Showing posts with label Tax. Show all posts
Showing posts with label Tax. Show all posts

Pay more, get less, or work longer - these are likely scenarios

As our workforce ages, younger income-earners are being asked to carry more of the tax burden and cost of services such as health care

Seniors tend to cost governments more money than they pay in taxes

Seniors tend to cost governments more money than they pay in taxes

Photograph by: WAYNE HIEBERT, Postmedia files

Seniors tend to cost governments more money than they pay in taxes; younger workers are more apt to pay in more than they get back in services.
As the balance of these two groups changes in Canada - a burgeoning cohort of retirees, and a barely budging number of income-earners - something's got to give. What are the options?
The best choice, though it's unlikely to be sufficient to cover all of the new demand for government services, would be to simply get more productivity out of those who still go to work.
On one hand, there should be scope for this because, compared to other countries, we haven't been improving our productivity very well. On the other hand, our track record is discouraging because - you guessed it - compared to other countries, we haven't been improving our productivity very well.
Also, because productivity gains are tied to investment, our efforts won't be helped by the shrinking of Canada's capital pool as a growing number of seniors stop saving and start drawing down capital to fund retirement.
Another strategy would be to add new workers through immigration.
We're already doing that, and it works - to a point.
An analysis by Schroder Investment Management notes that Canada has the highest immigration rates in the developed world.
"This is why Canada's population will continue to grow, albeit slowly, until 2050, while many other developed countries will shrink," it says.
"By the 2020s, all population growth is expected to come from immigration, and many sectors of the economy (transport, primary industry, construction) will be dependent on foreign workers. In light of this, it seems unlikely that immigration could be raised to high enough levels to completely offset the effect of domestic population aging."
There are other options, of course, but all look less palatable.
One is that governments could simply give Canadians fewer benefits and services. For seniors, this would almost certainly mean cuts to pensions and further erosion of health care, the two biggies that strain government coffers.
Schroder notes that this is, in effect, what Canada already does to keep the growth of its health care costs at a lower rate than most other developed countries.
Health care cost control "has been largely achieved by limiting capacity," the analysis says. "The number of doctors per 1,000 residents has barely risen; the number of nurses and hospital beds has fallen, and Canada has lagged other OECD countries in its stock of medical technology.
"Capacity control does not appear to have adversely affected health outcomes, with life expectancy and infant mortality continuing to improve and outperform the U.S. However, continued demand growth has necessitated health care rationing and the user experience has deteriorated: Waiting lists for procedures are long and it is often difficult to find a family doctor."
Hands up if you're an older person who wants to see us go farther down this road.
A second strategy would be to tax working people more steeply to pay the freight for the growing numbers who don't go to work any more. That's essentially what the federal government did a decade ago when it raised the mandatory contribution rate for the Canada Pension Plan to 9.9 per cent from six per cent of eligible earnings. Hands up if you're a younger worker who wants to see your deductions go higher still.
Finally, it would help - but only to a point - if baby boomers were to put off retirement for a few more years. Governments have recently made this possible by banning mandatory retirement at 65, and misbehaving markets have made it necessary for at least some of us to stay on the job for a few years longer than we once planned. But the next logical policy step would be to add a stick to the carrot by delaying eligibility for pensions and seniors' benefits.
This would likely irk both sides of the generation gap - boomers who are eager to retire, and younger workers who itch to be promoted into the jobs the old guys vacate. Blog:

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Expenses in Canada: Taxes and other expenses.

Taxes in Canada

Canadians enjoy many government-funded benefits, such as healthcare, education systems, interconnecting highways, clean drinking water and sanitation systems. Canadians pay a variety of taxes to the federal and provincial governments to support these benefits.
Each year, you determine your final tax obligation. On the return, you list your income and deductions, calculate federal and provincial or territorial tax, and determine if you have a balance of tax owing for the year, or whether you are entitled to a refund of some or all of the tax that was deducted from your income during the year.

Sales Taxes

When you purchase an item or a service one or more types of tax may be added:
  • Goods and Services Tax (GST) - A 5% federal tax applies to most goods and services sold in Canada.
  • Provincial Sales Tax (PST) - With the exception of Alberta, the provinces also tax many new and used items (but not services). The rate varies by province.
  • Harmonized Sales Tax (HST) - In Nova Scotia, New Brunswick, and Newfoundland and Labrador, the GST and PST are combined into a single tax - the HST. The HST is 13% (5% GST plus 8% PST) and is added to the cost of the goods or services for the final total price.
Provincial/Territorial tax rates (combined chart)*
Newfoundland and Labrador7.7% on the first $31,061 of taxable income, + 12.8% on the next $31,060, + 15.5% on the amount over $62,121
Prince Edward Island9.8% on the first $31,984 of taxable income, + 13.8% on the next $31,985, + 16.7% on the amount over $63,969
Nova Scotia8.79% on the first $29,590 of taxable income, + 14.95% on the next $29,590, + 16.67% on the next $33,820 + 17.5% on the amount over $93,000
New Brunswick10.12% on the first $35,707 of taxable income, + 15.48% on the next $35,708, + 16.8% on the next $44,690, + 17.95% on the amount over $116,105
QuebecContact Revenu Québec
Ontario6.05% on the first $36,848 of taxable income, + 9.15% on the next $36,850, + 11.16% on the amount over $73,698
Manitoba10.8% on the first $31,000 of taxable income, + 12.75% on the next $36,000, + 17.4% on the amount over $67,000
Saskatchewan11% on the first $40,113 of taxable income, + 13% on the next $74,497, + 15% on the amount over $114,610
Alberta10% of taxable income
British Columbia5.06% on the first $35,716 of taxable income, + 7.7% on the next $35,717, + 10.5% on the next $10,581, + 12.29% on the next $17,574, + 14.7% on the amount over $99,588
Yukon7.04% on the first $38,832 of taxable income, + 9.68% on the next $38,832, + 11.44% on the next $48,600, + 12.76% on the amount over $126,264
Northwest Territories5.9% on the first $36,885 of taxable income, + 8.6% on the next $36,887, + 12.2% on the next $46,164, + 14.05% on the amount over $119,936
Nunavut4% on the first $38,832 of taxable income, + 7% on the next $38,832, + 9% on the next $48,600, + 11.5% on the amount over $126,264
Source: as of September 18, 2009

Pay Deductions

The following deductions are standard for all employees in Canada. The deductions are automatically taken out from your paycheck before you receive your pay.
  • Income taxes
  • Canada Pension Plan or Quebec Pension Plan
  • Employment Insurance
  • Union dues - if you belong to a union
  • Contributions to a retirement or pension plan
  • Any other necessary or agreed upon deductions between you and your employer
The above deduction could reduce your pay by as much as 25% to 35% of your total income.


If you plan to live in a city and will not have a car, budget for public transportation. Public transportation in Canada is reliable and safe, and is reasonably priced.
If you will be buying a motor vehicle, budget for gasoline, maintenance, and repairs and automobile insurance, along with the cost of the vehicle.


Canadians purchase a number of different types of insurance. Some are required by law and some are purchased to provide financial security. Common types are:
  • Automobile insurance (required to drive a vehicle)
  • Property insurance (to protect your home and your belongings from theft or damage)
  • Medical insurance (addition provincial health coverage)
  • Life insurance (to protect your family if anything should happen to you)
  • Creditor's insurance (to cover outstanding debts if you are unable to work)

The Coming Tax Increases in USA. Why americans should consider moving to Canada

2009 Tax Day Tea Bag ProtestImage by bvcphoto via Flickr
Source:The Economic Collapse blog

Unless the U.S. Congress acts, there is going to be a massive wave of tax increases in 2011.  In fact, some are already calling 2011 the year of the tax increase.  A whole host of tax cuts that Congress established between 2001 and 2003 are set to expire in January unless Congress chooses to renew them.  But with Democrats firmly in control of both houses that appears to be extremely unlikely.  These tax increases are going to affect every single American (at least those who actually pay taxes).  But this will be just the first wave of tax increases.  Another huge slate of tax increases passed in the health care reform law is scheduled to go into effect by 2019.  So Americans that are already infuriated by our tax system are only going to become more frustrated in the years ahead.  The reality is that the U.S. government will soon be digging much deeper into our wallets.
The following are some of the tax increases that are scheduled to go into effect in 2011....
1 - The lowest bracket for the personal income tax is going to increase from 10 percent to 15 percent.
2 - The next lowest bracket for the personal income tax is going to increase from 25 percent to 28 percent.
3 - The 28 percent tax bracket is going to increase to 31 percent.
4 - The 33 percent tax bracket is going to increase to 36 percent.
5 - The 35 percent tax bracket is going to increase to 39.6 percent.
6 - In 2011, the death tax is scheduled to return.  So instead of paying zero percent, estates of $1 million or more are going to be taxed at a rate of 55 percent.
7 - The capital gains tax is going to increase from 15 percent to 20 percent.
8 - The tax on dividends is going to increase from 15 percent to 39.6 percent.
9 - The "marriage penalty" is also scheduled to be reinstated in 2011.
It is being estimated that the total cost of these tax increases to U.S. taxpayers will be $2.6 trillion through the year 2020.
But wait, there are even more tax increases coming.
The "health care reform law" contains over a dozen new taxes that will be implemented in stages over the next decade.  When you add all of these taxes to the taxes that were mentioned earlier, the result is going to be absolutely devastating.  According to an analysis by the Congressional Joint Committee on Taxation the health care reform law will generate $409.2 billion in additional taxes by the year 2019.
Double ouch!
So is it any wonder why the public has such a low opinion of the U.S. Congress?
Every single major poll done on the topic shows that approval ratings for Congress are at record lows.
For example, Gallup's 2010 Confidence in Institutions poll found Congress ranking dead last out of the 16 institutions rated this year.
Of course there are a whole host of reasons why the American people are upset with Congress, but one of the big ones is the fact that we are literally being taxed to death.
However, it is not just federal income taxes that are killing us.
In a previous article entitled "Taxed Enough Already!", we listed just a few of the taxes that Americans have to pay each year....
Accounts Receivable Tax
Building Permit Tax
Capital Gains Tax
CDL license Tax
Cigarette Tax
Corporate Income Tax
Court Fines (indirect taxes)
Dog License Tax
Federal Income Tax
Federal Unemployment Tax (FUTA)
Fishing License Tax
Food License Tax
Fuel permit tax
Gasoline Tax
Gift Tax
Hunting License Tax
Inheritance Tax
Inventory tax IRS Interest Charges (tax on top of tax)
IRS Penalties (tax on top of tax)
Liquor Tax
Local Income Tax
Luxury Taxes
Marriage License Tax
Medicare Tax
Payroll Taxes
Property Tax
Real Estate Tax
Recreational Vehicle Tax
Road Toll Booth Taxes
Road Usage Taxes (Truckers)
Sales Taxes
School Tax
Septic Permit Tax
Service Charge Taxes
Social Security Tax
State Income Tax
State Unemployment Tax (SUTA)
Telephone federal excise tax
Telephone federal universal service fee tax
Telephone federal, state and local surcharge taxes
Telephone minimum usage surcharge tax
Telephone recurring and non-recurring charges tax
Telephone state and local tax
Telephone usage charge tax
Toll Bridge Taxes
Toll Tunnel Taxes
Traffic Fines (indirect taxation)
Trailer registration tax
Utility Taxes
Vehicle License Registration Tax
Vehicle Sales Tax
Watercraft registration Tax
Well Permit Tax
Workers Compensation Tax
Are you dizzy yet?
The reality is that the American people are being drained in dozens and dozens of different ways.
But what did you expect?
Did you think that our politicians would pile up the biggest debt in the history of the world and never ask you to pay for it?
Did you think that we could run deficits equivalent to about 10 percent of GDP without ever seeing tax increases?
The truth is that the U.S. government needs a whole lot more money than even these new tax increases will bring in.
After all, it is being projected that the U.S. government will be spending $2 trillion on the interest on the national debt alone by the year 2020.
To put that in perspective, the entire budget for the U.S. government is less than $4 trillion for 2010.
Are you starting to get the picture?
In the years ahead the IRS is going to be digging deeper and deeper into our pockets and a gigantic chunk of that money is going to go directly into the pockets of those who own our debt.
But very few Americans wanted to listen when this problem was actually somewhat fixable 20 or 30 years ago.
So now we are all going to pay the price - literally.
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