# Federal tax law keeps piling up.



## alingva (Aug 17, 2013)

I do not understand why people who do not understand in taxes file their income tax w/o any professional help.

http://www.cch.com/taxlawpileup.pdf


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## Just a Guy (Mar 27, 2012)

Because they'd rather save the fee than their taxes.

The fee they can see, any tax savings would imply that someone else may know more than they do...


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## MoneyGal (Apr 24, 2009)

Meh. Basic taxes, for most people, are pretty straightforward and don't require "professional" help, plus CRA's review helps catch and fix any errors or oversights. And I think you'd be hard-pressed to find a professional who is actually up to date on every single one of those 70,000+ pages of info.


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## Spudd (Oct 11, 2011)

I think this chart is probably for US taxes. I don't see anywhere that it says "Canadian". 

And I agree with MG that taxes are not rocket science.


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## SpendLessEarnMore (Aug 7, 2013)

It's just me but I don't trust accountants to know how to save more than what I can research.

But Canadian tax is confusing. Like they have more than 4 meanings for how you would claim your taxes if you've been outside the country for a long while depending on your assets and ties to Canada. Than would you pay based on Canadian income source or worldwide source of income. They don't draw a clear line there. Just you have to report all worldwide income. Doesn't leave much room for tax planning.


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## Eclectic12 (Oct 20, 2010)

SpendLessEarnMore said:


> It's just me but I don't trust accountants to know how to save more than what I can research.
> 
> But Canadian tax is confusing. Like they have more than 4 meanings for how you would claim your taxes if you've been outside the country for a long while depending on your assets and ties to Canada ...


Meh ... I think a large part of MoneyGal's point is that for most people, it's income earned (salary plus investments), taxes withheld, credits such as charitable donations and deductions such as RRSPs.

Then you add on top of that the number of people who have taxable investments of interest or GICs, a limited number of income sources (ex. salary plus GICs = two sources of income) and it ends up being a relatively simple process.


Bottom line is to identify where there are circumstances that require expertise instead of understanding a few things & the ability to do simple math (or understand what a tax program is asking for .... ).


Cheers


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## warp (Sep 4, 2010)

Our tax system is a mess, pure and simple, It is way to convoluted and way to coplicated....and full of stupid rules that punish Canadian savers and investors, and especially seniors, who have spent a lifetime saving with the idea of taking care of themselves.

If filing taxes is a legal requirement. then anyone with a grade 10 education should be able to file them with reasonable ease, and not have to resort to paying a "professional", ( who might be dumber than you), to do them for you.

It is surely time to simplify the tax code...in fact I would go to a FLAT TAX system....simpler and easier for everyone.


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## andrewf (Mar 1, 2010)

Simpler and easier but way less fair, with lots of perverse effects.

Flat tax looks appealing in theory, until you start hammering out the details. I'm not opposed to simplifying taxes and getting rid of needless complexity, but a progressive tax regime is not complex. The complexity arises from deductions, tax shelters, etc.


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## steve41 (Apr 18, 2009)

To relate once again...... my folks' 1943 tax return had 12 separate tax brackets. They managed just fine (remember, computers, calculators hadn't been invented yet) 
Are we _that_ math-challenged? (don't answer that)


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## alingva (Aug 17, 2013)

Most of the people will not believe me (for a simple reason, bankers do not want you to know the truth) but income tax exist with a simple purpose - eliminate inflation (excess of lended money) from the system. Our money system is based on debt, money is created when someone borrows it from a bank. Since banks create money without any limitation - someone has to remove this excess of money and this is a purpose of income tax. People would tell that Gov needs money for different purposes, it is all bul..hit, Gov does not need income tax money. Please note, I am not talking about sales tax, property tax etc, just income tax. The income tax system must be very complex and rules have to be very vague - if CRA (or the Gov) does not like you for any reason they want to find a way to penalize you for not paying taxes (which is not difficult to 'find' if the system is complex and nobody knows and understands it). Income tax system will never be simple and its intention is not just to collect money but to keep you in fear. Do not believe me? Read several books about Federal Reserve and money as http://www.amazon.com/Creature-Jekyll-Island-Federal-Reserve/dp/0912986212 or http://www.amazon.com/Secret-World-Money-Andrew-Gause/dp/0965658902


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## HaroldCrump (Jun 10, 2009)

alingva said:


> Most of the people will not believe me (for a simple reason, bankers do not want you to know the truth) but income tax exist with a simple purpose - eliminate inflation (excess of lended money) from the system.
> ...
> Gov does not need income tax money.


Since we are expressing subjective _opinions_ only, IMHO, the purpose of income taxes is income/wealth re-distribution.
Govt. gets to play umpire by deciding who to take from, and who to give to.
Pick and choose winners and losers.
Favorite lobby group vs. un-favorite lobby group depending on what's in season.
And get a few votes for themselves in the process.

Income taxes also enable govt. to create excess employment and keep the money in the system circulating.


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## alingva (Aug 17, 2013)

HaroldCrump said:


> Since we are expressing subjective _opinions_ only, IMHO, the purpose of income taxes is income/wealth re-distribution.
> Govt. gets to play umpire by deciding who to take from, and who to give to.
> Pick and choose winners and losers.
> Favorite lobby group vs. un-favorite lobby group depending on what's in season.
> And get a few votes for themselves in the process.


 Absolutely agreed.



HaroldCrump said:


> Income taxes also enable govt. to create excess employment and keep the money in the system circulating.


There is the problem here. System will not cease to exist if you constantly have the same amount of money. You do not need more money or less money. Your life would be much easier without inflation. 
Imagine you created a perfect printing press and you can print as much money as you want - you print some (i.e. Gov sells some Gov bonds) and buy your mother in law car in order for her to love you (i.e. buy some votes from the voters). Lets say we have $100 in the whole system but after you printed some money the system has $110. Since you spend money first ($10 extra dollars to buy your mother in law a car) you do not care about how much money will be in the system after you spend it. But I (i.e. voter/employee/an ordinary person) do care about that. Since you want to continue to print more money in the futute (i.e. borrow more in the future) and you do not want me to kill you (i.e. to vote for another candidate) you need to take the extra money out of the system. So here income tax comes into play. It withdraws some of $10 you already spent. Now we have $103 (for example) and we call extra $3 in the system - 3% inflation. Inflation is very good for the Gov because Gov does not print the money, it has to borrow it from you and me by selling us its bonds but when it returns the money it returns the nominal value not the same purchasing power. If we do not have income tax we would have hyperinflation tomorrow (exactly what Zimbabwe has because they do not have bond market) and banks would not lend money at all. BTW, have you ever thought why we pay interest when we borrow money??? If I borrow 1kg of sugar from you will I return you 1kg and 300gr? If I borrow your car will I return 1 car + a wheel?? Of course no, but money is the only form of barter which costs less and less every year and the only people who benefit from it are the Gov and banks. In order to keep you quiet they have to have small inflation (not big) but how do you keep small inflation? By introducing income tax. Income tax came into the system the same year Federal Reserve was created (1913), strange is not it? We never had such a tax before. More debt Gov has more tax we have to pay to eliminate extra money from the system. Gov does not care about your and my employment, but they need us to work somewhere to pay income tax. And if you are too smart and do not want to be part of their system - they will tax you by Alternative Minimum Tax http://en.wikipedia.org/wiki/Alternative_Minimum_Tax


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## alingva (Aug 17, 2013)

HaroldCrump said:


> Income taxes also enable govt. to create excess employment and keep the money in the system circulating.


One more thing - this explanation was created for us by banks in order to eliminate too many questions. The same thing happens now with Money laundering, it has nothing to do with the real money laundering, Gov just wants to know about every transaction what you do in order to tax you. I learned economics and many things what they teach us in classes is absolutely garbage.


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## warp (Sep 4, 2010)

Govt's,( fed and provincial), use the tax code for social enginerring. They decide when to pass a tax break for this group or that, and do so to try and get votes close to election time,

This is one reason we have such huge deficits and total govt debt.

I do not see how flat taxes are unfair to anyone. Someone making 10 times as much as you do will pay 10 times as much tax. Seems fair to me. Besides if you inssist on "progressive tax rates", you can easily do that under a flat tax sysytem.

What we need to get rid of are all the deductions, credits, exemptions, calculations, confusions, complications, exasperations, etc etc etc. 
I was on the phone with the CRA asking a question today, and the agent was more confused and less knowledgeable than I am!

Keep a few neccessary deductions from income....like personal exemptions, education deductions, medical, and perhaps an exemption for children......then have a flat tax for EVERYONE......and if desirable, have 3 tax rates, to tax the high earners a bit more.


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## andrewf (Mar 1, 2010)

I don't disagree that the problem is the myriad of deductions and tax shelters. I'm sympathetic to people who want a simpler tax system, I just think that going to one rate, no deductions is too extreme.


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## warp (Sep 4, 2010)

OK Andrew.....then keep a few deductions you would term as "fair"........then if you think one rate is too extreme...make 3 rates that rise as taxable income rises, so the higher earners will pay a bit more.

Personally , I can see NO justification for taxes to be in the 50% range as they are now at the top end. It is ludicrous to me that ANY government even thinks it's reasonable to take 50% of anyone's earnings, ( unless they are govt employees,,who are way overpaid, way overperked, and have pensions the rest of us can only dream about.....guess who is paying for all that pork).

Of course when you add in all the other taxes we pay besides income taxes....and there are dozens and dozens....(all paid with after-income-tax dollars by the way).....then our tax system is just theft...and I think that is what is extreme.


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## AltaRed (Jun 8, 2009)

andrewf said:


> I don't disagree that the problem is the myriad of deductions and tax shelters. I'm sympathetic to people who want a simpler tax system, I just think that going to one rate, no deductions is too extreme.


It works IF the federal personal exemption is somewhere around poverty line, e.g. $20k for individuals, another $10k for a spouse, and $5k for each child. In this example, a family of 4 would have an income of $40k before a cent of income tax was payable. Then say a 25% or 30% flat after that to say, $200k, then one more step-up to get those greedy 1 percenterers...... Then, of course, it is a matter of getting provinces on board.


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## MoneyGal (Apr 24, 2009)

I'm personally very intrigued by the idea of a negative income tax a la Milton Friedman: http://en.wikipedia.org/wiki/Negative_income_tax


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## andrewf (Mar 1, 2010)

AltaRed said:


> It works IF the federal personal exemption is somewhere around poverty line, e.g. $20k for individuals, another $10k for a spouse, and $5k for each child. In this example, a family of 4 would have an income of $40k before a cent of income tax was payable. Then say a 25% or 30% flat after that to say, $200k, then one more step-up to get those greedy 1 percenterers...... Then, of course, it is a matter of getting provinces on board.


I think we have to split the discussion of how much we collect in taxes and how those taxes are collected. I don't know what rate would need to be applied in your scenario to geberate equivalent revenues, but I'd expect it to be higher than 30%.


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## kcowan (Jul 1, 2010)

andrewf said:


> I'd expect it to be higher than 30%.


That means that you don't suspect that the rich are using all kinds of tax dodges.. I hope you are right. If the average middle class guy pulls in $100k then he would pay 30% of $60k or $18k (married with 2 kids). The guy making $10 million pays nearly $3000k.

Add in big fines and jail terms for tax evasion and you've got something.


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## Guban (Jul 5, 2011)

warp said:


> Personally , I can see NO justification for taxes to be in the 50% range as they are now at the top end. It is ludicrous to me that ANY government even thinks it's reasonable to take 50% of anyone's earnings, ( unless they are govt employees,,who are way overpaid, way overperked, and have pensions the rest of us can only dream about.....guess who is paying for all that pork).
> QUOTE]
> 
> This was a bit before my time, but it is shocking! How about 93%?
> http://www.michaeljamesonmoney.com/2009/04/tax-rate-of-93.html


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## warp (Sep 4, 2010)

There indeed have been times in the past where tax rates did reach these shocking rates of 90% plus!...both in Canada and the US.
If that is not the definintion of "theft", I don;t know what is...theft doene "legally" of course. Then again "legal theft" was done just a few years ago when Obama stole money rightfylly and legally belonging to GM bondholders, and gave that money to the UAW to assure democrat union votes. He did this with the hepl opg Supreme Court judge Gingsberg, who signed off on the deal, so it couldn;e get a leagl court challenge...( don't believe me..google it)

The reason Ronald Reagan got into politics in the first place was because he was appalled to find out he was paying a 90% tax rate when he become successfull as an actor. He considered it theft. So when he became President , that was one of his first acts,,,to lower tax rates for everyone. Of course, like all idiot politicians he could NOT control himself with his spending ,,,and he created a lot of govt debt. 

Sound familiar??


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## warp (Sep 4, 2010)

MoneyGal said:


> I'm personally very intrigued by the idea of a negative income tax a la Milton Friedman: http://en.wikipedia.org/wiki/Negative_income_tax


MoneyGal:

As you probably know, we have something like that right now in Canada.
It's called the WITB....the "working income tax benefit"....where low earners will get a payment form the federal govt.

It's a nice idea , but welcomes all inds of abuse.
As well, rememebr when soemone gets something "free" from any Govt..someone else has to pay for it....either today, with higher taxes, or later, in years to come, from higher govt debts.

These days , that's what all governments seem to be best at...creating debt, debt, and more debt. Of course when the day comes to pay all these debts, the politicians who created them , ( to buy votes), will be long gone and collecting nice pensions.


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## SpendLessEarnMore (Aug 7, 2013)

That's exactly the problem now a days with politicians. It's come down to an exact science. Politicians only get voted in if they cater to special interest groups. They have to spend in order to keep their jobs otherwise how many politicians have had a long successful career cutting spending? Mike Harris? Ralph Klein? These 2 are hated by some many groups of people.


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## Eclectic12 (Oct 20, 2010)

SpendLessEarnMore said:


> That's exactly the problem now a days with politicians ....
> They have to spend in order to keep their jobs otherwise how many politicians have had a long successful career cutting spending?
> Mike Harris? Ralph Klein? These 2 are hated by some many groups of people.


It seems to me to be more like they have to spend to get their jobs. By the time they are there - they owe too much to too many.

As for Mike Harris - I'm not so sure it's strictly for cutting spending. You have to wonder when what's coming out of the premier's office as well as from Harris is "it's all about class sizes, better standards, better curriculum & cost savings ... read the draft act".

I did and if the school board was in the black, then nothing changed ... not class sizes, not standards and not costs. 

If the school board was in the red, the gov't took over the board - where the legislation was written to prevent the courts from reviewing any decisions made, the school board was barred from negative comments on any decisions by the Ministry office and if parents wanted to appeal any decision taken, all avenues of appeal except to the office that *made* the decision were banned.

If it's really a "common sense revolution" - surely the decisions made can survive checks/balances instead of concentrating all power into one office that exempt from criticism and the courts.


... and that's from the draft legislation that the gov't published and suggested the public read to see what a great idea it was.


Cheers


*P.S.*

One would think such a glaring disconnect would be mentioned in the media but they were too busy printing/broadcasting the sound bite of the day from the players.

Or if you prefer another Mike Harris disconnect - less than a month apart he was saying the gov't had made money on the sale of the 407 yet as an investor, I was interested to read the annual meeting report where the buying company was saying they'd been able to buy for $0.25 on the dollar & would have no restriction on the tolls charged after two years.


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## crabbygit (Nov 6, 2013)

I believe we get taxed a lot more than 50% if you consider the direct and indirect forms of taxation.


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## Guban (Jul 5, 2011)

Spudd said:


> I think this chart is probably for US taxes. I don't see anywhere that it says "Canadian".


I agree with you. So we should only have 1/10th the amount shown! :chuncky:

This doesn't include state or provincial taxes income taxes.


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## crabbygit (Nov 6, 2013)

Eclectic12 said:


> *P.S.*
> 
> Or if you prefer another Mike Harris disconnect - less than a month apart he was saying the gov't had made money on the sale of the 407 yet as an investor, I was interested to read the annual meeting report where the buying company was saying they'd been able to buy for $0.25 on the dollar & would have no restriction on the tolls charged after two years.


The incidence of tolls and public private partnerships is increasing at a rapid rate and I fear it will be to our [public] detriment.


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## alingva (Aug 17, 2013)

*Tax Freedom starts...*

...Jun 10.

Every year this date moves closer and closer to Dec 31

http://www.moneyinside.ca/blog/finance/tax_freedom_day_canada_2013_b-51.html


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## pwm (Jan 19, 2012)

Isn't slavery just another name for 100% taxation?


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## alingva (Aug 17, 2013)

At least slaves get food for free (what kind of food - is another story)


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## brad_g (Apr 12, 2013)

alingva said:


> ...Jun 10.
> 
> Every year this date moves closer and closer to Dec 31
> 
> http://www.moneyinside.ca/blog/finance/tax_freedom_day_canada_2013_b-51.html


I like the idea of calculating a tax-freedom day but the way the Fraser Institute does it is disingenuous. They use average income rather than median income in their calculations which strongly skews the results since average income is much higher than median income (income distribution follows a power law, not linear). Median is the right value to use. 

According to StatsCan, the difference is about $20,000 more for the average ($97K vs 76K). Run that through their calculations and tax-freedom day would come over a month earlier.


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## pwm (Jan 19, 2012)

OK then, so if it was May 10 should we be content with that?


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## brad_g (Apr 12, 2013)

pwm said:


> OK then, so if it was May 10 should we be content with that?


That's up to you, but either way you should decide on the right info.


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## andrewf (Mar 1, 2010)

The Fraser Institute is a professional deceit tank. They take their conclusion and generate data to fit.


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## pwm (Jan 19, 2012)

_They take their conclusion and generate data to fit._

Much like the Marxist CCPA. (Canadian Centre for Policy Alternatives).


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