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Bugs





Joined: 16 Dec 2009
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PostPosted: Sat Sep 30, 2017 9:34 am    Post subject: The Liberals real tax problem ... Reply with quote

Quote:
Trump's tax bombshell is going to blow up Canada's competitiveness
Jack Mintz: If these U.S. tax rates happen, Canada will be distinctly offside, especially when it comes to retaining entrepreneurs


Donald Trump announced his wishlist this week for changes to the U.S. income tax system.
Jack M. Mintz
September 29, 2017
8:18 AM EDT

While Canada debates hiking taxes on small businesses, the Trump administration and Congress launched a tax-reform process Wednesday that could make the United States one of the most competitive countries in the world. Much is still left to Congress to sort out, such as scaling back credits and deductions to offset some of the lost net revenues of US$2.2 trillion over a decade. And who knows if a final deal will be made despite the enormous pressure on Republicans to deliver a tax-reform package after the demise of health-care reform.

If significant tax-rate reductions occur as contemplated, Canada will be distinctly offside, especially when it comes to retaining entrepreneurs. The call to “go south, young enterpriser” could well be the end result if we continue to tax more heavily the skilled population who pay a hefty price to support public budgets in Canada.

Using 2015 statistics, the top income earners with more than $100,000 (7.8 per cent of taxpayers) paid 50.8 per cent of federal and provincial personal income taxes (corporate taxes on private corporations would be on top of that).

Earners with more than $100,000 paid 50.8 per cent of personal income taxes

Wednesday’s White House announcement calls for significant reductions in U.S. federal income tax rates for the middle class. Seven brackets will be reduced to three with rates of 12 per cent, 15 per cent and 35 per cent (the current federal top rate is 39.6 per cent at incomes in excess of roughly US$415,000). The standard deduction will be doubled and mortgage interest and charitable contributions will remain deductible. Retirement-income incentives will be enhanced. It will be up to Congress to decide on a fourth bracket for the highest incomes and about limiting other preferences. Ivanka Trump’s enhanced child tax credits are also included. The alternative minimum and estate taxes are to be repealed.

With Canada’s top personal tax rates varying between 48 per cent in Alberta to 54 per cent in Nova Scotia on incomes above roughly US$160,000, mobile, skilled workers may well be attracted to move to a business-friendly United States for tax reasons. A repetition of the 1990s brain drain with a low dollar and high personal tax rates could be in the making if our tax-and-spend governments don’t change their ways.


On the business tax side, the U.S. reform could create significant pressures for Canada. The White House’s proposed federal rate of 20 per cent, combined with deductible state income taxes, will result in the U.S. corporate tax rate falling by a point and a half below the combined federal-provincial corporate rate in Canada, which is about 27 per cent.

The U.S. proposal would also enable machinery and equipment expenditure to be fully written off instead of depreciated. In the first time in a decade, Canada would lose its competitive business-tax advantage for large corporate investments with most industries except for communications, mining and oil and gas being more heavily taxed.

The U.S. plan also includes a minimum tax on the US$2.5 trillion of multinational profits that are sitting outside of the United States, which could raise significant revenue. But, more importantly, it will let bring companies bring those profits home subject to no additional U.S. taxes over what taxes have already been paid abroad. This is a game-changer for a country like Canada as it could lead to a significant outflow of cash to the United States, depressing our dollar and potentially pushing up interest rates.

And that is not all. The U.S. package proposes a much lower federal rate of 25 per cent for non-corporate business income of so-called S corporations —small businesses — partnerships and proprietorships to be taxed at a federal rate of 25 per cent, instead of higher personal income tax rates. This would result in a significant reduction in the effective tax rate on small-business investment by up to a third. That would put it well below Canada’s corporate and personal tax burdens on small business profits that are now subject to tax rates potentially over 50 per cent. One can hear the giant sucking sound for startup companies from Canada as we burden small businesses with higher taxes while the U.S. goes in an opposite direction.

U.S. tax reform is not all bad news for Canada. A more vibrant U.S. economy will help push up our exports. The only question is whether we can keep businesses here to export to a U.S. market that becomes increasingly protective yet more attractive with lower taxes and less regulation. What is striking is that the U.S. tax policy is focused on growth, while ours is aimed at soaking the job creators.
http://business.financialpost......ments-area


There's no way that the Liberals didn't see some version of this coming. It was always a part of Trump's promised package, and yet they have chosen to 'soak the rich' ...

This will change everything.
Pissedoff





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PostPosted: Sat Sep 30, 2017 12:34 pm    Post subject: Reply with quote

Trump is a business man, Trudeau a failed drama teacher.
cosmostein





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PostPosted: Mon Oct 02, 2017 10:45 am    Post subject: Reply with quote

This is the dirty little secret that lurks in the background.
The goal of the President is to attract jobs to the United States.

Our government is clinging to an almost 1970s notion that producing abroad is challenging to Canadian business or that setting up facilities globally is prohibitive.

We are in a largely Globalized Economy now;
If the equation associated with moving abroad makes sense from a payback perspective its far less challenging to do so today than it was 40 years ago.

If the Canadian Government in their effort to generate revenue makes its significantly less attractive to do business at home than in the US who is seemingly trying to slash tax rates what happens to the manufacturing core of Ontario and Quebec?
Bugs





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PostPosted: Tue Oct 03, 2017 11:16 am    Post subject: Reply with quote

I don't think it's such a secret in America. Trump is promoting a tax deal that will bring all that international capital back home again -- but he's not talking greenbacks, he's talking about the stuff that produces wealth, industrial jobs.

It's that our media are (1) largely made up of dim bulbs, and (2) protect us from upsetting thoughts if it doesn't serve the purposes of whatever big interest they sell column inches to. In their world, "fear" is something that is used to promote a sale.

You want to see our party, in its entirely elitist way, produce some innovating and exciting bits of economic policy. My bet -- it will be entirely abstract! It will be something from some branch of economics or another, plucked out of its theoretical context, and sold to people as fact ... like how free trade would send the bad jobs overseas and make better jobs for the locals and in the end, we'll all be richer. Tell that to people in Toledo Ohio.

What a canard that one turned out to be! Full disclosure: hey, I believed it too. Our industrial jobs disappeared at the time the first Trudeau came to power.

But we need to keep our jobs. The auto pact has got to be a target. I look for the lines of defense to be drawn. I look for the diplomatic moves. What I see is a PM who is, at least at the level of image, trying to rally the anti-Trump forces internationally. How could we be in the hands of bigger idiots? I wonder.

It should be easy. The Liberals are not only screwing up the country, they are going against the tide of events! We are going to be in a fight to keep jobs. And believe me, there's an interest rate change at some point in the future. What happens then? Nobody in politics seems willing to talk about economic policy that has a realistic view of the emerging economic context -- and the media are antagonistic to our side, no matter what we say.

This is the context of our actual next election. All of these things are looming and it's as if nobody dares to generate a fact-based analysis, for the same reason the messenger feared being killed. Nobody likes a killjoy. But that isn't leadership.

We now have a leader, where we previously didn't -- and guess what? It doesn't seem to make one bit of difference. He makes commercials in front on some southern Ontario gingerbread nostalgia inviting us to feel the pain of the Starbucks franchisee? Are you friggin' kidding me?

Think Tim Hortons ... think two genders ... think of merit instead of quotas ... and the cost of hydro ... you should know what I am getting at. Nobody gives a shit about the tax plight of Starbucks owners! Or anyone else who charges $3 for a scone.

What makes me sick is that somebody is getting paid to produce that pap, and I could do a better job for free.

The hard part for Conservatives is that, in today's context, real conservatives have to be revolutionaries. Otherwise, they are 'conserving' or making sustainable an advanced welfare state that is the exact negation of the values we all think are important. This is a runaway wreck, so out of whack with the population that present policy is to promote inflation -- a fancy word for higher prices. How can you not beat a gang like that? Jacking up prices is going to war with the population. It makes them poorer.

The Liberals just hide it well. So we need a leader with the wit to strip them naked. Instead, we've got the kind of party that accepts that nannies are a normal employee expense, that's why. They have no sense that that's our money! And, out of that group, purged of its leading lights, we've chosen a leader who is used to people shutting up when he stands.

Somebody should introduce him to the pickup truck drivers of this country, the guys in the drive-through. They'd take some of the mickey out of him soon enough.

And then, maybe, we could focus on the things that are important.
cosmostein





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PostPosted: Wed Oct 04, 2017 4:40 pm    Post subject: Reply with quote

Bugs wrote:

The hard part for Conservatives is that, in today's context, real conservatives have to be revolutionaries. Otherwise, they are 'conserving' or making sustainable an advanced welfare state that is the exact negation of the values we all think are important. This is a runaway wreck, so out of whack with the population that present policy is to promote inflation -- a fancy word for higher prices. How can you not beat a gang like that? Jacking up prices is going to war with the population. It makes them poorer.


I think that the CPC in general and Conservatives in particular are making this far too complicated than it needs to be.

Conservatives want smaller government;
Small government is cheaper (in theory)
And if Government is cheaper the need to collect over 300 Billion dollars from its citizens becomes minimized and they can start getting it back in their pockets.

Its that simple.

I don't know what the number is;

But the question is, how much do we need to spend at the Federal Level to perform the services needed by the Government, Provide Healthcare, Meeting our NATO commitments, and whatever other aspect of non-pork barrel spending is considered "needed"

Are we talking 150b? 200b? 250b?

Whats the Delta between what we need and what the Government of the day wants?

The further we pull down that spending number below the revenue number the faster we pay the debt (less sexy) or the more people get to keep (more sexy)
Bugs





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PostPosted: Thu Oct 05, 2017 12:21 am    Post subject: Reply with quote

But that isn't how it works anymore. It's a dream. If Stephen Harper couldn't deliver on that, what makes you think Andrew Scheer can? Harper, bless his heart, only managed a balanced budget maybe three years of his tenure. And the number of employees is only marginally smaller, if at all. And that fire burned in Harper's soul.

Look, I think you know I feel the same, but we have to recognize that it's very hard to simply freeze the size of the state, never mind reduce it significantly.

I see an immediate situation emerging that threatens us with a lot of instability. I don't know how much, but if we lose the auto pact, for instance, it's a helluva blow. It's been a mainstay of Ontario industry since Lester Pearson days. It'll be like oil going from $100 to $50 -- another few cents off the dollar. My point is that it feels like we are sleepwalking in the dark, unaware that there are zombies around.
cosmostein





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PostPosted: Thu Oct 05, 2017 10:03 am    Post subject: Reply with quote

Believe me;
The logistics of cutting the budget by 100b overnight is not lost on me.

However you make the point of educating the public, which I agree with.

I think its just easier that we at times make it out to be, the concept that reducing government is not a bad thing and the sky will not fall isn't a hard sell.

The left will imply that less Government means people dying in the streets, massive cuts to programs, huge gaps in social services.

But.....

What if we asked for something wacky yet attainable?

Like reducing Federal spending to 2006 levels?

People were not dying in the streets, social services were still plentiful, and even then we felt spending was outrageous.

The Population in 2006 was around 33 million people and the Federal Government spent around 220 billion dollars.

In 2017 the population is around 36 million and the plan is to spend around 330 billion dollars.

For three million more people and a decade of inflation we are spending 110 billion dollars more.

Doesn't that seem outrageous?

I think most Canadians have no idea the Federal Government has more revenue than ever in its history, nor do I think most Canadians could imagine we are spending 110 billions dollars more of their money ten years later.


Last edited by cosmostein on Thu Oct 05, 2017 11:54 am; edited 1 time in total
cosmostein





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PostPosted: Thu Oct 05, 2017 10:08 am    Post subject: Reply with quote

Bugs wrote:
Harper, bless his heart, only managed a balanced budget maybe three years of his tenure. And the number of employees is only marginally smaller, if at all. And that fire burned in Harper's soul.



But with that in mind;
Could you imagine if Harper had this Economy right now?
Not having to do damage control over a global recession from 2008 till 2015?

Lets keep in mind the federal public sector from 2000 - 2006 grew from 211,925 to 254,622 largely due to the Federal Liberals programs growing to a peak of 282,980.

On his last day in office the population of the federal sector was 257,138

I still chalk that up as a win.
Bugs





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PostPosted: Thu Oct 05, 2017 6:07 pm    Post subject: Reply with quote

I don't mean to criticize Harper for this in the least. My point is the opposite -- if he had such poor success, how can we expect those less committed to do better?

I am confused about what to do politically. We act and think as if we are in a capitalist society, and parts of it -- such as retail trade -- are markets, that's certainly true. But when you scratch the surface, you see most of the economy is made up of oligopolistic corporations of immense size, often plugged into regulatory systems that merge into the state.

As we recently commented, these corporations can, in effect, blackmail politicians into subsidizing them. Netflix for the love of jayzuz, is going to get subsidies for its support of Canadian culture?

(I can hardly stay on my stool for the laughing ... that has to be the most preposterous use of doublethink of the week. 'Netflix a bastion of Canadian culture. And here I thought they were an American internet streaming organization, already plugged in to Disney, George Lucas, and Spongebob Squarepants.

And Canadian culture? What's that? Does this mean an endless loop of Margaret Atwood or -- no, no, please no -- The Tragically Hip?

I don't think this is stuff we want to encourage.

But, seriously, how would any of us like to be the crusading alderman who made Amazon go to Calgary instead of your burg?

Companies no longer make investments in communities. Now, the taxpayers are literally paying these corporations for jobs. There's no market in labour -- the minimum wage is set by cabinet. We are controlled in a zillion ways we never realize. Example: I just bought some laying hens awhile back. I had to open a file, and if I don't have the receipt, I can't have the birds butchered. This year they imposed a carbon tax on backyard bonfires -- $20, + HST, and you have to phone them when you light it. The board of health has declared that is to be ho smoking in any public space in the community -- an area 10 times Toronto and a population about one-tenth of Toronto's!. Now they're trying to do it to marijuana -- supply manage to keep the price high! Regulation is everywhere.

In what sense are we a free people anymore?

I could go on ... and on and on and on ... but the point is that our cultural map doesn't work very well anymore. Classic capitalism probably didn't survive World War I. After that, we were into a realm where there was competition, but all the real competitors were huge. In Auto, for example, there were companies like Studebaker' and Hudson, and more, and there was genuine competition between these industrial corporations, but now it seems the players are reduced to two or three, and they cooperate and 'manage' what we think of as markets. (I don't know if you follow that.)

Take the factors of production -- labour, capital, and land -- which of them has a value that is set by a market? They are all so heavily regulated, and altered by credit, and distorted by mass marketing, how can we be sure that this is the most efficient way to allocate resources anymore?

Whatever unnamed system we are in, we should start figuring it out because we won't be able to plan very effectively if we are using cultural maps that were already becoming obsolete a century ago.
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