Liberals renege on closing tax loophole for the wealthy
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Canadians are incredulous at report (link is external)s that shows Canada’s highest paid 100 CEOs’ compensation hit a new high of an average of $9.5 million or 193 times more than someone earning an average wage.
Even more maddening is the news that taxpayers are subsidizing those billion dollar salaries because Prime Minister Trudeau has failed to axe the stock option loophole (link is external) that taxes only half the income from stock options. And now we’ve learned that the Prime Minister broke that election promise after some powerful corporate lobbying (link is external) last year, just before the federal budget was tabled.
Here’s your chance to remind Justin Trudeau of his promises. Remind him that failure to keep his word is costing billions. He chose to keep this perk for wealthy CEOs while telling us we can’t afford Pharmacare, a childcare program or many of the other investments that would make Canada stronger. That’s just not right.
Caving to Bay Street lobbying to keep those perks in the last federal budget was a bad move. It let Canadians down.
We won’t let it happen again in this year’s budget. Send a message to Prime Minister Justin Trudeau to axe the stock option tax loophole.
Remind him that ordinary Canadian taxpayers are paying attention. Tell him to keep his promise to make taxes fairer.
Petition
PM: Close The Stock Option Loophole! | Canadians for Tax Fairness
Even more maddening is the news that taxpayers are subsidizing those billion dollar salaries because Prime Minister Trudeau has failed to axe the stock option loophole (link is external) that taxes only half the income from stock options. And now we’ve learned that the Prime Minister broke that election promise after some powerful corporate lobbying (link is external) last year, just before the federal budget was tabled.
Here’s your chance to remind Justin Trudeau of his promises. Remind him that failure to keep his word is costing billions. He chose to keep this perk for wealthy CEOs while telling us we can’t afford Pharmacare, a childcare program or many of the other investments that would make Canada stronger. That’s just not right.
Caving to Bay Street lobbying to keep those perks in the last federal budget was a bad move. It let Canadians down.
We won’t let it happen again in this year’s budget. Send a message to Prime Minister Justin Trudeau to axe the stock option tax loophole.
Remind him that ordinary Canadian taxpayers are paying attention. Tell him to keep his promise to make taxes fairer.
Petition
PM: Close The Stock Option Loophole! | Canadians for Tax Fairness
Why is Justin Trudeau always smiling?
Over the past 12 months, the average Canadian wage has been falling, once inflation is included.
Economy growth is weak. The cost of housing is rising – skyrocketing, in some regions. Part-time and temporary work is growing.
It’s a stressful time – what’s there to be so happy about?
You’d think you’d get some empathy from the leader of a country full of economically stressed people. You’d think you might get an occasional flash of outrage, sadness, frustration or even – dare we say it – anger. But in Canada, with Justin Trudeau, it’s the exact opposite. We get smiles, stock photo-ops and a refusal to answer tough questions in the Commons. It’s a strategy of misdirection.
And if you can’t get some empathy, you’re not getting any policy. There’s no effort to strengthen minimum wages or employment standards. Trudeau broke his promise to fix unfair tax rules for stock options. And there’s no signal that Canadian will push for stronger human, labour and environmental rights in the many trade deals Trudeau’s pursuing.
Behind the smiles, what Canadians are getting are massive reverse Robin Hood schemes.
We’ve all heard about Trudeau’s $4 billion middle class tax cut. The problem is, the middle class gets almost no benefit from it. The biggest benefit goes to people with after-deductions taxable income of between $90,000 and $200,000. People earning under $45,000 get zilch. Some people are happy about that.
But Trudeau’s biggest reverse Robin Hood plan is his private Infrastructure Bank. A bill to create this bank is making its way through Parliament now. And absolutely some people are happy about that.
During the election, Trudeau promised to use historically low interest rates – currently about 2% -- to launch a boom of infrastructure construction. But once in government, the Liberals set up an advisory panel of finance capitalists – let’s not mince words – and asked them to come up with a plan for financing infrastructure. Smiles everywhere.
No big shocker – the advisory panel recommended that instead of paying 2% interest to borrow money by issuing bonds, the government should pay them 7 to 9% for doing the same thing. They recommended creating a privately-funded monopoly that would finance infrastructure projects – the Infrastructure Bank.
And the kicker is that the Liberals’ advisory panel also recommended the government chip-in $20 billion to get their bank running. The Liberals are looking at raising this money by privatizing airports and sea ports. Toronto’s Pearson Airport alone could fetch $5 billion, according to a recent report.
If you’re an economist, it’s called rent-seeking. It’s a practice that uses monopolies to extract wealth. It contributes nothing. It just takes. And the Infrastructure Bank is rent-seeking on steroids.
The rents extracted though the Infrastructure Bank would be massive. Economist Toby Sanger has calculated that Infrastructure Bank financing will add about $5 billion a year to project cost – the roads, bridges, subways, arenas, etc. Smiles all around.
And that $5 billion is paid by you – money you contribute in taxes and thought would go to health care, education and care for others. It gets diverted away to the richest. It is a reverse Robin Hood scheme.
It’s no accident that Trudeau is out of touch and out of tune with the Canadian people. It’s a strategy. The real question is if there is a political leader who can capture the true mood of Canadians and end these reverse Robin Hood schemes.
Prime Minister Trudeau: reverse Robin Hood with a smile | Canadian Association of Labour Media
Over the past 12 months, the average Canadian wage has been falling, once inflation is included.
Economy growth is weak. The cost of housing is rising – skyrocketing, in some regions. Part-time and temporary work is growing.
It’s a stressful time – what’s there to be so happy about?
You’d think you’d get some empathy from the leader of a country full of economically stressed people. You’d think you might get an occasional flash of outrage, sadness, frustration or even – dare we say it – anger. But in Canada, with Justin Trudeau, it’s the exact opposite. We get smiles, stock photo-ops and a refusal to answer tough questions in the Commons. It’s a strategy of misdirection.
And if you can’t get some empathy, you’re not getting any policy. There’s no effort to strengthen minimum wages or employment standards. Trudeau broke his promise to fix unfair tax rules for stock options. And there’s no signal that Canadian will push for stronger human, labour and environmental rights in the many trade deals Trudeau’s pursuing.
Behind the smiles, what Canadians are getting are massive reverse Robin Hood schemes.
We’ve all heard about Trudeau’s $4 billion middle class tax cut. The problem is, the middle class gets almost no benefit from it. The biggest benefit goes to people with after-deductions taxable income of between $90,000 and $200,000. People earning under $45,000 get zilch. Some people are happy about that.
But Trudeau’s biggest reverse Robin Hood plan is his private Infrastructure Bank. A bill to create this bank is making its way through Parliament now. And absolutely some people are happy about that.
During the election, Trudeau promised to use historically low interest rates – currently about 2% -- to launch a boom of infrastructure construction. But once in government, the Liberals set up an advisory panel of finance capitalists – let’s not mince words – and asked them to come up with a plan for financing infrastructure. Smiles everywhere.
No big shocker – the advisory panel recommended that instead of paying 2% interest to borrow money by issuing bonds, the government should pay them 7 to 9% for doing the same thing. They recommended creating a privately-funded monopoly that would finance infrastructure projects – the Infrastructure Bank.
And the kicker is that the Liberals’ advisory panel also recommended the government chip-in $20 billion to get their bank running. The Liberals are looking at raising this money by privatizing airports and sea ports. Toronto’s Pearson Airport alone could fetch $5 billion, according to a recent report.
If you’re an economist, it’s called rent-seeking. It’s a practice that uses monopolies to extract wealth. It contributes nothing. It just takes. And the Infrastructure Bank is rent-seeking on steroids.
The rents extracted though the Infrastructure Bank would be massive. Economist Toby Sanger has calculated that Infrastructure Bank financing will add about $5 billion a year to project cost – the roads, bridges, subways, arenas, etc. Smiles all around.
And that $5 billion is paid by you – money you contribute in taxes and thought would go to health care, education and care for others. It gets diverted away to the richest. It is a reverse Robin Hood scheme.
It’s no accident that Trudeau is out of touch and out of tune with the Canadian people. It’s a strategy. The real question is if there is a political leader who can capture the true mood of Canadians and end these reverse Robin Hood schemes.
Prime Minister Trudeau: reverse Robin Hood with a smile | Canadian Association of Labour Media
David MacDonald discusses the need to start tackling some of Canada's most expensive and least justifiable tax handouts to the rich:
The richest 10 per cent of Canadians enjoy an average of $20,500 a year in tax exemptions, credits, and other loopholes. That’s $6,000 more than in 1992 and it costs the federal government $58 billion—double what it paid in tax expenditures in 1992.
The cost to the federal government for all preferential personal income tax treatments, not just for the rich, has ballooned from $90 billion in 1992 to a projected $152 billion in 2018. That’s a 69 per cent cost increase since 1992.
...
This is about taking a clear-eyed look at how Ottawa has been prioritizing tax expenditures that disproportionately benefit a few at the expense of the many.
Meanwhile, government after government puts off making proper investments to ensure clean water and decent housing on Aboriginal reserves as well as delaying bold action on poverty reduction and homelessness.
In some Canadian cities, some working families are paying the equivalent of a second monthly mortgage just to get their children in child care.
Millennials are being asked to pay record-high tuition in order to get a university degree, only to graduate with record-high student debt and limited work opportunities.
The case for closing tax loopholes, shutting down tax credits and exemptions tilted heavily in favour of the rich and corporate Canada is really about diverting that money to pay for programs and services that benefit everyone—even the rich and corporations, because they benefit from a healthy, well-functioning society.
The cost to the federal government for all preferential personal income tax treatments, not just for the rich, has ballooned from $90 billion in 1992 to a projected $152 billion in 2018. That’s a 69 per cent cost increase since 1992.
...
This is about taking a clear-eyed look at how Ottawa has been prioritizing tax expenditures that disproportionately benefit a few at the expense of the many.
Meanwhile, government after government puts off making proper investments to ensure clean water and decent housing on Aboriginal reserves as well as delaying bold action on poverty reduction and homelessness.
In some Canadian cities, some working families are paying the equivalent of a second monthly mortgage just to get their children in child care.
Millennials are being asked to pay record-high tuition in order to get a university degree, only to graduate with record-high student debt and limited work opportunities.
The case for closing tax loopholes, shutting down tax credits and exemptions tilted heavily in favour of the rich and corporate Canada is really about diverting that money to pay for programs and services that benefit everyone—even the rich and corporations, because they benefit from a healthy, well-functioning society.
Don't you wish Harper was still in charge?
Tax credits and exemptions do not"cost" the government or citizens anything. What they do is leave more money in the hands of the people that worked for it.
The poor already pay no income tax so obviously they are not eligible for credits etc. Too bad the producers in society don't get the same courtesy from the government when it comes to taxes.
Tell ya what then. How about the producers of society pay sales taxes that are the same percentage of income as those who are poor. Maybe if the govt focused on creating the kind of environment that produced MORE living wage jobs, there'd be fewer people paying $0 in income tax.
I am so not shocked. Trump folded like a 3 card flush, why would JT not follow suit? All you have to do is see who benefits from their actions, or in most cases like the medical experiments on Baffin Correctional Center inmates see who does get abused by the same Government. Apparently the love for Native people fades once the cameras are silent. Bit disappointing but not a huge surprise.
Well said.
Did you notice that the author of the article was very careful not to provide any numbers that would detail what the average tax contribution was/is for corporations and the top 10% income earners?
The $20,00 sure sounds like a lot of money, but t isn't such a grand windfall when you understand that the aforementioned likely paid 6 or 7 figures in taxes to begin with
You do not create the kind for environment you're looking for by upping the taxes on the private sector.
These are the same loopholes that existed under Harper.
So the poor, as you describe them, who pay income taxes every paycheque are not eligible to claim deductions for gas, vehicle insurance, vehicle purchases, clothing, entertainment and travel expenses etcetera because...?
Tax credits aren't loopholes exclusive to "rich" people.
I'm getting sick and f-cking tired of people ignorant of CRA policies pissing and moaning about things that don't exist.
.
Do you wear a uniform? Use your personal vehicle for work? Supply your own tools required for employment?
I'm getting sick and f-cking tired of people ignorant of CRA policies pissing and moaning about things that don't exist.
Because those credits are for business or those required to make expenditures such as wearing a uniform.
.
Do you wear a uniform? Use your personal vehicle for work? Supply your own tools required for employment?
I'm not ignorant of the CRA policies, Quite the opposite. Many, including me, are saying why are the CRA policies not inclusive of all workers? Why are there policies that only favour certain job classification? Either change the policies to include all workers or cancel those policies for the elite and connected.
No I never wore a uniform but I didn't wear a $2,000.00 suit that I could write off either.
And yes, the majority of workers use a vehicle or some form of transportation to get to and from work. And many people use tools or supplies that are not supplied by companies nor are they eligible to write them down against gross earned income.
Obviously you are ignorant. I don't get those credits either and you'd probably call me rich.
You could make $39M a year and if you aren't using your own vehicle or required to wear a uniform you won't get them either.
If you want those credits, become an Avon lady who drives her own vehicle, wears an Avon uniform, supply your own telecommunications and have a portion of your home as your office.
You could make $39M a year and if you aren't using your own vehicle or required to wear a uniform you won't get them either.
If you want those credits, become an Avon lady who drives her own vehicle, wears an Avon uniform, supply your own telecommunications and have a portion of your home as your office.
You want those wonderful and generous tax credits?
Easy, all you need to do is convince your employer to hire the company that you will incorporate (you) as a contractor... The employer will pay the Newco whatever salary you are getting and you'll be able to claim select credits and deductions.
Newco can now pay you whatever amount you wish - that you'll pay taxes on and your corp will have to pay taxes on the balance of it's it's revenues.
See how easy it is?... All it takes is just one or 2 more levels of taxation and you too can enjoy this bounty of benefits!
Federal Finance Minister Bill Morneau would like Canadians to believe sweeping corporate tax reforms proposed by the Trudeau government are simply about making rich people pay their fair share of taxes.
But judging from the reaction of small business owners and professionals such as doctors, lawyers, accountants and others, the Liberals may be in for a bigger battle than they anticipated, before they introduce enabling legislation this fall.
Sun Media columnist Jim Warren, a long-time Liberal strategist, described Morneau’s proposals as grossly unfair and a danger to the entrepreneurial spirit which creates jobs in his July 30 Sunday Sun column.
Citing the Trudeau government’s argument that allowing professionals to incorporate their businesses under current tax rules gives them an unfair tax advantage over salaried workers, Warren countered that: “Only in Ottawa would someone with a government job, pension and benefits think you can fairly compare these two people.” Ouch.
He said the federal Liberals’ own example of why reform is needed, that a salaried employee earning $220,000 annually pays $35,000 more in income taxes ($79,000 vs $44,000) than an incorporated consultant earning the same amount, is based on a false premise.
The difference, Warren said, is that full-time salaried employees get sick days, vacations, a pension plan and medical insurance, with benefits at least partly paid by their employer.
By contrast, incorporated entrepreneurs and professionals have to provide their pensions and benefits out of their own pockets, as well as the expense of running a business, which is why they have historically received a lower tax rate.
In the same edition of the Sunday Sun, Dr. Charles Shaver, chair of the Ontario Medical Association’s section on general internal medicine, said Morneau’s proposals were unfair to the OMA’s 29,900 doctors — 69% of whom are incorporated — because the OMA negotiated the right to incorporate in lieu of fee increases with the Ontario government.
Now, he said, the feds want to arbitrarily change the rules.
In a July 28 memo to Ontario doctors, OMA President Shawn Whatley warned Ottawa’s proposed changes, “could create a staggering 73% effective tax rate on the earnings from investments held inside professional corporations.
“This comes in addition to eliminating income splitting, paying tuition for children in college, and other changes. The loss of these benefits will affect physicians who are sole income-earners, on parental leave as well as those on sick leave. It will impact doctors at all stages of their careers.
“Many members are furious and rightly so. Doctors cannot run small businesses in an environment of continual uncertainty. This only adds to the frustration so many of us feel. The OMA Board shares these concerns, and we’re taking action to support members, and deliver the strongest possible response.”
Suspicious the Trudeau government will try to portray doctors’ objections to corporate tax reform as based solely on greed, Whatley noted they in fact, “impact all small corporations in Canada, including convenience store owners, farmers, insurance brokers and others.”
Because the government “cannot attack these small businesses in the same way that it usually attacks doctors,” Whatley said the OMA has “formed a coalition and are collaborating with the Canadian Medical Association, provincial and territorial medical organizations, the Canadian Federation of Independent Business, and other professional organizations” to fight the federal proposals.
It should make for an interesting battle, although in the end, Prime Minister Justin Trudeau has a majority government and can do what he likes.
Morneau
But judging from the reaction of small business owners and professionals such as doctors, lawyers, accountants and others, the Liberals may be in for a bigger battle than they anticipated, before they introduce enabling legislation this fall.
Sun Media columnist Jim Warren, a long-time Liberal strategist, described Morneau’s proposals as grossly unfair and a danger to the entrepreneurial spirit which creates jobs in his July 30 Sunday Sun column.
Citing the Trudeau government’s argument that allowing professionals to incorporate their businesses under current tax rules gives them an unfair tax advantage over salaried workers, Warren countered that: “Only in Ottawa would someone with a government job, pension and benefits think you can fairly compare these two people.” Ouch.
He said the federal Liberals’ own example of why reform is needed, that a salaried employee earning $220,000 annually pays $35,000 more in income taxes ($79,000 vs $44,000) than an incorporated consultant earning the same amount, is based on a false premise.
The difference, Warren said, is that full-time salaried employees get sick days, vacations, a pension plan and medical insurance, with benefits at least partly paid by their employer.
By contrast, incorporated entrepreneurs and professionals have to provide their pensions and benefits out of their own pockets, as well as the expense of running a business, which is why they have historically received a lower tax rate.
In the same edition of the Sunday Sun, Dr. Charles Shaver, chair of the Ontario Medical Association’s section on general internal medicine, said Morneau’s proposals were unfair to the OMA’s 29,900 doctors — 69% of whom are incorporated — because the OMA negotiated the right to incorporate in lieu of fee increases with the Ontario government.
Now, he said, the feds want to arbitrarily change the rules.
In a July 28 memo to Ontario doctors, OMA President Shawn Whatley warned Ottawa’s proposed changes, “could create a staggering 73% effective tax rate on the earnings from investments held inside professional corporations.
“This comes in addition to eliminating income splitting, paying tuition for children in college, and other changes. The loss of these benefits will affect physicians who are sole income-earners, on parental leave as well as those on sick leave. It will impact doctors at all stages of their careers.
“Many members are furious and rightly so. Doctors cannot run small businesses in an environment of continual uncertainty. This only adds to the frustration so many of us feel. The OMA Board shares these concerns, and we’re taking action to support members, and deliver the strongest possible response.”
Suspicious the Trudeau government will try to portray doctors’ objections to corporate tax reform as based solely on greed, Whatley noted they in fact, “impact all small corporations in Canada, including convenience store owners, farmers, insurance brokers and others.”
Because the government “cannot attack these small businesses in the same way that it usually attacks doctors,” Whatley said the OMA has “formed a coalition and are collaborating with the Canadian Medical Association, provincial and territorial medical organizations, the Canadian Federation of Independent Business, and other professional organizations” to fight the federal proposals.
It should make for an interesting battle, although in the end, Prime Minister Justin Trudeau has a majority government and can do what he likes.
Morneau
Actually, those were two separate points. My bad for using one paragraph for them.
