Behind the Numbers

Entries Tagged as 'Taxes and Tax Cuts'

The TFSA Shouldn’t Be Scrapped, It Should Be Fixed: Budget 2015

April 20th, 2015 · · Alternative Federal Budget, Federal Budget, Income Inequality, Taxes and Tax Cuts

Today The Globe and Mail Report on Business published 5 economists’ thoughts on what tomorrow’s federal budget could and should do.

I chose to focus on a measure that is virtually guaranteed to be in the budget, because the federal government has promised to do it since the last federal election in April 2011: double the annual contribution limits to the Tax Free Savings Account.

I thought it was bad policy in 2011. It’s even less of an excusable policy direction now. It doesn’t even do what the feds say it does.

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Doubling contribution limit to Tax-Free Savings Accounts exposes true intent of a bad policy

April 16th, 2015 · · Economy & Economic Indicators, Federal Budget, Income Inequality, Taxes and Tax Cuts

Last week, federal finance minister Joe Oliver re-affirmed that his government seeks to double the annual contribution limit to Tax-Free Savings Accounts (TFSAs), from $5,500 to $11,000.

This is a terrible idea.

When the TFSA was first introduced, the claim at the time was that the policy was intended to support modest income people wanting to save for retirement, but for whom the RRSP may not make good economic sense. There was some merit to this argument, although boosting the CPP and Old Age Security (OAS) would have been a far preferable solution.

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Alternative Federal Budget vs. Income Splitting: Who benefits?

March 30th, 2015 · · Alternative Federal Budget, Federal Budget, Taxes and Tax Cuts

On March 19th, we released the 2015 Alternative Federal Budget (AFB) and also marked the publication’s 20th anniversary. Like every year, the AFB includes practical measures to improve Canadian’s lives. For the past two years, we’ve been running our AFB through a sophisticated income inequality simulation to see how our budget would affect poverty and inequality in Canada. This analysis allows us to see who benefits and who doesn’t from various social programs and tax/transfer changes.

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Doubling TFSA Contributions Limits: Even Nastier than Income Splitting

March 2nd, 2015 · · Canada, Income Inequality, Taxes and Tax Cuts

The Harper government gives five reasons why Canadians ought to be happy with its proposal to double the maximum contribution to the Tax-Free Savings Account. Examine each of its points more closely, however, and it’s clear that the TFSA carries far higher risks than rewards — for individual Canadians  as well as for the economy as a whole.

Let’s unpack the government’s arguments one by one:

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Small business tax cuts in Canada: been there, done that

January 29th, 2015 · · Canada, Taxes and Tax Cuts

In the prelude to the 2015 federal election, NDP Leader Thomas Mulcair is talking job creation in Southwestern Ontario.

He’s promising more small business tax cuts and credits as his entry point. It’s the political norm these days to promote low business taxes, but the reality is small business tax cuts are already old hat. Here’s why:

About a year ago, Canada’s Department of Finance released a report outlining the changes in effective tax rates for small businesses, or Canadian controlled private corporations (CCPCs) as they are called in tax language, between 2000 and 2011.

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Municipal headache

January 29th, 2015 · · Cities, Taxes and Tax Cuts

Municipal taxes. Their mere mention is enough to cause headaches for some. Throughout the year, we nearly forget that we help finance our own town or city. Then the tax bill pops up in our mailbox, and we open it with trembling hands, wondering about the magnitude of this year’s hike. This letter can put an end to many households’ home-owning project, mainly elderly and young families. Wages rarely follow the staggering rise in the price of real estate.

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The downside of Canada’s love affair with small business

January 28th, 2015 · · Income Inequality, Taxes and Tax Cuts

It is not difficult to understand the motivation behind the federal NDP’s decision to make a tax cut for small business a centerpiece of its pre-election policy roll out.red

As touted by what must be the most consistently effective political lobbying force in Canadian history, small business is perceived to be an important engine of economic growth and job creation.

And while supporting small business doesn’t have the easily identifiable upside that goes with investing in large-scale projects of multinational corporations that have big job numbers attached to them, it has the virtue of avoiding the red-faced problem when those big jobs go south.

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Toronto, you’re richer than you think

January 20th, 2015 · · Ontario, public services, Taxes and Tax Cuts

Toronto’s budget season has begun in earnest, and it’s yielding a mix of the predictable “we can’t afford things” debate, along with some refreshing surprises.

Refreshing: Mayor John Tory is clearly signalling a desire to break from the recent past with the 2015 budget. His announcement on improvements to the TTC and his focus on the value of service improvements at his budget press conference this morning are a welcome breath of fresh air.

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The case against a revenue-neutral carbon tax

January 16th, 2015 · · Energy Policy, Environment, Taxes and Tax Cuts

I’m a fan of carbon taxes, but increasingly I see the term “revenue-neutral” attached to it. Where I live, in BC, we have perhaps the most prominent example of a revenue-neutral carbon tax, and carbon tax advocates have come to promoting the BC model to other jurisdictions, such as Ontario, who are contemplating their own carbon tax. This includes the new EcoFiscal Commission, which endorses a naive view of markets – the magic of free markets is alive and well, and if only we could put a price on carbon to change marketplace incentives, all will be well.

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Nova Scotia Tax Review: Eroding Tax Fairness

November 19th, 2014 · · Income Inequality, Nova Scotia, public services, Taxes and Tax Cuts

The Nova Scotia Tax Review released today lacks an analysis of the impact its tax changes will have on Nova Scotians. Who would benefit? A simple distributional analysis of different income groups would give us some information. Not available. (Informative to check out the analysis we did for the Hamm government’s proposed cuts back in 2003 – by income level & by gender and county.)

What is the anticipated effect of the tax changes on the economy? How many jobs might be created by this tax package? There is no evidence in this report on either of those. What can be said based on what we know about the problems facing the province, the current tax regime and the impact of taxes and government spending on the economy?

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