GOVERNMENT CPP BAFFLEGAB MORE IMPORTANT THAN FINANCIAL DISCRIMINATION AND QUALITY OF LIFE OF CANADIAN SINGLES
These thoughts are purely the blunt, no nonsense personal opinions of the author and are not intended to provide personal or financial advice.
There has been much discussion lately as to whether the CPP (Canada Pension Plan) system should be changed. The objective of the government is for country to live in a society that takes care of its citizens. The reality is that some citizens are being taken care of more than others, that is the rich and married/coupled persons while singles and low income are being financially discriminated against.
EXAMPLES OF FINANCIAL DISCRIMINATION
- TARGETED TAX RELIEF PROGRAMS FOR SENIORS-The Federal Conservative government has a targeted tax relief program where a single senior can now earn $20,360 and a senior couple $40,720 before paying federal income tax. Program claims that approximately 400,000 seniors (or 7 to 8% of total Canadian seniors) have been removed from the tax rolls altogether. This so called tax relief for seniors allows federal tax relief for senior singles equal to $1,697 per month and for senior couples $3,393 per month.
The tax relief for senior singles hardly covers a rent or mortgage payment of $1,200 and $250 for food per month (Maslow’s Hierarchy of Need), but amply covers this amount for a senior couple. For a couple $1200 for rent or mortgage and $500 for food leaves $1693 (or 50% of $40,000) for other necessities and medications and maybe even a nice little vacation all tax free.
It is a well-known fact that singles require more income to that of a married/coupled persons living as a single unit. In Equivalence scales (Statistics Canada 75F0002M – Section 2 ‘The LIM and proposed Modifications’ (75f0002) (equivalence-scales) if singles are assigned a value of 1.0, then couples require 1.4 times for income, not 2.0. $20,360 times 1.4 equals $28,504 ($2,375 per month) (updated November 18, 2017). If the federal government cared about income equality and quality of life for senior singles, it would increase the tax free amount for singles. By not applying equivalence scales to income for senior singles, they lose $678 a month or approximately $8,000 Lost Dollar Value annually in quality of life to married/couple retired persons. (From age 65 to 90, this amounts to $20,000).
When income for senior married/coupled persons is over $40,000 they again get another benefit, that is pension splitting, which singles cannot use increasing quality of life for married/coupled persons over senior singles. This is a tax benefit piled on top of another tax benefit.
The number of senior ‘ever’ singles (never married, no kids) and divorced/separated persons comprises only about 13 per cent of the population, so how much would it cost to bring the quality of life for these citizens up to the standard of tax relief for married/coupled persons? The answer is ‘not very much’ in comparison to what has been given to married/coupled senior persons.
“Ever” singles are told every day they are worthless and worth less than married/coupled persons even though they have worked 35 – 40 years subsidizing mother/baby hospital care, EI paternal/maternal leave, education taxes even though they have had no children and paid more taxes than families.
- GOVERNMENTS IGNORE COURT RULINGS–Re Allowance Program and Credits, (policyalternatives) 2009 Policy Brief, “A Stronger Foundation-Pension Reform and Old Age Security” by Canadian Centre for Policy Alternatives, page 4, states this program discriminates on basis of marital status as confirmed by case brought under Charter of Rights where federal court agreed program was discriminatory, and ruled it would be too expensive to extend program on basis of income regardless of marital status.’ So what is happening? Age eligibility for Allowance will change from 60 to 62 beginning in 2023 with full implementation in 2029. In this democratic, civilized country let’s just ignore federal court rulings and continue a $? million discriminatory program. Article suggests that ‘OAS (Old Age Security) and GIS (Guaranteed Income Supplement) combined should be increased to at least bring it up to after-tax LICO (Low Income Cut Off) for single individuals.’ And why should married/coupled people get discriminatory marital status benefits where unused credits like Age Credits can be transferred to spouse?
Gross financial discrimination for singles occurs when governments choose to completely ignore court rulings. Lost Dollar Value to singles: unable to calculate.
- PENSION SPLITTING–It is immoral and ethically irresponsible for governments to deny that pension splitting benefits the wealthy most. For families who can be exempt from paying 10 – !5 percent income tax on $100,000 and maintain the same income level during retirement as they had during their working years, even though they have less expenses during retirement, is financially discriminating to singles who cannot pension split. (This information was revised April 10, 2016 – Lost Dollar Value: From estimate on income splitting, it has been suggested that income splitting would provide tax relief of $103 for income $30,000 or less and $1,832 for income of $90,000 and over or an average of $794 overall. If $800 ($794 rounded off) is calculated times 35 years (age 65 to 90), then Lost Dollar Value will equal $28,000.)
- HOUSING-Financial gurus seem to be leaning towards renting instead of home ownership. This creates further hardship for singles and the low income. If young married/coupled persons are being told that they will probably need to rent because housing prices are out of reach, where does this leave singles and low income persons? Trend now is towards tiny houses with composting toilets and tanks for storing water, but the rich don’t want to see tiny houses in their backyards.
Try telling singles and low income person that renting is the better alternative when they pay more per square foot and quality of housing is lower than that of houses for families. If they have problems with not enough income for housing, they are told they should go live with someone. These people ought to try ‘walking in the shoes’ of singles living in one room or communal situations, where because of low income, they don’t have their own bathroom, and it becomes a ‘dog eat dog’ world where others will, for example, steal food because there is not enough money to buy food. (cprn.org)
The housing market (rental and ownership) is financially completely upside down. Instead of the rich and middle class paying more for the greatest amount of square footage, they are paying less for the greatest amount of square footage and niceties associated with that. Singles and low income will be living in hovels, thus violating Maslow’s Hierarchy of Needs principle.
- IF MONEY IS THERE YOU WILL SPEND IT, IF IT IS NOT, YOU WON’T–Financial studies have come to conclusions that for people in the lowest income quintile on average have replacement rates of 100 percent, implying their real standard of living actually rises after retirement. This is such a lie and is totally irrelevant to singles and low income persons. If there is a poor quality of life before retirement, there still will be a poor quality of life on 100 percent replacement income for singles that does not meet the 1.4 income equivalent (updated November 17, 2017) to that of married/coupled persons living as a single unit.
Governments, decision makers, some financial advisers to the government. and think tanks are financially illiterate about the financial discrimination of singles.
It seems to be more important for governments to ensure that upper-middle class and upper class maintain their standard of living than it is to treat singles fairly.
Unprecedented growth in value of houses will result in huge tax-free wealth for families and married/coupled persons to the financial detriment of singles and low income.
Marital manna benefits like pension splitting has created a nanny state where married/coupled persons want it all and once these benefits are in place, it is very difficult to get rid of them. Married/coupled persons have been made irresponsible by their own government. They are not living a lower life style in their retirement. A further question is whether these programs will be financially sustainable.
Assumption that retirement income only needs to replaced at 70 percent, for example, does not hold true for both singles and married/coupled persons, because singles require 1.4 income equivalent to married/coupled persons living as a single unit (updated November 17, 2017). Twenty thousand dollars a year is not an adequate quality of life retirement income for Canadian senior singles.
GOVERNMENTS NEED TO ADDRESS FINANCIAL EQUALITY FIRST FOR ALL CANADIAN CITIZENS REGARDLESS OF MARITAL STATUS, THEN TWEAK CPP.
This blog is of a general nature about financial discrimination of individuals/singles. It is not intended to provide personal or financial advice.