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

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.)

FINANCIAL POST PERSONAL AND FAMILY FINANCIAL PROFILES STAR RATINGS-Part 2 of 2

FINANCIAL POST PERSONAL AND FAMILY FINANCIAL PROFILES STAR RATINGS-Part 2 of 2

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

(six-reasons-why-married-coupled-persons-are-able-to-achieve-more-financial-power-wealth than singles)

(Andrew Allentuck from the Financial Post oversees the personal and family finance profile evaluations.  Anyone can submit their financial profile to the Financial Post for analysis by a financial planner.  Some of these cases have been used in this blog.  It is helpful to know the background behind these financial analyses.  In Part 2 of 2 the following information outlines the top ten questions that the Financial Post receives regarding these financial profile evaluations.  The blog author’s comments re questions are entered below some of the questions.)

Financial  Post, December 22, 2012 “THE TOP 10 FAMILY FINANCE QUESTIONS OF 2012 (financialpost)

‘….In hundreds of letters to Family Finance requesting assistance and commenting on the problems folks face in paying their bills, 10 top issues emerged:

  • Debt…a 1.0% interest rate increase on a home equity line of credit will turn a $100,000 interest-only loan floating at 3.5% or $3,500 to a heftier $4,500 a year…

  • Tax shelters Inability to make the most of RRSPs, RESPs, TFSAs and, for those who qualify Registered Disability Savings Plans (RDSPs) spurred many readers to ask how they could sock away more money and which choices in the alphabet soup of these plans would be most tax efficient.  

  • Downsizing Family transition from children to empty nests and the need to raise cash for retirement spending came up in more than half of our cases.  The amount of money that can be raised or the amount of debt that can be liberated depends on the market price of home or cottage.  Where prices are very high – think Vancouver, Victoria, Calgary and Toronto – readers sensed that they could  take a profit over cost, especially if they had owned the home for many years, pay debts and have cash left over for a smaller home or for renting….’

Comment:  The unfortunate truth is that many seniors (married or coupled and widowers) living in their expensive big homes do not want to downsize.  Many financial assistance programs have been implemented included house tax assistance and renovation assistance.  Many singles and poor families, however, do not have the ability to own big expensive homes.  Singles are told they can move or go live with someone if they have problems  with housing.  It is primarily only wealthy families that have cottages or second properties, motorhomes and other expensive toys.

  • ‘Children Couples and those expecting a first child wrote in dozens of cases to ask what is the cost of raising a child.  A 2011 study by the Manitoba Department of Agriculture suggested that a child born in 2010 would set its parents back by $191,665…..’

Comment:  Some statistics give a figure of $250,000.  To 18 years of each child, this amounts to $13,889 per year and $1157 per month.  It is difficult to understand why parents (beyond replacing themselves with two children) would have three, four, five children when they know they won’t be able to support themselves and their children within the parameters of their budgets and salaries. When it is known that there is a world population explosion and the earth will not be able to sustain this population explosion, why would responsible parents have more than two children?

  • ‘Boundaries It is one thing to know the statistics of child-rearing expense and another to  manage it.  Readers asked many times how much they could afford to give their kids for RESPs and for activities while at home.  It was common to find cases in which parents, strapped for money, spent $400 to  $500 a month for sport yet could have cut down on hockey and put enough money into RESPs to qualify for maximum government grants.  Indulgences included foreign travel with parents and money for cars for teenagers.  When the parents wound up strapped for cash, it was clear that they had failed to set boundaries on what they would spend and what they might ask their older children to earn to support their sports, hobbies and travel.’

Comment:  Straight from a financial person’s mouth-married or coupled families with children often don’t set boundaries in reality to what they can afford.  However, singles are often told they spend too much and are selfish even though they don’t have the same financial income and assets as married or coupled families with children.

  • ‘Limits to portfolio growth

  • Understanding risk

  • Insurance Virtually every reader has insurance for his home and car, but life insurance is another matter.  A third of  our readers need more insurance than they have to cover to risk that the single breadwinner in a family could die prematurely.  Another third have inappropriate coverage with costly whole life that builds cash value slowly, or universal life they (and many financial analysts) can’t understand.  The remainder need to adjust their coverage up or down with how their lives have changed.  The math within life insurance is complex, the tax breaks that life insurance can afford are valuable, and the protection against many creditor claims life insurance can provide are precious, but few readers  understand how intricate a product life insurance is.’

Comment:  Life insurance should be made mandatory for all married or coupled family units, just like home and car insurance.  Life insurance should replace all boutique tax credits directed towards widowers as they are now technically ‘single’.  Ever singles and divorced persons do not get benefits that widowers get and are, in fact, helping to support widowers with these benefits. Also, education on term insurance as the most cost effective insurance needs to be promoted.

  • ‘Retirement age A generation of readers grew up aspiring to retire at age 55.  Two-thirds of the letters to Family Finance raise the question of how they can get enough money to retire then or a little later.  Today, the mid-50s goal is so 1980 – before the crashes of the dot-coms, 9/11 and the 2008 debt crisis.  In fact, few readers have sufficient capital to make it to 55.  Instead, working another decade to 65 or even 67….is necessary.  Working longer not only allows more savings, it postpones the time that retirees have to start drawing down their capital.  Working longer also provides a reason to get up in the morning, maintains associations, and even sustains credit ratings.  Full retirement at age 55 is an idea whose time has come and gone for most.’

Comment:  Again, straight from a financial person’s mouth-married or coupled family units seem to believe they can retire early after having received multiple family tax credits, and then be able to pension split without paying very little for these credits.  Many singles have to work longer while paying to help support married or coupled family units and the multiple tax credits they receive.  Singles receive very little of these tax credits.

  • ‘Make a budget Many requests to Family Finance ask for help making a budget.  Readers regard having a set of rules as a key to meeting savings goals for their kids and retirement.  Where cash is tight, a set of rules for the road is surely a good  idea.  Just thinking about what categories of spending should have various allocations each month is helpful.  Mundane it may be, but writing a budget can be a first step to sound family finance.’

Comment:  Everyone should have a budget.  In addition to family budgeting, parents need to teach their children about budgeting, the Rule of 72 and what the real costs are for items like expensive sports activities.  If singles are thought to be spendthrifts and selfish, maybe it is because their parents never taught them anything about finances.  Or, maybe it is because married or coupled family units with children don’t even to try to understand what it costs single persons to live once they leave  home.  More married or coupled family units with children need to educate themselves on all the benefits they receive, how little they are paying for these benefits and what it is costing other family units like singles to support these benefits that they, themselves, do not receive.

CONCLUSION

It would be helpful if all citizens learn to take responsibility for their own financial well-being instead of looking to others to support them in the form of government tax credits. The present upside down financial situation of giving to the wealthy (particularly married or coupled or family units with children) while making them pay less needs to be reversed so those who truly need assistance receive this assistance (poor singles and poor families with children).  It is absurd that the wealthy are accumulating huge inheritances like TFSA accounts without paying taxes on these accounts.  It is absurd that the wealthy parents want to leave huge inheritances for their children, but do not wish to give up assets like big houses while receiving tax credits such as house tax financial assistance and pension-splitting.  It is absurd that governments do not take into accounts assets as well as income when handing out tax credits.

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

CONTINUED FINANCIAL ILLITERACY OF FINANCIAL GURUS EQUALS FINANCIAL DISCRIMINATION OF SENIOR SINGLES (Part 2 of 2)

CONTINUED FINANCIAL ILLITERACY OF FINANCIAL GURUS EQUALS FINANCIAL DISCRIMINATION OF SENIOR SINGLES (Part 2 of 2)

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

This blog post is a comment on the Broadbent Institute Report on the economic circumstances of Canadian seniors.  The Broadbent Institute is a left-leaning social democratic think tank founded by Ed Broadbent who was a past leader of the New Democratic Party .  It describes itself as an independent, non-partisan organization championing progressive change through the promotion of democracy, equality, and sustainability and the training of a new generation of leaders.  Its mission is to “Support, develop, and promote social democratic principles for the 21st century”, “Propose new solutions for a more equal society”, and “Equip a new generation of progressive campaigners & thinkers with the tools they need to build a social democratic society through training and education”.

This post addresses excerpts from the report first (Part 1), and then is followed by comments on the report (Part 2).

COMMENTS ON  REPORT – PART 2 OF 2

In February, 2016 the Broadbent Institute in Canada and Richard Shillington of Tristat Resources published the report:  “An Analysis of the Economic Circumstances of Canadian Seniors”.       (analysis_of_the_economic_circumstances_of_canadian_seniors)

The report information is mainly directed towards poverty of seniors without an employer pension plan (roughly 47 per cent) and therefore, many of these seniors have wholly inadequate retirement savings.

(It should be noted in the report that single seniors does not refer to marital status, but the fact that they live alone.  Therefore, single seniors includes ‘ever’-never married, no kids-singles, divorced/separated, and widowed seniors living alone).

Review of the report reveals some points that are very disconcerting.

  • The true facts of what it costs singles to live is under-reported.  Married/coupled persons and, indeed, the author of the Broadbent report do not seem to realize that the widowed (married/coupled persons whose spouses are deceased) are a part of the singles population.  It is a well known fact that it costs singles approximately 70 per cent of what it costs married/coupled persons to live as a single unit.  This fact is never addressed in the report. (Using LIM 11.1 percent of seniors live in poverty–719,000 seniors:  419,000 singles and 250,000 living in an economic family.  The poverty is astonishingly high at almost 30 per cent for senior singles without employer pension plans).  (Widowed persons and the extra benefits they get are discussed later in this post).
  • All the extra benefits that have been given to married/coupled persons are never addressed.  Governments continue to create financial silos where more and more benefits are given to married/coupled persons even though they are able to live with less because of economies of scale, but not to singles resulting in financial inequality.  (Following table was updated on March 8, 2016 with additional information).

financial silos6

  • It is ludicrous that this report does not treat home equity as a retirement asset.  Those who have to rent are at a much greater financial disadvantage than those who own their own home.  Quote from report : “ …..Many of those who argue that there is no looming pension crisis have included home equity as a liquid asset.  This analysis has not treated home equity as a retirement asset because the replacement rate analysis has as its objective an income that allows one to enjoy a lifestyle comparable to that which existed pre-retirement.  We do not include home equity here because we accept that the pre-retirement lifestyle for many middle- and moderate-income Canadians include continued homeownership”, (Page 19).

According to Statistics Canada 2011 articles “Living Arrangements of Seniors” and “Homeownership and Shelter Costs in Canada”:      (statcan.gc.ca) and (statcan)

  • The average household total income for couple-family households was about twice that of non-family households (which were primarily one-person households) and lone-parent households ($101,000 per year versus $43,000 per year and $55,000 per year respectively).  Thus, while lone-parent households and non-family households had a lower cost than couple-family households, the lower household total income results in a higher proportion exceeding the affordability threshold”.
  • Approximately 69 per cent of Canadians own their own home.  About  four out of five (82.4%) married/coupled people own their own home, while less than half (48.5%) of non-family households (singles) own their dwellings.  Just over half (55.6%) of lone-parent households own their dwelling.  (It stands to reason that more senior married/coupled and widowed persons will own their own homes, while senior singles–‘ever’ single and early divorced)–are more likely to have to rent placing them in greater income inequality and a lower standard of living and quality of life). Regardless of housing tenure, the proportion of non-family households and lone-parent households that paid 30% or more of total income towards shelter costs was about twice the proportion of the couple-family households.
  • Quote “approximately 56.4 per cent of the senior population (5 million total seniors in 2011) live as part of a couple and about 24.6 per cent of the senior population live alone (excludes those living with someone else, in senior citizen facilities and collective housing).

Singles are constantly told to ‘go live with someone’ when they have difficulties paying for housing; meanwhile married/coupled and widowed persons may be living in their big houses (enjoying the same lifestyle they had before pre-retirement) and seeking help with paying their taxes while refusing to move to a less expensive dwelling.  (senior-singles-pay-more-part-3-of-4)

  • It is ludicrous for this report to state that seventy per cent  income replacement should be a benchmark in the formulas.  Seventy per cent income replacement is entirely different for those who own their own home versus those who rent.  It is selfish to think that the rich and married/coupled persons should be able to live same lifestyle post-retirement as pre-retirement when singles and early divorced generally will have a poorer lifestyle throughout their entire lives.

An example is the Financial Post financial evaluation “Bright Future Despite Big Debt, Small Income” published in Calgary Herald on February 20, 2016 where Ontario young couple’s after tax income is $4,800 per month and their food budget is $800 and entertainment $160 per month for two people.  Just these two items are 20 per cent of their budget.  Either they live in an area with very high food costs or they are living the high life for one of the necessities of life in Maslow’s Hierarchy of need.  Seventy per cent replacement at retirement would give this couple an unreasonably high style of life for food in comparison to singles.   Reader letter mentioned above in ‘senior-singles-pay-more-part 3-of-4’ link suggested singles should be able to live on just $200 per month for food.

  • It is ludicrous to suggest that persons without employer pension plans cannot save, especially those with incomes over $100,000.

Quote from report:  “For those with incomes in $50,000-$100,000 range, the median value (savings) is only $21,000” (Page 3).

If those with pension plans have forced saving, it it is ridiculous to say that those without pension plans are not able to save.  For example, a $75,000 before-tax income may result in $600-$700 per month being deducted from pay cheque (employer deductions are excluded in this discussion).   It is also ridiculous to say that in this First World country persons with $100,000 plus incomes cannot save.  One of the principles of good finances is to save 10 per cent.  Whole report promotes greed of looking for more benefits and not planning for the future if there is no plan for saving during working years.

  • Reporting false information on marital status is a crime.  Quote from report states:  “Table 7 represents the results of increasing the single and married GIS amounts by the same percentage.  One should keep in mind that there is an incentive for seniors to appear as singles to governments even if they are living as a couple.  This is because the GIS for senior couples is less than twice the amount for singles.  An increase in the GIS for singles only (with no increase for couples) would increase this so-called ‘tax on marriage’ and associated incentives.  This would encourage couples to hide their cohabitation from the authorities for financial reasons”, (Page 21).

GIS for senior couples should, repeat, should be less than twice the amount for singles.  Singles (particularly ‘ever’ and early divorced singles including the author of this blog) have worked very hard to have financial formulas include singles at 70 per cent of married/coupled persons living as a single unit.  The GIS for senior singles is more than married/coupled persons because it costs more for singles (including widowed persons)  to live than it does for married/coupled persons living as a single unit.  Why can’t married/coupled persons understand this?  When married/widowed persons become widowed their living costs will go up.

The statement  “An increase in the GIS for singles only (with no increase for couples) would increase this so-called ‘tax on marriage’ and associated incentives. This would encourage couples to hide their cohabitation from the authorities for financial reasons” is absurd and selfish.  Tax on marriage, why can’t married/coupled persons realize all the extra benefits they receive as outlined in table above???  When is ‘enough’ ever going to be ‘enough’ for them???

The notation (# 28) at the bottom of page 21 states:  “While legislation treats those cohabiting the same regardless of their marital status, it is easier to deceive the government if you are not married”.  This statement is false and backwards.  If it is anyone being deceitful, it is the married/coupled persons.  Can someone explain why it would be easier to deceive the government if you are not married (‘ever’ single)?  The issue with false reporting lies with those who are married/coupled, divorced or separated.  They are trying to ‘milk’ the system by falsely reporting their marital status even though the Canada Revenue income tax rules clearly define the parameters of marital status.

False reporting is a crime.  It would be very easy to track deceit by following income tax declaration of marital status and address of residence over several years.  Deceit of married/coupled persons would incrementally increase the monetary value they would receive from the deceit as it costs them less to live as a couple than it does single persons.

It seems married/coupled persons want it all even if they have to lie about it.  So what will they do when their spouse goes to a nursing home or is deceased?  In order to collect the benefits they are entitled to as one spouse living at home and the the other in a nursing home and widowers, they will need to lie again and change their marital status from single to married/coupled or widowed when filing their income taxes.

‘Ever’ singles (never married, no kids) throughout their entire working lives pay same amount of taxes as each individual (with equal income to the single person) reporting income tax in a married/coupled relationship and have supported/subsidized families who use mom/baby hospital care, EI benefits for maternal/paternal leaves, etc.  They are never recognized for their tax support and for using less resources than families.  Since singles have paid supportive taxes throughout their entire working lives, they deserve to live with the same financial dignity and respect as seniors and as married/coupled persons.  As seniors, ‘ever’ singles deserve to have their own space and their own bathroom and not be forced to cohabitate with other persons.

The real financial lives of singles is revealed when a simple math calculation is used for the targeted tax relief where a single senior can now earn $20,360 and a senior couple $40,720 before paying federal income tax.  This so called tax relief for seniors allows federal tax relief for singles equal to $1,697 per month and for senior couples $3,393 per month.  The tax relief for senior singles hardly covers a rent or mortgage payment of $1,200 and $250 for food per month (Maslow’s Hierarchy of Need), but amply covers this amount for a senior couple.  For a couple $1200 for rent or mortgage and $500 for food leaves $1693 (or 50% of $40,000) for other necessities and maybe even a nice little vacation all tax free.

CONCLUSION

It is incredible how in just a few paragraphs a think-tank can undo the hard work that singles have been trying to achieve in seeking financial equality.  Think-tanks and financial gurus continue to practice financial illiteracy on what it truly costs singles to live.   (false-assumptions-four-ways-seniors-singles-lose outand (financial-gurus-financially-illiterate-about-singles-finances)

Even though the final statement of the report states:  The GIS is the most effective federal mechanism in the short term for reducing the poverty rate and the impact of poverty on seniors, and it can be targeted at senior singles who need it the most”, there are many shortcomings to this report.

This report is encouraging irresponsible financial behavior.  It is morally, ethically and socially reprehensible in a First world country to say that one cannot save with an income over $100,000 and to promote financial inequality and discrimination of singles.

The Broadbent Institute is supposed to be about ‘a more equal society’, so where is the financial equality?

SOLUTIONS

In order to ensure financial equality between singles (including widowers) and married/coupled persons the following measures need to be taken:

    • change financial formulas so that senior singles receive 70 per cent of whatever is given to married/coupled senior persons as it costs more for singles to live than it does married/coupled persons because of economies of scale
    • financial formulas should be revised to include all senior persons regardless of marital status in one financial formula.  To eliminate financial silos that benefit married/coupled persons most, delete benefits already given to married/coupled persons such as pension splitting (benefits the rich most) so that there is a level financial playing field for all regardless of marital status. (It is understood that it is expensive to raise children and  benefits given for children should last for first twenty years of the life of the child.  However, beyond the twenty years of the children, any other benefits given to married/coupled persons should be deleted or should also be given equally to singles at rate of 70 per cent)
    • create a side-by-side list of all possible benefits under categories of married/coupled, widowed and single and analyze the total value of benefits in each category (see table above).  Financial formulas should be created equally for all categories, not just the married/coupled and widowed.
    • delete allowance benefit that has been ruled to be discriminatory by the courts
    • education, education and more education on financial literacy for singles.  Think tanks, financial gurus and married/coupled people need to educate themselves on what it really costs singles to live.

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

 

 

NEW YEAR’S RESOLUTIONS (FINANCIAL) FOR SINGLES

stock-vector-creative-happy-new-year-design-vector-illustration-334950749

 

NEW YEAR’S RESOLUTIONS (FINANCIAL) FOR SINGLES

  1. I resolve to contact my members of government, policy and decision makers and educate them about the financial discrimination of singles.
  2. I resolve to question fees when married/coupled persons (adult to adult) are paying less person to person for two adults than for one adult. (Example:  gym memberships when married/coupled persons pay less per person than single persons.   It is recognized that children are expensive to raise and, therefore, fees for the children may be free.  However, it is financially discriminatory to charge a single adult and a divorced/separated adult with and without children more, adult to adult, than married/coupled adults.)
  3. I resolve to contact my members of government, policy and decision makers and insist that singles (ever) and divorced/separated individuals need to be included in financial formulas, not just married/coupled persons and widowers.

_________________________________________             _____________________

Name                                                                                                      Date

SENIOR SINGLES PAY MORE – PART 2 OF 4

FINANCIAL FAIRNESS FOR SENIOR SINGLES NOT PART OF PLAN

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

This article was published in a local newspaper on August 19, 2015. The Conservative Party was in power federally at the time. In the October, 2015 federal elections the Conservatives were ousted by the Liberal Party. Proper names have been removed.)

In the midst of a Federal Election the financial rhetoric continues. The Conservative Member of Parliament, Wildrose, in his latest mailbox flyer, states that Conservatives have been committed to helping provide Canadian seniors with a secure and dignified retirement. The reality is that married/partnered people stand to gain much more from the Conservative Action Plan 2015 and other Conservative financial initiatives than individual/single seniors.

First, increases in the contribution limits of the TFSA account favors married/partnered people as the contribution limit per person is doubled. (The doubling of the TFSA was rescinded by the Liberals when they came into power in the October, 2015 federal election).

Second, pension splitting benefits applies only to married/couple people, not singles.

Third, the Age Credit benefits initiative increased by an amount of approximately $1,000. This benefit is incrementally reduced by 15% of net income exceeding approximately $35,000 and is eliminated when net income exceeds approximately $80,000. Any unused portion of the Age Credit can be transferred to the individual’s spouse or common-law partner. Comparable benefit of unused portion to individuals/singles without a spouse/common-law partner is zero.

Fourth, in the targeted tax relief benefits a senior couple can earn $40,720 without paying income tax (marital manna benefit), while a single senior can only earn $20,360 before paying income tax.

Fifth, Allowance for people ages 60 to 64 benefits are available to the spouses or common-law partners of GIS recipients. The spouse, age 60 to 64, of a senior with a single income of less than $31,584 may receive an allowance of $1,070.60 per month. This is an additional $12,000 per year. Furthermore, this benefit may also be available to immigrant married/coupled people who have been in the country for only ten years. Canadian-born and immigrant individuals/singles have nothing comparable to this benefit.

These are just a few of many more examples.

The following tables showing the income and net worth/wealth of unattached individuals versus families of two or more have been taken from MoneySense, The All-Canadian Wealth Test, January 2015 (moneysense) (based on Statistics Canada 2011 data)

____________________________________________________________________

INCOME TABLE

______________________________________________________________________________

INCOME

HOW DOES YOUR PAY STACK UP

_____________________________________________________________________

Quintiles                    Unattached Individuals        Families of Two or More

Bottom 20%                 $0 to $18,717                         $0 to $38,754

Lower-Middle 20%        $18,718 to $23,356                 $38,755 to $61,928

Middle 20%                  $23,357 to $36,859                 $61,929 to $88,074

Upper-Middle 20%         $36,860 to $55,498                $88,075 to $125,009

Highest 20%                 $55,499 and up                      $125,010 and up

______________________________________________________________________________

NET WORTH TABLE

____________________________________________________________________

NET WORTH

ARE YOU RICH?

______________________________________________________________________________

Quintiles                     Unattached Individuals        Families of Two or More

Bottom 20%                 Negative to $2,468                  Negative to $67,970

Lower-Middle 20%         $2,469 to $19,264                   $67,971 to $263,656

Middle 20%                   $19,265 to $128,087                $263,657 to $589,686

Upper-Middle 20%         $128,088 to $455,876              $589,687 to $1,139,488

Highest 20%                 $455,877 and over                   $1,139,489 and up

______________________________________________________________________________

An individual/single person who has an income of more than $55,000 is considered to be in the top 20% ‘wealthy’ category, but has great difficulty living a ‘wealthy’ lifestyle on $55,000 especially if they have a mortgage or need to pay rent in their senior years (meanwhile wealthy family income is $125,000 and up). Women between ages 45 and 64 earn on average $23,000 less than men.

What is even more revealing is the net worth of unattached individuals compared to families of two or more. The MoneySense article makes the following comments:

“The collective net worth of the lowest 40% of individuals wouldn’t match the poorest 20% of families. Families can build wealth faster than individuals because they can pool resources, which enables them to pay down debts faster and make larger purchases. And what a difference it makes: between ages 55 and 65, families are worth, on average, a whopping $670,000 more than unattached individuals in the same age group”.

 

(It should be noted that the net worth is probably even higher for families of two or more, since it appears that single parents with children are included in families of two or more statistics.  Single and divorced/separated parents of children, especially if younger in age, should excluded from families of two or more and placed into  their own category for more accurate statistics -added January 20, 2016).

It is always prudent to have more than one source for verification of facts, so here are another two.

The “Current State of Canadian Family Finances 2013-2014” report by the Vanier Institute of the Family vanierinstitute.ca states that

“between 1999 and 2012 the net worth of families advanced more than it did for unattached individuals”.

The 2009 “Report of the National Seniors Council on Low Income Among Seniors” (seniorscouncil) states that:

“between 1980 and 2006, the unattached have the highest incidence of low income of any group, with 15.5 percent of unattached seniors living below LICO in 2006, a rate 11 times higher than that of senior couples (1.4 per cent)”.

So how can married/coupled people continue to demand more financial benefits? How can governments continue to increase the financial means of married/coupled people at the expense of unattached individuals/singles? And, how expensive is it really to raise children when families can achieve so much more net worth than singles? Financial fairness requires balance and elimination of unfair benefits such as income/pension splitting and ability to transfer credits from one spouse to another.

The Conservative MP claims to “stand up for Canada’s seniors who have helped make Canada the strong and prosperous country it is today”. However, this holds true more for married/coupled people in Canada than it does for individuals/singles. In his flyer, the Conservative MP wants feedback on the question “Am I on the right track to deliver support to seniors?” For senior individuals/singles the answer is a resounding and unequivocal “NO”.

Individuals/singles need to stand up, speak out and make facts such as the above known to their members of Parliament, those with decision-making power, and families. Individuals/singles need to decide which political parties are detrimental to their financial health and vote for the party which best meets their financial needs in the Federal election. They need to demand financial sensibility and equality. Financial discrimination of one segment of the population over another is a blatant violation of human rights and civil rights.

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

SENIOR SINGLES PAY MORE -Part 1 of 4

SENIOR SINGLES PAY MORE – Part 1 of 4

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

LOST DOLLARS LIST’

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

 

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

    

FALSE ASSUMPTIONS- ‘FOUR WAYS SINGLE SENIORS LOSE OUT’

FALSE ASSUMPTIONS OF ARTICLE ‘FOUR WAYS SINGLE SENIORS LOSE OUT’

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

(On searching internet a few days ago this article was found – ‘Four ways single seniors lose out’ by Ted Rechtshaffen, Financial Post October 13, 2012. While the intentions of the article are great, the assumptions and categorization of singles is false.)

In his October 13, 2012 article Ted Rechtshaffen (four-ways-single-seniors-lose-out) talks about four ways that single seniors financially lose out. Portions of the article are outlined in part here (full article is available online):

Rechtshaffen states:

“Being part of a couple in old age has so many tax advantages that losing a spouse through divorce or death can be very costly. Given the fact that so many more single seniors are female, this unfairness is almost an added tax on women. Becoming single in old age could cost you tens of thousands of dollars through no fault of your own. The current tax and pension system in Canada is significantly tilted to benefit couples over singles once you are age 65 or more….

Here are four ways that single seniors lose out:

1. There is no one to split income with. Since the rules changed to allow for income splitting of almost all income for those aged 65 or older, it has meaningfully lowered tax rates for some…If you are single, you are stuck with the higher tax bill.

2. CPP (Canadian Pension Plan) haircut… If one passes away, the government doesn’t pay out more than the maximum for CPP to the surviving spouse. They will top up someone’s CPP if it is below the maximum, but in this case, they simply lose out almost $12,000 a year.

3. RSP/RIF (Retirement Savings Plan/Retirement Income Fund) gets folded into one account. This becomes important as you get older and a larger amount of money is withdrawn by a single person each year — and taxed on income…her tax bill will be much larger… than the combined tax bill the year before, even though they have essentially the same assets, and roughly the same income is withdrawn.

4. Old Age Security (OAS). The married couple with $50,000 of income each, both qualify for full Old Age Security —… If the husband passes away, you lose his OAS, about $6,500. On top of that, in the example in #3, the wife now has a minimum RIF income…and combined with CPP and any other income, she is now getting OAS clawed back.

The clawback starts at $69,562, and the OAS declines by 15¢ for every $1 of income beyond $69,562. If we assume that the widow now has an income of $80,000, her OAS will be cut to $414.50 a month or another $1,500 annual hit simply because she is now single. In total, almost $8,000 of Old Age Security has now disappeared. As you can see, a couple’s net after-tax income can drop as much as $25,000 after one becomes single.

On the other side, there is no question that expenses will decline being one person instead of two, but the expenses don’t drop in half. We usually see a decline of about 15% to 30%, because items like housing and utilities usually don’t change much, and many other expenses only see small declines.

In one analysis our company did comparing the ultimate estate size of a couple who both pass away at age 90, as compared to one where one of them passes away at age 70 and the other lives to 90, the estate size was over $500,000 larger when both lived to age 90 – even with higher expenses.

So the question becomes, what can you do about this?

I have three suggestions:

1. Write a letter to your MP along with this article, and demand that the tax system be made more fair for single seniors. You may also want to send a letter to Status of Women Minister…as this issue clearly affects women more than men.

2. Look at having permanent life insurance on both members of a couple to compensate for the gaps. Many people have life insurance that they drop after a certain age. The life insurance option certainly isn’t a necessity, but can be a solution that provides a better return on investment than many alternatives and covers off this gap well. If you have sufficient wealth that you will be leaving a meaningful estate anyway, this usually will grow the overall estate value as compared to not having the insurance — and not hurt your standard of living in any way.

3. Consider a common law relationship for tax purposes. I am only half joking. If two single seniors get together and write a pre-nuptial agreement to protect assets in the case of a separation or death, you can both benefit from the tax savings.

Ultimately, the status quo is simply unfair to single seniors, and that needs to change.”

Ted Rechtshaffen is president and wealth advisor at TriDelta Financial, a boutique wealth management and planning firm. www.tridelta.ca

The first thing that is so wrong with this article is the definition of single versus married/partnered in marital status. The senior persons mentioned in this article are not single. According to Statistics Canada definitions, they are widowed or divorced/separated (after age 65). Persons who are true and ever singles have none of the financial benefits/losses mentioned in this article. And if persons are divorced/separated, especially at an early stage of their marriage, they also do not have many of the benefits/losses mentioned here. (The earlier the divorce/separation in life, the greater is the loss of benefits that married/coupled persons enjoy).

  1. Being part of a couple in old age has so many tax advantages…How true!
  2. The current tax and pension system in Canada is significantly tilted to benefit couples over singles once you are age 65 or more….This statement is not completely true. The system is even more unfair for singles who are true (‘ever’) singles, not widows. Singles who are true singles have been excluded from the discussion.
  3. Benefits – Article correctly states that pension splitting, CPP, RSP/RIF and OAS are benefits to married people because the couple receives these benefits times two and is able to pension split, but widowed persons have less of these benefits. To this, true singles and early divorced/separated persons ask the question, “so what”? If widowed persons are now so called ‘single’ they should have to live same standard of living, not better than, true singles and early divorced/separated persons.
  4. Losses – Losses are correctly stated, however, true (‘ever’) singles and early divorced/separated persons have a hard time understanding why this is a hardship. Widowers are now ‘single’ so why can’t they live the same lifestyle as true singles and early divorced/separated persons?
  5. Higher tax bill – Why is this a problem? Widowed persons are now on more equal playing field to true single and early divorced/separated persons.
  6. Clawback – Again why is this a problem? True singles and early divorced/separated persons enjoy none of these benefits. Also, many true (ever) singles and early divorced/separated Canadian persons do not have the luxury of a $70,000 income.

Estate size $500,000 less
Just more proof that married/coupled persons want it all and want more, more and more from the time of marriage until the death of their spouse/partner and even after the death of their spouse/partner.  In article ‘The Added Price of Single Life?’ by Bella Depaulo (belladepaulo) talks about a A British study that showed  true singles lose equivalent of $380,000 USA over a lifetime to married persons, so what is the problem with losing $500,000? Another good article is ‘The high price of being single in America’ theatlantic.com.

The article then goes on to make these enlightening points:

“There is no question that expenses will decline being one person instead of two, but the expenses don’t drop in half. We usually see a decline of about 15% to 30%, because items like housing and utilities usually don’t change much, and many other expenses only see small declines“.

It would be exceedingly wonderful if government, businesses, society and families (married/partnered) would recognize this fact for true singles and early divorced/separated persons instead of telling them “it must be their lifestyle” that is making them poor. Fifteen to 30 percent decline? Wow, singles would love these percentages to also be used for them especially since 60 to 70% income of married or partnered persons is often used (i.e. MoneySense articles). If only true singles and early divorced persons could say they should have the same benefits as widowed persons, that is, 70 to 85% income of married or partnered persons.

Unfair to single seniors?  The  most unfairness is to true singles and divorced/separated persons, not widows.

Regarding the suggestions that are made:

  1. “Write your MP and demand that tax system be made more fair for single seniors”. The article refers only to married/coupled and divorced/separated seniors after the age of 65. It dis criminates by exclusion against true singles and early divorced/separated persons.
  • “Look at having permanent life insurance on both members of a couple to compensate for the gaps”. This is a great idea. The author of this blog has long thought this would be a solution to providing benefits to survivors once spouses have died and they would actually be paying for those benefits through premiums. At the present time, survivors are getting marital manna benefits, but then are asking for more as this article suggests. They are also getting survivors benefits from pension plans and paying very little for these benefits. An example is a pension plan where only $100 is deducted each month from living spouse for pension benefits in the thousand dollar range. Deduction of $100 per month or $1200 per year does not pay for survivor pension that is two-thirds of full pension of the spouse. Life insurance plans at present time do not extend to 90 years of age without excessive premiums. To stop all the marital manna benefits that survivors get, life insurance plans need to be extended to 90 years of age, and spouses need to pay premiums for entire life. Another critical thinking, outside the box idea is to eliminate marital manna benefits and make permanent term life insurance plans compulsory, just like house and car insurance, so that married/coupled persons would actually pay for the benefits they receive. This methodology would allow true singles and early divorced/separated persons to be on more level financial playing field to married/coupled persons since generally true singles do not need life insurance. A longer term for collecting premiums should help to offset the costs of the premiums that will be paid out. Permanent life insurance would ease burden that married/partnered benefits place on government programs. There also would then be more monies to bring government programs for true singles and early divorced/separated persons to have same standard of living as married/coupled and widowed persons.
  • Consider a common law relationship for tax purposes. He says he is only half kidding. Really? According to Canada Revenue Agency rules this is not legal. Ever singles and divorced/separated persons cannot just shack up with someone for tax purposes. More true singles and early divorced/separated persons would be doing this if they could.

Lessons learned

  1. Writers who wish to write about the financial affairs of singles should use correct definitions for singles. The persons in this article were not true singles. In other words, correctly identify who your audience is.
  2. Writers of financial institutions who wish to write about the financial affair of singles should include all singles in their discussions. To do anything less is discriminatory and disrespectful to singles who truly are single.
  3. By all means vote and contact your Members of Parliament, but insist that true singles and early divorced/separated persons (senior and otherwise) be included in financial discussions and formulas equal to and at the same level as widows and middle class families. (Seventy to 85% income of married/coupled persons would be wonderful).

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

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