare earth minerals.  Just how do some extreme environmentalists and politicians think rare earth minerals get to Canada from China to be used in production of wind turbines?  The answer is probably by tanker.

The hypocrisy of the tanker ban is that it is only one way?  Does the  ban on tanker traffic address the tankers coming into Canada?

Elizabeth May was so impressed with India’s climate change plan.  However, India has just voted in again an authoritarian government with the help of far right Hindu religious voters.  India at present time has no middle class and the highest rate of unemployment in forty five years.

Any plan that is implemented by any country has to provide 100% climate change funds to the poor to convert from gas to electricity instead of excessive compensation of the wealthy who are the highest emitters of energy and the biggest consumers of natural resources.

Elizabeth May since her marriage has upped her membership in the ranks of the wealthy high super emitters of energy and super users of natural resources. Those with multiple properties (examples: second property hop farm owned by Elizabeth’s husband, Arizona and other vacation properties that sit empty for six months of the year and excess travel between these properties, huge motorhomes, etc.) should pay more for this privilege afforded to them by their wealth.

Green Party Reform of spousal pensions for those who have married after the age of 60 or retirement

The Green Party and particularly Elizabeth May belong to the chickenshit club of married/coupled financially privileged households.

From the ‘Surviving Spouses Pension Fairness Coalition’ May states she has lobbied to repeal legislation that denies pension benefits to spouses who have married after the age of 60 or retirement.  In one of her letters she states:  …The Green Party supports deleting these restrictive clauses in the Federal Superannuation Acts which penalize pensioners who have remarried or married for the first time after age 60 after retiring….these clauses serve to unfairly deny hard earned pension benefits to deserving partners.  These….clauses are causing great hardship to the survivor whose spouse gave a life in service to our country.”

Liberal Prime Minister Trudeau in his letter also supports this –  “I and the entire Liberal Caucus, believe that Canadian seniors are entitled to a dignified, secure, and healthy retirement. Retirees deserve financial security; they deserve a strong Canadian Pension Plan, and a government who is not only committed to protecting the CPP, but is dedicated to improving its benefits.  A secure and comfortable retirement is essential to achieving middle-class success, and Liberals believe that the federal government must do more to fulfill this promise. While the Conservative Government has left Canadians and the provinces to fend for themselves, Liberals support working with the provinces to create legislation that will make retirement security easier, not harder for all Canadians to achieve.”  (Shouldn’t the same apply to never married no children senior households?)

Tom Mulcair, NDP letter states – “New Democrats want to acknowledge the debt we owe our seniors and reward the years of hard work and dedication to our country.  That’s why we are committed to ending these archaic restrictions on benefits for pensions and their spouses.”

This is not the only pension plan where marriage for only a few years privileges the surviving spouse who hasn’t made any contributions to the pension.

Why, why, why do married persons believe they are entitled to benefits they haven’t earned?  These newly married persons never worked for and never made contributions to the pension of their spouses.  The reform of all spouses pensions similar to the above promotes the financial discrimination of never married, no children persons.  Why do these married persons who never worked for these pensions deserve to have a better lifestyle than never married, no children persons?  Never married, no children persons can never access another person’s pensions. As stated above, it has been shown that it costs more for never married, no children persons to live.  Why can’t a new widow because of death of the spouse live with the same financial realities as a never married, no children person? Afterall, the widow is now ‘single’.

Solution:  A proper financial justice solution would be to pay whatever is left in deceased spouse’s pension to the surviving spouse in the same way that whatever is left in the never married, no children person’s pension is paid to the listed benefactor.  If benefit after benefit is given to widows, equal financial remuneration equivalent to these benefits should also be given to never married, no children seniors.

Chickenshit Club of Conservatives Jason Kenney (Alberta) and Doug Ford (Ontario)

Jason Kenney is already showing his true Trumpian values by targeting most vulnerable residents at the lower end of the financial scale.  He is doing this by lowering corporate taxes and reducing teen minimum wage instead of making the wealthy pay their fair share of taxes. Just waiting for him to reduce progressive taxes back to a flat tax!  Doug Ford continues to do his damage by breaking election promises, attacking healthcare and public sectors and employees of these sectors, and implementing retroactive financial policies on budgets that have already been planned.

Where are the ‘Elizabeth Warren’ and ‘Bernie Sanders’ of Canadian politics that will promote social justice and financial equality by ensuring corporations and upper middle class families and the wealthy pay their fair share of taxes without the compounding of benefits that make them wealthier than single person and low income households?

Chickenshit Club of Liberal Party

The Liberals also belong to the Chickenshit Club of politics as they have done very little to promote social justice and equality where wealthy and corporations pay their fair share.  They are promoting ideas for the elderly to receive benefits if they have to work over the age of 65. How nice – make the senior poor work longer while giving benefits to the wealthy and married who have multiple compounding of benefits which allow them to retire at age 55.

Liberals keep talking about helping the middle class – the real truth is they are pushing the middle class up to the upper middle class while keeping unattached persons and low income families at the lower end of the financial scale.  With their plans there will be no middle class.

The Liberals have done nothing to mitigate the financial injustice and inequality of Conservative Tax Free Savings Account (TFSA) which benefit wealthy the most.

The following  was published in the Calgary Herald as this blog author’s opinion letter on TFSAs – ( Ted Rechtshaffen and Fraser Institute are telling half truths since only child rearing years are discussed on who is paying more taxes.  Wealthy Canadians with TFSA accounts pay no tax on investments earned; therefore, someone else is indeed picking up the bill, i.e. those who can’t afford TFSA accounts. Singles pay more taxes throughout entire lifetime).

“TAX LOOPHOLES NEED TO BE CLOSED”

Re: “Trudeau is right, 40 per cent of Canadians pay no income tax, Opinion, Feb. 8, 2019 (someone-else-is-picking-up-the-bill) ”

Ted Rechtshaffen and the Fraser Institute once again tell half-truths about who pays the most income tax.  Conservatives have created a TFSA monster at home (not offshore) tax loophole.

“They Want To Spend $50,000 In Retirement, Did They Save Enough?”(did-they-save-enough) outlines how an Ontario couple with large TFSA, RRSP accounts and a $600,000 house can retire at 55 and evade income taxes for 15 years while using benefits intended for low-income persons.

Canada, one of the few countries with TFSAs, has the most generous plan with the only limit being annual contribution amounts. Others (example Roth IRA) impose age, income and lifetime limits on contributions.

Without further addition of TFSA limits, the wealthy will pay less income tax than those who cannot afford TFSAs.

Chickenshit Club of Drug Cost and Advertising

All political parties are lobbying to cut drug costs.  Has anyone thought of limiting the amount of advertising drug companies can do?  Advertising is very expensive. Surely, this money could be used to decrease drug costs and to promote research for new drugs.  Why does one have to listen to advertisements on Peyronie’s disease, hemorrhoids, female and male sexual drive dysfunction, etc. over and over again.  Information on benefits of drugs should occur from discussion between the doctor and patient, not from advertisements. One solution would be to limit the amount of times each drug company can advertise in a given time period.

Chickenshit Club of Issues like Tanker Traffic Ban, Money Laundering, etc.

It doesn’t matter which political party it is – Liberal, Conservative, Green Party, BC NDP party, etc., all political parties with their chickenshit politics are trying as hard as they can to harm certain provinces and low income citizens in any way they can.  Governments at all levels have failed in controlling ‘dirty money’ and indeed have been complicit in promoting it. Some have hypocritically implemented legislation that negatively impacts only certain parts of the country.

Tanker Traffic Ban – on west coast, but not the east coast while increasing other revenue generating traffic such as cruise ships, ferry traffic and sightseeing boat traffic on the west coast.

Money Laundering in BC and Canada – The money laundering problem is prevalent across Canada but the egregious case of the ‘Vancouver Model’ of money laundering in BC shows how greed of chickenshit government overtakes the moral and ethical logic of doing the right thing.  BC governments failed to address the problem because of the huge amounts of money generated for the BC Lottery Corporation to be used for government programs. Since this also apparently involved real estate, housing prices rose to an exponential level.  Who is affected most of all? – low income persons who can’t afford housing, be it rental or ownership.

CONCLUSION:

Unless there is a major change to the upside down financial situation of politics and government where the wealthy, married and corporations stand to financially benefit the most (selective socialism for the rich), there is little hope that single person households and low income families will ever reach the middle class status so hypocritically touted by governments, politicians, families, and the elite. They should seek to right the biggest social injustices and financial inequalities, not go after the easiest solutions.

(Updated June 8, 2019)

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

FAILURE TO PROVIDE LIVING WAGE ENSURES UNEQUAL SUBSIDIZATION OF MANY GROUPS OF SOCIETY

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FAILURE TO PROVIDE LIVING WAGE ENSURES UNEQUAL SUBSIDIZATION OF MANY GROUPS OF SOCIETY

(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.)

Many including conservative and far right leaning political views imply that a living wage or even a $15 minimum wage is unsustainable even while ensuring the financial privileging of the wealthy.  The following article was published in local newspapers and states much more eloquently than this author can the financial harm and discrimination that low minimum wages cause.

“Low Wages are a subsidy”  opinion letter gives an accurate summation of subsidies experienced when minimum wage does not equal what it costs to live.

Article quoted in its entirety:

“I understand the minimum wage is a very contentious issue but I would just like give my thoughts on this.

If a person is on minimum wage and does not earn enough to survive then they must have their wages topped up be it either state welfare, charity, parents or working another job.  If it is by state welfare then the business is receiving a subsidy through my taxes. If it is by charity, then the business is receiving a subsidy through the charitable donations to the worker.  If the working lives at home then it is by the parents.

If the worker takes on another job, the subsidy is through his low wages.  The simple truth is that by paying minimum wage someone is making up the difference to a living wage and someone is benefiting from the low wage.  We as consumers should feel guilty that these workers are subsidizing our lifestyle by us not paying the real price for the goods or service.”

CONCLUSION

Editorials and opinion letters to local newspapers in the recent past have dissed raising the minimum wage and climate pricing while praising charitable organizations.  Some spout biblical verses while stating there always will be poverty. Charity touted as panacea for poverty does not solve poverty problem. Charity only masks poverty and should be viewed as sinful when it replaces paying a decent living wage or pushes poor further into poverty while financially privileging the wealthy and fleecing the poor.

COLLATERAL DAMAGE AND FUTURE CONSEQUENCES OF POLITICAL FINANCIAL FORMULAS

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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.)

BIG LITTLE LIES OF SIMPLE TAX (FLAT) RATE

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BIG LITTLE LIES OF SIMPLE (FLAT) TAX RATE

(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.)

This blog post was prompted by a right wing think tank article that once again promotes a flat tax and big little lies that it is already progressive and should replace the progressive tax system.  It was submitted to a local newspaper in shortened format, but was not published.

The article ‘Many misconceptions surround single tax rate’ is reprinted in its entirety at the end of this post along with reader comments.

EVALUATION OF SIMPLE (FLAT) TAX

This right wing author says he is the originator of the simple tax.  In fact, he has changed the name of the flat rate to the simple tax as per explanation given in article as reprinted at the end of this post.  The simple tax of 10% was adopted by the Alberta Conservative Government in 2001.  

While it is true the personal exemption rate was increased during implementation of the simple tax, during their forty year Alberta reign the Conservatives failed to raise the minimum wage to meaningful levels.  (Reality check:  The wealthy also get to use the personal exemption rate.)  One of the best big little lies or gaslighting of this author occurs when he fails to tell the truth that during the implementation of this simple tax the tax rate for lower income persons was changed from 8% to 10%.  There was no Alberta Advantage for lower income earners as a result of the tax rate being increased at the same time personal exemption rate was increased.

He once again spews lies on single tax being progressive.  He says tax paid by the wealthy are a gift to those who pay little or not tax.  Oh, puh-leese.

He states low income earners pay no tax, but fails to mention wealthy never pay their fair share.  He fails to mention the many tax federal and provincial tax loopholes and benefits which filter down to the wealthiest taxpayers.

The wealthy, for example, put their Old Age Security (OAS – a poverty reduction pillar that is only clawed back on top two percent) into TFSAs that are not declared as income.  Forty per cent of Canadians have net worths over $750,000.

The poor pay plenty by suffering financial and mental stresses while trying to pay for basic human necessities on provincial minimum wages which remained static for many years.  Low income earners cannot take advantage of tax loopholes and benefits because they do not have the income to do so.

CONCLUSION

Instead of ‘Conservative gaslighting pants on fire’ half truths, he needs to speak full truths on tax loopholes, benefits and minimum wages.  Progressive versus simple tax and ‘taxes explained in beer’ provides further discussion on fallacies of the simple tax for low income earners (tax-system-explained-in-beer-analogy). (End of post).

Reprint of simple tax article is given below.

‘MANY MISCONCEPTIONS SURROUND SINGLE TAX RATE’, Mark Milke, May 12, 2018 (https://www.pressreader.com/canada/calgary-herald/20180512/281702615355933)

Alberta’s cancelled single tax rate is in the news again after the United Conservative Party passed a policy resolution wanting it back.

 

That was followed by Twitter wars, interviews and commentaries about that tax, much of it uninformed or making obvious points.

 

I know something about the single rate tax system. I wrote about it in a 1998 submission to the Alberta Tax Review Committee, which recommended it be adopted, which it was in 2001.  I favour its return one day, but when spending is controlled and the budget is balanced.

 

Class warfare warriors have long mischaracterized Alberta’s single rate tax, so let’s clear up some misconceptions.

Let’s start with why it is called a single tax and not a flat tax. Because a true flat tax system would mean that no basic exemption exists — that everyone pays the same proportion of tax relative to income. That would be a bad idea. But that was never Alberta’s tax system. It is also why the political and media myth that the single tax was not progressive is nonsense.

 

In 2014, the last year the single-rate system was in effect, Alberta’s basic provincial personal exemption was $17,787. Income earners below that paid nothing in provincial income tax.  As for everyone else, at $25,000 in income, 2.9 per cent went to provincial income tax. At $50,000, the rate was 6.4 per cent. A $100,000 income was taxed 8.2 per cent. The single tax system was progressive.

 

Next up, the silly notion that the single rate tax was a giveaway to the wealthy. Note the language. It assumes money belongs to government and not those who earn it. In that view, any tax relief is a gift. That inverts a more sensible view from citizens to politicians: We will pay reasonable and justifiable taxes, but don’t assume our earnings are your property.

 

A relevant fact: Higher- and middle-income Albertans pay most of the income tax, not those with lower incomes. That is why the former and not the latter would gain in any tax relief scenario.

 

For example, using tax data from 2014, those earning under $50,000 counted for 57.3 per cent of all tax filers and paid just 7.6 per cent of all provincial income tax.  Of note, almost 1.8 million Albertans were in that under $50,000 group in 2014, but nearly half (845,690 Albertans) quite properly paid nothing in tax due to low incomes. (Another 8,290 at higher levels also did not pay provincial income tax for various reasons, such as maximizing previously unused RRSP deductions.)  Those who earned between $50,000 and $100,000 counted for 27 per cent of all tax filers and paid 30.6 per cent of all provincial income tax.

Albertans whose incomes were more than $100,000 accounted for 15.7 per cent of Alberta’s tax filers; they paid 61.8 per cent of all provincial income tax. Point: If one’s argument is that the wealthy should pay a hefty share of Alberta’s income tax burden, the $100,000-plus crowd in Alberta already did (a proportion higher both of tax filers and of total taxes paid than in any other province).  Thus, any substantive tax relief will naturally benefit that group.

 

Here’s the summary: Even when the single rate tax was in effect, Alberta’s over $50,000 tax filers already paid 92.4 per cent of all provincial income tax. And even for those who earned less than $50,000, more than half — more than 920,000 Albertans — paid all the income tax collected from that group.

 

When someone claims a single tax is a giveaway to higher incomes, the rhetoric has it backwards: The gift is actually from more than 2.2 million Albertans at all income levels in 2014, to the more than 850,000 Albertans who quite properly, mostly due to low incomes, paid nothing for the cost of government.

 

READER COMMENTS

#1 – Don’t bother with hard numbers Mark. It doesn’t fit the left wing rhetoric. Math is too hard for them. Lies and innuendo is the tool of the left. And 100k + income earners only paying 62% of the tax. No, Canadians want those earning more than 100k a year to pay 100% of the tax. That way, they get closer to their dream of equality of outcome. The last thing you want to do is stump a Canadian with real facts.

#2 – Your most salient point is that money belongs to those who earn it….not the government. I accept that if we want the social services we now enjoy taxes must be collected. But it must be fair and not punitive, which it is right now.

#3 – Whenever taxes are reduced, the high tax payers will always get the biggest break. Usually the biggest complainers of this move, are the socialists who pay very little tax. When Alberta implemented the single tax rate they increased the personal exemption, if the provincial or federal governments really wanted to help low income earners, just raise the exemption Trump increased the personal exemption for everybody, which means the low wage earners got a major tax break from trump. Currently are personal taxes are twice as high as the US, so why would any professional want to live in Canada compared to the US from a tax perspective.  (End of article).

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

POOR ALWAYS PLACED AT A DISADVANTAGE

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POOR ALWAYS PLACED

(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 columnist’s opinion letter prompted the author to submit an opinion letter to a major local newspaper which was published.  Due to space and time constraints the last statement of the author’s opinion letter can be interpreted in several ways.  The conclusion discusses these interpretations.

COLUMNIST’S OPINION LETTER PUBLISHED IN MAJOR LOCAL NEWSPAPER

RE: Government hypocritical on minimum wage, Oct. 2. (hypocrisy)

‘What sort of person could possibly begrudge someone getting a raise when they only make 12 lousy bucks an hour?

Probably someone who’s been hanging onto the coattails of the deep thinkers over at the Fraser Institute, or maybe ingratiating themselves with those tall foreheads inhabiting the C.D. Howe playpen. Such folks talk as though the blood drained from their thin veins a long time since.

Nope, here in Calgary, on this glorious fall morning, some fine people will be starting work with an extra spring in their collective step, knowing a nice $1.40-an-hour raise is coming, with the minimum wage jacked up to $13.60, alongside the promise it’ll hit $15 in another year.

I wish them well and, honestly, a veritable pox on those who’d deny them otherwise.

Of course, some small-business owners might decide they can’t afford this new, higher wage, so instead, they’ll work extra unpaid shifts themselves and maybe cut some poor soul from the payroll altogether. No blame should be levied there, either. Walk a mile in those shoes.

Oh, then there are those big, international corporations – the McDonald’s and Amazons of this increasingly global and heartless world. The more the cost of labour goes up, then the more bottom-line reasons to invest in robots and automation. Such reactions are inevitable – on a worldwide scale, it’s why we don’t produce much of our electronic gadgets, clothes or food because someone, somewhere, does it much cheaper, and the price we’re willing to pay supersedes patriotism everytime and everywhere.

Countless economic studies – conducted, of course, by those who’ve never seen a minimum wage pay packet since mommy and daddy shelled out for that first go-round of college – have never successfully nailed the effect of such ordained raises on subsequent employment. Usually, the conclusions mirror the political viewpoint of the group paying for the study.

Let’s face it: any relevant data here in Calgary to be gleaned in the upcoming 12 months after this latest increase would be washed away in the wake of a jump to $70 in the price of a barrel of oil. There are too many factors involved, so politicians merrily fill the gap…..

…..Politicians love spouting one-sided rhetoric. Take Alberta’s NDP Labour Minister who’s pushing this minimum wage strategy.

“Through talking to economists, business people, low wage workers and other stakeholders, we’ve come to the decision all hard-working Albertans deserve enough to support themselves.”

Hypocrite is what I say to her and all the rest of the dreary clan on both the provincial and federal stage. Because if $13 bucks an hour is not a living wage – and I wouldn’t argue otherwise – then why do these people steal from those poor souls making such a pittance?

They call it taxation. On the federal level, you start paying tax at about $12,000 a year. So, assuming you make a paltry $13 an hour and work 40 each week, your annual income is about $27,000 a year. Oh yes, Ottawa wants its sweet pound of that sad flesh.

Now the NDP Labour Minister and her saintly crew aren’t quite as grasping, to be fair, but once $15 an hour is reached, then the yearly sum will be over $30,000 and a third will be subject to provincial income tax.

So what sort of person gets up on a platform with flunkies to the right and hangers-on to the left and proceeds to lecture everyone about how the lower paid need a living wage and then takes part of such an increase and pockets it themselves? After all, where does a politician’s salary come from if not from tax revenue?

What sort of person? A politician, that’s who.’

BLOG AUTHOR’S OPINION LETTER PUBLISHED IN A MAJOR LOCAL NEWSPAPER

The columnist calls the NDP Labour Minister hypocritical for pushing the minimum wage strategy.  He states government through taxation steal from those poor souls making such a pittance.

Fact check:  when the almighty Alberta Conservatives (financial-discrimination-based-on-minimum-wage-controversy) brought in the flat income tax, they raised the provincial tax from 8% to 10% for the lowest income level.  The poor never had an Alberta Advantage.

Fact check:  those with low lifetime income will have a pittance of CPP pension retirement pillar (canada-pension-plan) because CPP contributions are based on wage levels.

Politicians, corporations and the wealthy always win because they pull the financial purse strings.

CONCLUSION

Because of time and space constraints the last statement  ‘Politicians, corporations and the wealthy always win because they pull the financial purse strings’ would likely leave the reader thinking this blog author was agreeing with the columnist regarding taxation, minimum wage, and NDP hypocrisy.  The columnist fails to mention the Alberta NDP also replaced the Conservative Party flat tax with a progressive tax system while increasing the minimum wage.

It is the opinion of this author that the Alberta Conservative Party when implementing the flat tax placed low income persons at a financial disadvantage while benefitting the wealthy more.  The Alberta NDP has, in fact, done the right thing by replacing the 10% flat tax with a progressive tax and at the same time increasing the minimum wage incrementally to $15 per hour.  The poor will receive an increase in income (impact-on-cpp-enhancements) at same time the wealthy will pay more tax.  By increasing the minimum wage for the poor and tax for the wealthy, the unfair financial spread between the two groups is narrowed.

ALBERTA PROGRESSIVE TAX  2017 IMPLEMENTED BY ALBERTA NDP PARTY

  • First $126,625 10%
  • >$126,625 to $151,950 12%
  • >$151,950 to $202,600 13%
  • >$202,600 up to $303,900 14%
  • >$303,900 15%

CANADIAN FEDERAL PROGRESSIVE TAX 2017

  • 15% on the first $45,916 of taxable income, +
  • 20.5% on the next $45,915 of taxable income (on the portion of taxable income over $45,916 up to $91,831), +
  • 26% on the next $50,522 of taxable income (on the portion of taxable income over $91,831 up to $142,353), +
  • 29% on the next $60,447 of taxable income (on the portion of taxable income over $142,353 up to $202,800), +
  • 33% of taxable income over $202,800

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

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

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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).

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

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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.

  1. 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:

income-tax-rate-scenario-1-to-3

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).

  1.  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.

  1.  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)

income-tax-rates

 

(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

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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

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 the loss of the CCB is taken into account. (His status is not stated, assume he is a single parent?)

child-benefit-math-3-scenarios

ANALYSIS

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

  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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).
  6. 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.)