# TFSA - collect full OAS/GIS and pay 0 taxes while spending $100k/year after 65



## 1.5M (Apr 21, 2012)

According to my calculation if I maximize my TFSA contribution, I'll have 632k and my wife about the same by the time we're both 65 (I used the average rate of return of my investments for the last 10 years). So we'll be able to live on over $120k/year while collecting full OAS and GIS because we'll have no taxable income. LOL, please vote Harper again.


----------



## gibor365 (Apr 1, 2011)

How did you get 120K?!


----------



## crazyjackcsa (Aug 8, 2010)

Cool story bro.


----------



## 1.5M (Apr 21, 2012)

gibor said:


> How did you get 120K?!


101k is 8% of TFSA (which would basically keep TFSA at the same lvl) plus OAS/GIS 25k/year for two. Anyway forgot to take into account CPP which will lower OAS/GIS a bit. Still will not pay any taxes on combined income over 120k/year. 

Basically this is a transfer of tax revenue for the government from the future to present. 
People are encouraged to switch savings from RRSP to TFSA so they'll pay taxes now with the side effect that government revenue from taxes will drop dramatically in 15-20 years when people will start living off TFSA.


----------



## gibor365 (Apr 1, 2011)

The only problem with your calcs, that 120K when you over 65 won't be same as 120K now (inflation).
Also OAS starts at 67


----------



## 1.5M (Apr 21, 2012)

gibor said:


> The only problem with your calcs, that 120K when you over 65 won't be same as 120K now (inflation).
> Also OAS starts at 67


My calculation is net of inflation. I expected to have that amount plus the inflation to that date (i used my rate of return minus inflation).

I didn't know they already raised the OAS age from 65 to 67. In fairness I fully expect they'll phase out both OAS and GIS if they remain in power. They will not be able to afford it when people with incomes over 100k/year pay 0% in taxes.


----------



## gibor365 (Apr 1, 2011)

> They will not be able to afford it when people with incomes over 100k/year pay 0% in taxes.


 They can do it by printing money, so inflation will much higher


----------



## andrewf (Mar 1, 2010)

1.5M said:


> My calculation is net of inflation. I expected to have that amount plus the inflation to that date (i used my rate of return minus inflation).
> 
> I didn't know they already raised the OAS age from 65 to 67. In fairness I fully expect they'll phase out both OAS and GIS if they remain in power. They will not be able to afford it when people with incomes over 100k/year pay 0% in taxes.


Are you assuming 8% real rate of return on your TFSA. That is quite optimistic.


----------



## 1.5M (Apr 21, 2012)

andrewf said:


> Are you assuming 8% real rate of return on your TFSA. That is quite optimistic.


My average rate of return in the last 10 years is 11.6% which is more than 8% adjusted for inflation.


----------



## AltaRed (Jun 8, 2009)

andrewf said:


> Are you assuming 8% real rate of return on your TFSA. That is quite optimistic.


I will be more blunt..... unrealistic to assume anything more than broad stock indices over long periods of time.


----------



## GoldStone (Mar 6, 2011)

1.5M said:


> My average rate of return in the last 10 years is 11.6% which is more than 8% adjusted for inflation.


Were you an investor in the "lost decade for equities"? What was your return in those 10 years? Or are you too young to have experienced that?


----------



## 1.5M (Apr 21, 2012)

AltaRed said:


> I will be more blunt..... unrealistic to assume anything more than broad stock indices over long periods of time.


SP500 returned 7% from 1950 to 2009 after inflation: SP500-historical-real-total-returns
However, my returns were better than SP500 in 9 of the last 10 years. I don't plan to change that, so an extra 1% over SP500 seems reasonable to me.
Anyhow, I will be able to adjust my spending to my actual return, with that income, considering that we spend about $50k/year right now.

The point was that I will not pay any taxes and I will collect almost full government benefits although my actual spending could be over $100k/year. And any TFSA saver can easily be in the same boat in 15 to 20 years.


----------



## piano mom (Jan 18, 2012)

1.5M said:


> According to my calculation if I maximize my TFSA contribution, I'll have 632k and my wife about the same by the time we're both 65 (I used the average rate of return of my investments for the last 10 years). So we'll be able to live on over $120k/year while collecting full OAS and GIS because we'll have no taxable income. LOL, please vote Harper again.


Don't worry, Harper's granddaughter will solve that problem. LOL


----------



## 1.5M (Apr 21, 2012)

GoldStone said:


> Were you an investor in the "lost decade for equities"? What was your return in those 10 years? Or are you too young to have experienced that?


Been an investor (really more of a speculator) for 14 years, the only losing year for me was 2008. Next year made it all back though. So it was not a lost decade for me, lol.


----------



## GoldStone (Mar 6, 2011)

1.5M said:


> Been an investor (really more of a speculator) for 14 years, the only losing year for me was 2008. Next year made it all back though. So it was not a lost decade for me, lol.


That tells us nothing about your average long-term return.

That's fine, you said you can do 1% better than S&P500.

1. S&P 500 returned 9.84% compounded from 1965 to 2014. 
2. 10 year US bonds returned 6.7% compounded in the same period.
3. 9.84% - 6.7% = 3.14% equity risk premium (the compensation that stock owners received for owning risky stocks vs. safe bonds)
4. 10 year US bonds yield 2% today. The expected return of bonds equals their starting yield.

Putting #3 and #4 together, we get expected returns for stocks in the next 10 years:

2% + 3.14% = 5.14% nominal

You can do 1% better, so 6% nominal. Far cry from 8% real that you used in your projections.

But whatever.


----------



## 1.5M (Apr 21, 2012)

GoldStone said:


> 1. S&P 500 returned 9.84% compounded from 1965 to 2014.
> 2% + 3.14% = 5.14% nominal


One tiny problem with your calculation, you ignore dividends, which are about 2%.


----------



## GoldStone (Mar 6, 2011)

I quoted total returns.


----------



## AltaRed (Jun 8, 2009)

GoldStone said:


> I quoted total returns.


Correct... but at the risk of continuing to feed a braggart here with unrealistic projections on an otherwise legitimate discussion topic, the real message is that it is possible IF the TFSA annual contribution limits stay in place for decades for one to potentially collect only CPP and OAS and be non-taxable for all intent and purposes. That said, no gov't in Canada will let TFSA contributions of $10k continue for that long. It might be a nice thought but the loss of tax base cannot handle it.


----------



## GoldStone (Mar 6, 2011)

^ I agree. They may introduce a lifetime cap on TFSA balances. As far as I know, this is how the UK handles their tax-free accounts.

In theory, they may also introduce an OAS means test that looks at TFSA balances. This is less likely though. A means test that includes TFSAs but excludes real estate would be seriously flawed.


----------



## andrewf (Mar 1, 2010)

Loss of tax base + GIS being paid to multi-millionaires.


----------



## gaspr (Mar 24, 2014)

The government has to change the means test for GIS...Check out this article

I would like to see net worth used for a means test...


----------



## 5Lgreenback (Mar 21, 2015)

Thats very optimistic planning. I wouldn't count on it. Way to many variables quite likely to throw things off. One can dream though!


----------



## Eclectic12 (Oct 20, 2010)

1.5M said:


> ... In fairness I fully expect they'll phase out both OAS and GIS if they remain in power. They will not be able to afford it when people with incomes over 100k/year pay 0% in taxes.


I doubt the gov't phase out OAS/GIS ... I suspect you mean what's more likely - add some sort of test so that those who don't need it are not eligible to collect it.


Cheers


----------



## OnlyMyOpinion (Sep 1, 2013)

Regardless of the details, OP raises a valid point - the TSFA allows you to save for a more tax efficient retirement stream that would not impact OAS/GIS under the current rules. 

But as AltaRed points outs, the rules are likely to change in the future to close this opportunity.

I would warn folks not to depend on a future retirement plan that assumes TSFA/OAS/GIS under the current rules. Try to build 'layer's of income certainty into your plan - pension and/or rrsp income (taxable on withdrawl), CPP, etc. We are not counting on TSFA's OAS/GIS in our plans.


----------



## CalgaryPotato (Mar 7, 2015)

OnlyMyOpinion said:


> Regardless of the details, OP raises a valid point - the TSFA allows you to save for a more tax efficient retirement stream that would not impact OAS/GIS under the current rules.
> 
> But as AltaRed points outs, the rules are likely to change in the future to close this opportunity.
> 
> I would warn folks not to depend on a future retirement plan that assumes TSFA/OAS/GIS under the current rules. Try to build 'layer's of income certainty into your plan - pension and/or rrsp income (taxable on withdrawl), CPP, etc. We are not counting on TSFA's OAS/GIS in our plans.


Are you saying you wouldn't count on the combination of TFSA's with OAS & GIS in retirement or on any of those? I agree with the former, but I think if TFSA's are there you can count on them for now. If they make changes you adjust. Same as if they change RRSP rules at some point.


----------



## Eclectic12 (Oct 20, 2010)

^^^^

In terms of the TFSA itself, I think that rolling back the current level back to $5.5K or similar could happen. I suspect cancelling the TFSA would cause a firestorm. So IMO, planning on the TFSA is fine.

The parts I could see easily happening is adding in some sort of means test for TFSAs to affect OAS/GIS eligibility, lowering the threshold for starting the OAS clawback and similar. It's those pieced I'd want a buffer for.




Cheers


----------



## CalgaryPotato (Mar 7, 2015)

They always could, but to me trying to avoid retirement strategies based on programs that they are explicitly offering because they may go away in the future makes no sense. However not making a retirement strategy around a loophole (ie: TFSA plus the low income benefits) seems prudent.


----------



## OnlyMyOpinion (Sep 1, 2013)

I meant I wouldn't count on the combination of TSFA+OAS/GIS to stay unchanged during a long accumulation period as the OP laid out. That opinion is biased by years of building our RRSP's though. Fortunately RRSP contributions are cumulative now, so you could swing entirely to a TSFA plan but then later swing back to utilizing RRSP room if TSFA (or GIS/OAS) rules change materially.


----------



## Westerncanada (Nov 11, 2013)

Eclectic12 said:


> ^^^^
> 
> In terms of the TFSA itself, I think that rolling back the current level back to $5.5K or similar could happen. I suspect cancelling the TFSA would cause a firestorm. So IMO, planning on the TFSA is fine.
> 
> ...


Agreed. I cant see them retracting anything already saved.. maybe cutting the limit or having a cap. 



OP.. I know everyone is quick to give you all the reasons that your plan "cant" work.. and thats a negative but potentially realistic outlook. 

That said.. I didnt hear anyone mention positive variables such as raises.. increased salary or promotions at work.. potential inheritance or a significant bull market that may return a much larger then average return etc. 


Prudent planning is key.. and sounds like your well on your way so kudos!


----------



## Charlie (May 20, 2011)

I fully expect the GIS and OAS means test to include some TFSA calculation in the future. It's too small to worry about now, but it will soon be an issue and it's easy to address without changing the essence of the TFSA.


----------



## gibor365 (Apr 1, 2011)

Not so much OAS, but restricting GIS is very possible.... the question how it can be done.... onme can have TFSA balance 10K and another 500K... regardless of all room was used or not


----------



## 1.5M (Apr 21, 2012)

I don't think it's possible to reduce OAS/GIS for people with large TFSA savings. 
I don't think any government in the world monitors people's investing/saving accounts or their net worth. 
Anyhow, until they'll present a legislative solution to this issue, there is still the legal possibility of the scenario presented in the first post. 

Usually, as a responsible government, when you come up with big changes in people finances, you'd think of this basic crap so that people can reliably plan their future. The fact that all of you are saying, don't count on it in 15-20 years, means we cannot reliable plan our retirement.


----------



## Charlie (May 20, 2011)

It would be pretty easy to do for TFSAs. 

The balances in the accounts are already reported by the trustees, so they could simply compute some 'implied income' similar to min RRIF withdrawal rates, and use that, or the greater of that and actual withdrawals. The amount would increase the income for the means test but not be taxable. There are already other types of income that are treated this way -- WCB benefits etc.

You can plan your retirement just fine. You just shouldn't rely on a TFSA being an end run around the means tests for GIS or OAS.


----------



## cainvest (May 1, 2013)

1.5M said:


> I don't think it's possible to reduce OAS/GIS for people with large TFSA savings.


They could easily track TFSA accounts in the future and refuse GIS because of it.


----------



## gibor365 (Apr 1, 2011)

cainvest said:


> They could easily track TFSA accounts in the future and refuse GIS because of it.


Sure they can, every financial institution sends every year TFSA balances to CRA. The question how they gonna do it.... specific market value threshold or something else....and it changes constantly?


----------



## Eclectic12 (Oct 20, 2010)

1.5M said:


> I don't think it's possible to reduce OAS/GIS for people with large TFSA savings.
> I don't think any government in the world monitors people's investing/saving accounts or their net worth.


If the Canadian gov't was not monitoring the TFSA amounts - how did they know they needed to address swap transactions, intentional over-contributions to TFSA to create contribution room the following year etc.? 

The TFSA started in 2009 yet they figured out there was a problem, broke down the categories, came up with something to address it and announced changes in Oct *of the same year*. Usually the changes don't take effect until the legislation was passed yet in this case - they made the penalty effective the day after the announcement.


More recently ... how did they know to go after those who had obeyed the contribution limits but ended up with large TFSA values through trading?
http://business.financialpost.com/p...r-tfsa-being-targetted-by-cra?__lsa=3b5f-db00


The financial institutions are already required to report TFSA contributions/withdrawals so it does not seem all that difficult to get a FMV number added to the data feed.


BTW ... my US born co-worker who hasn't lived in the US since she was a teen has to report the US gov't *the highest per month* balance for bank accounts, in addition to filing a US tax return. If she was silly enough to have a TFSA, she would have to report it as well.


Anyhow, until they'll present a legislative solution to this issue, there is still the legal possibility of the scenario presented in the first post. 




1.5M said:


> ... The fact that all of you are saying, don't count on it in 15-20 years, means we cannot reliable plan our retirement.


Or people don't trust them ... I've had people tell me for decades to skip the RRSP as the gov't is going to shut it down "anytime now". :biggrin:


Cheers


----------



## 1.5M (Apr 21, 2012)

cainvest said:


> They could easily track TFSA accounts in the future and refuse GIS because of it.


So they track only TFSA, why not real estate or other assets, why not net worth? 
Seems to me they'd need to track your TFSA holdings and calculate your gains. Then they'd need to calculate a virtual income from TFSA gains because of dividends and capital gains being taxed differently. So your "tax-free" account would need to be reported like a regular investing account, but only by people older than 67, lol.
I don't think it's that easy, even if it was possible. 
And if they do track TFSA, maybe would be easy for people to liquidate TFSAs before 67 and transfer assets into real-estate or something else they don't track and still collect OAS/GIS if available.


----------



## 1.5M (Apr 21, 2012)

Eclectic12 said:


> More recently ... how did they know to go after those who had obeyed the contribution limits but ended up with large TFSA values through trading?
> http://business.financialpost.com/p...r-tfsa-being-targetted-by-cra?__lsa=3b5f-db00


TFSA is a severely flawed con concoction which will complicate the tax code a lot if they try to fix it. It would have been much easier if they had the courage to directly cut the taxes paid by rich people.


----------



## AltaRed (Jun 8, 2009)

TFSA contributions (not TFSA value) wil be capped at some future date. Just like the capital gains exemption when it was capped in 1994. The loss of tax base cannot handle it. I doubt there would be any attempt at a TFSA means test for GIS. GIS as a program is terribly flawed anyway and that program is likely to change first. FWIW, I don't think anyone on full CPP and OAS qualifies for much, if any, GIS anyway.

We cannot compare RRSPs with TFSAs because gov't gets its money back from RRSPs as a tax deferred vehicle eventually. That is much different than a 'beyond the tax system' TFSA.


----------



## cainvest (May 1, 2013)

1.5M said:


> So they track only TFSA, why not real estate or other assets, why not net worth?
> Seems to me they'd need to track your TFSA holdings and calculate your gains. Then they'd need to calculate a virtual income from TFSA gains because of dividends and capital gains being taxed differently. So your "tax-free" account would need to be reported like a regular investing account, but only by people older than 67, lol.
> I don't think it's that easy, even if it was possible.
> And if they do track TFSA, maybe would be easy for people to liquidate TFSAs before 67 and transfer assets into real-estate or something else they don't track and still collect OAS/GIS if available.


They'll likely only track TFSA if it becomes a problem for people abusing GIS, maybe for OAS as well ... who knows but easy for them to do. It could be as simple as TFSA accounts over $50k are excluded from receiving GIS. As far as other assets or forms of income ... if don't do that now they don't have to in the future, their call. There will always be loopholes but if only 0.0001% of the population abuses it they likely won't do anything ... I just wouldn't bank on it being possible in the future.


----------



## gibor365 (Apr 1, 2011)

> TFSA accounts over $50k are excluded from receiving GIS.


 it will be insane.... $49,999 will get GIS and $50K won't?!
or they need to introduce special GIS "tax brackets" and it's will be too complicated...
in any case, imho, government will find something to "screw" you


----------



## CalgaryPotato (Mar 7, 2015)

cainvest said:


> It could be as simple as TFSA accounts over $50k are excluded from receiving GIS.


That would definitely kill any argument that TFSA is a product that has advantages for the lower classes though.


----------



## cannew (Jun 19, 2011)

Lots of arguments about a moot issue. Be grateful that they increased tfsa to $10k and save as much as you can as long as you can. Use rrsp, tfsa, resp, and drip's, to save for your future so you won't need to worry about oas\gis. If your retirement savings can generate sufficient income to keep you happy in retirement, you'll live happy.

If they change the rules later, adjust to them and continue to save for your future.

For us older folks, the $10k tfsa and reduction of rrif withdrawals allows us to keep more $$ and reduces our taxes.


----------



## Eclectic12 (Oct 20, 2010)

1.5M said:


> So they track only TFSA, why not real estate or other assets, why not net worth?


Some are suggesting ... but I suspect where the RE is not the principal residence, they are keeping an eye out for that too.




1.5M said:


> Seems to me they'd need to track your TFSA holdings and calculate your gains.


The old CG exemption was a set amount so why not "TFSA FMV $X results in a clawback or losing OAS/GIS"? At the end of the day, those beating the drum about needing changes seem to be worried about totals ... not the pennies and nickels.




1.5M said:


> ... And if they do track TFSA, maybe would be easy for people to liquidate TFSAs before 67 and transfer assets into real-estate or something else they don't track and still collect OAS/GIS if available.


If it's not principal residence - then it's income and has the potential to affect OAS/GIS anyway. If it is a principal residence, it's not that liquid and could erode in value.




1.5M said:


> ... TFSA is a severely flawed con concoction which will complicate the tax code a lot if they try to fix it.


Depends on what the fix is ... where you are insisting on a "what was earned" system - it will be complicated. That's not the only way of addressing it.

Cheers


----------



## 0xCC (Jan 5, 2012)

AltaRed said:


> TFSA contributions (not TFSA value) wil be capped at some future date. Just like the capital gains exemption when it was capped in 1994. The loss of tax base cannot handle it.


I totally agree with this. I fully expect that there will be a cap on lifetime contributions (but withdrawals may still add to contribution room, so maybe "net" contributions is the better term). Maybe at the same time the cap is implemented the yearly limits will be lifted to make the new cap more politically palatable.

In the meantime I will continue to use the TFSA according to the current laws....


----------



## peterk (May 16, 2010)

cannew said:


> Lots of arguments about a moot issue. Be grateful that they increased tfsa to $10k and save as much as you can as long as you can. *Use rrsp, tfsa, resp, and drip's, to save for your future so you won't need to worry about oas\gis.* If your retirement savings can generate sufficient income to keep you happy in retirement, you'll live happy.
> 
> If they change the rules later, adjust to them and continue to save for your future.
> 
> For us older folks, the $10k tfsa and reduction of rrif withdrawals allows us to keep more $$ and reduces our taxes.


The issue is not about being worried with putting yourself in a situation where your OAS/GIS is clawed back. This issue is that people who in no conceivable way have a need for government welfare (OAS) will still be receiving it! 

I don't see why the tax man could not imply an income based on your TFSA balance and apply that amount to the income used to calculate your benefits.


----------



## 1.5M (Apr 21, 2012)

cannew said:


> For us older folks, the $10k tfsa and reduction of rrif withdrawals allows us to keep more $$ and reduces our taxes.


That's the problem with TFSA. While it gives a direct benefit to the main voting block (retired people), the costs for future generations are very high:
- increase in OAS age for the people in their 40s and early 50s 
- reduced tax revenue because more people will shelter more money in TFSAs and all the legal tax-avoiding loopholes TFSA enables
- an even more complicated tax code to deal with all those loopholes

I wish they would just have been honest and directly give you guys a tax break and/or increase OAS while eliminating the claw backs.It would have been much simpler.


----------



## mrPPincer (Nov 21, 2011)

peterk said:


> I don't see why the tax man could not imply an income based on your TFSA balance and apply that amount to the income used to calculate your benefits.


Sure, penalize the savers even more while rewarding those that blew it all on credit card debt & throw-away plastic consumer crap & take-out & cars they couldn't afford.

Please, lets not be giving the political swine at the trough any more bad ideas; it's tough enough for a saver these days what with the low interest rates, without throwing in the idea of penalizing savers.

Most of the most vocal about how to axe the TFSA probably have pensions of some kind or other.

Those of us trying to plan for a future without a pension should be able to count on some kind of stability in the rules that we're given to play by; most of the work I've done did not make it possible or easy to pay into CPP, yet I've always been paying taxes and been an extemely light user of public tax dollars, only use the 'free health care' to occasionally get sewn back up / get bones reset, don't use EI etc..

I have a little saved in non-registered accounts due mainly to a spartan lifestyle, & most of the ideas I've heard here would imho only make it more rewarding to those who just spend everything and more today while penalizing diligent savers and long-term planning.. would be unfair to say the least.

The money I have in TFSA has already been subjected to taxes.
I've contributed my share to society, & not just in tax money, I've lived well below the poverty line all my life so far and now everybody is talking about how to take my planned retirement trajectory out at the knees just because I've managed to squirrel away some savings for retirement, it's unfair.. qq :hopelessness: ;|

Some have mentioned a likely future cap on life-time contributions minus withdrawals.
I think that's the probable route they'll take, and really don't have a problem with that, but all this means test stuff scares me lol


----------



## gibor365 (Apr 1, 2011)

> The money I have in TFSA has already been subjected to taxes.
> I've contributed my share to society, & not just in tax money, I've lived well below the poverty line all my life so far and now everybody is talking about how to take my planned retirement trajectory out at the knees just because I've managed to squirrel away some savings for retirement, it's unfair.. qq ;|


 You are very right! it's unfair.... 
Hence person who will retire at 50, travel around the world and spend all savings include TFSA, will have full OAS/GIC and who saved will have clawback?!


----------



## peterk (May 16, 2010)

I guess I hadn't looked at it from that perspective ppincer. I certainly do agree that mid-high earners in retirement were probably mid-high earners all through their working years, and as a result certainly paid far more in taxes than you got back in services (still less than your fair share though, lol). So your OAS payments are certainly *earned* even if they are not *needed*. As a young high earner who pays far more than I receive, and will do so for the remainder of my life, I entirely see your point.

But I would advocate for a system that didn't take that money from you in the first place more than you used in services, and as a result you would not so much feel the need to extract funds off the backs of the current high earning generation (me), as the previous generation did to you when you were working... I'd prefer the money to go to those in need. Obviously the definition of need is up for debate, but I don't think our current 70k (140k for couples) limit is anywhere close to that definition.


----------



## mrPPincer (Nov 21, 2011)

perterk I agree with your last sentence completely, not to say I'm in disagreement with the rest.
My personal long-term plan does include GIS atm but I'm only age 52 atm and do have time to make alterations if deemed necessary.

I'm semi-retired but still a net taxpayer, no problem at all with that, roads need to be paved, we have an environment to consider, food quality needs to be ensured etc etc

Just from an overall perspective imho an eventual lifetime limit would be best in my view as opposed to clawbacks based on some means test (for TFSA, I'm not opposed to the means test for everything else).

People who fall between the cracks of all the ever-so-popular boutique tax credits, gov't funded retirement programs, etc should be able to count on a way forward based on the rules they are given, assuming some reasonable adjustments here and there, such as people for example who made their living through manual labour / contract work (just as an example) & who's body has been subjected to an amount of wear & tear that they are no longer suitable for the volume of work they used to do (again, not talking about anybody specific, just hypothetical you understand), yet this hypothetical pers.. blah blah blah you get the idea I'll stop whining now.. 

Just sayin.. when the time comes, just cap it, it's more fair, and simple, than some complicated means test


----------



## AltaRed (Jun 8, 2009)

mrPPincer said:


> Just sayin.. when the time comes, just cap it, it's more fair, and simple, than some complicated means test


Well said, and I can't imagine it being done any other way. It will be capped - it is just a question of when.... at $100k? That is where I would put my money.


----------



## 1.5M (Apr 21, 2012)

AltaRed said:


> Well said, and I can't imagine it being done any other way. It will be capped - it is just a question of when.... at $100k? That is where I would put my money.


Cap doesn't solve the issue illustrated in the OP. Let's say you cap it at $100k. That $100k can easily grow to $600k in 20 years (needs 10% avg return). 
Not to mention the creative yet legal methods used by some people to transfer from their non-reg/rrsp accounts to tfsa. There are already ppl with hundreds of thousands in their TFSA (http://business.financialpost.com/pe..._lsa=3b5f-db00). If they don't have CPP and have no remaining funds in non-reg/rrsp, they qualify today for full OAS/GIS if they are over 65.


----------



## mrPPincer (Nov 21, 2011)

If they cap at 100K for example, that 100K cap will be worth less and less as each year passes, in todays dollars it will be about half that in 20 years, so the problem will take care of itself barring extremme events.

As well, if 100K can grow to 600K in 20 years assuming 10% as you say, using historical inflation of 3%+, that 600K will be about half that in today's dollars, also, just because we have had 12%+ returns in equities in the last few years, does not mean a porfolio will do 10% over the next 20 years, people who have been in the market long enough know anything can happen.


----------



## 1.5M (Apr 21, 2012)

mrPPincer said:


> If they cap at 100K for example, that 100K cap will be worth less and less as each year passes, in todays dollars it will be about half that in 20 years, so the problem will take care of itself barring extremme events.


If we don't adjust the cap with inflation, then we are penalizing future generations. So beside increased OAS age requirement, we will also have them save less than us tax free. It's ok though, they don't vote anyway.


----------



## mrPPincer (Nov 21, 2011)

Something for the Harper gov't's great-great-grand-daughter to worry about?


----------



## Beaver101 (Nov 14, 2011)

^ +1 ... :encouragement: :biggrin: :wink: each:


----------



## GoldStone (Mar 6, 2011)

mrPPincer said:


> Something for the Harper gov't's great-great-grand-daughter to worry about?


Dontcha worry. Chretien's great-great-grand-daughter will bump HST back to 15%. Problem solved.


----------



## GoldStone (Mar 6, 2011)

BTW...

British equivalent of our TFSA has an annual limit of £15,240. That's *$28,266* Canadian. The limit is indexed to inflation, unlike our new and improved 10K limit. As far as I can tell from reading Wikipedia, they don't have any lifetime caps. Not on contributions, nor on balances.

http://en.wikipedia.org/wiki/Individual_Savings_Account

OTOH, their VAT is 20%.

IMHO, any concerns about tax base erosion are misguided. Governments have a bazillion different ways to skin the taxpayer. They will get their pound of flesh when they need it.


----------



## Beaver101 (Nov 14, 2011)

^^ +^ ... drats, outwitted. 



> IMHO, any concerns about tax base erosion are misguided. *Governments have a bazillion different ways to skin the taxpayer*. They will get their pound of flesh when they need it.


 ... very true.


----------



## mrPPincer (Nov 21, 2011)

^Lets hope common sense and science will prevail and future governments will bite the bullet and go with a consumption tax for needed revenue :smile-new:


----------



## 0xCC (Jan 5, 2012)

AltaRed said:


> Well said, and I can't imagine it being done any other way. It will be capped - it is just a question of when.... at $100k? That is where I would put my money.


My bet is that they don't really touch it in the next 5-7 years when the total contribution limit will already be over $100k (we are already at $$41k of contribution room, we will hit $100k just after the election after this year's election). To make the cap more palatable they will either put it up fairly high above the cumulative contribution room limit at the time of the announcement or they will put it a little bit closer to the the cumulative contribution room limit but make all the contribution room available at once (i.e. no more yearly limits, just a lifetime limit).

I will guess that when the cap comes in it will be put at $250k but the yearly limits will still be in place. If they eliminate the yearly limits my guess is the cap will be $200k.


----------



## Sherlock (Apr 18, 2010)

Do you guys think they will cap growth too or just contributions?


----------



## 0xCC (Jan 5, 2012)

Sherlock said:


> Do you guys think they will cap growth too or just contributions?


Phase 1 will probably be only contribution caps, phase 2 might be a "tax-free" growth cap (only accounts up to a certain size would be tax free, growth above that size would be taxed) or maybe removal of provisions for withdrawals not impacting OAS and GIS calculations. They could even change the rules so that withdrawals don't add back to contribution room. It will take awhile (10-15+ years) to really get a handle on how the accounts are impacting revenues and in which ways and those numbers will be used to target the changes.


----------



## gibor365 (Apr 1, 2011)

and maybe there won't be any cap  


> I used the average rate of return of my investments for the last 10 years


vast majority of people holding TFSA money in HISA or GIC with rates that in-line with inflation.
Very small % may have huge gains, but same % may have huge losses. 
Also 10K in 15-20years will be much less than 10K in today's money becuase of inflation.


----------



## 0xCC (Jan 5, 2012)

gibor said:


> and maybe there won't be any cap


Absolutely correct. The only reasonable thing we can do today is to play by today's rules.

All of us talking about caps or anything other than the current TFSA rules are just speculating on what might happen in the future. For me personally my speculation about the future is not changing what I am doing with my TFSA today. If some rules change in the future there should be enough time to deal with the rule changes before having to pay any extra taxes (ignoring the cases where the CRA is going after TFSA accounts that have too large a balance).


----------



## peterk (May 16, 2010)

We should not be talking about these 100k, 200k made up caps at all! Government spies might be reading this right now and saying "hey look, this forum with above average income, conservative leaning members is talking about a TFSA cap... That's not a bad idea!!" :eek2:


----------



## 1.5M (Apr 21, 2012)

The bottom line, TFSA is meant to be a tax cut for the rich. They are the people who can afford maximum contribution. Basically it's a legal tax-avoiding shelter for the most common revenue for rich people, capital gains. It was not enough those revenues were taxed at 50% the rate of working revenue tax, they want to pay 0%.

The poor gets to pay for the reduction in those taxes. Right now the cost is "only" a 2 year reduction in OAS. Probably in the future there will be additional costs. 

I know that some non-rich people (me included) are planning to take full advantage of TFSA, by reducing our current consumption way below our revenue (frugality), but most can't or don't know how to do that (and if everybody were doing it, the economy would collapse because the consumption would collapse).


----------



## gibor365 (Apr 1, 2011)

peterk said:


> Government spies might be reading this right now ...


none ?! :biggrin:



> I know that some non-rich people (me included) are planning to take full advantage of TFSA, by reducing our current consumption way below our revenue (frugality), but most can't or don't know how to do that (and if everybody were doing it, the economy would collapse because the consumption would collapse).


 " It's all about balance" 
and it doesn't mean how rich is specific family... who is "frugal" - should benefit in future and vice verca....


----------



## OhGreatGuru (May 24, 2009)

Enjoy the TFSA while you can. The whole program is unsustainable and bad fiscal policy.

In rough figures: if you contribute $10K/yr from age 25 to 65; at a modest return of 6%; the portfolio will be worth $1,547,620 at age 65. On $400,00 of capital contributions, that means it will have earned $1,147,620 in untaxed investment earnings over 40 years. Then at age 65 you can start withdraw just the annual earnings of $92,857 in perpetuity. It will not be counted as taxable income. The TFSA has basically created a legal substitute for an off-shore tax shelter, from which mostly the well-to-do will benefit.

(It gets worse if you start at age 18 with the help of your wealthy parents. And don't forget a married couple can salt away twice as much between them.)


----------



## GoldStone (Mar 6, 2011)

OhGreatGuru said:


> In rough figures: if you contribute $10K/yr from age 25 to 65; at a modest return of 6%; the portfolio will be worth $1,547,620 at age 65. On $400,00 of capital contributions, that means it will have earned $1,147,620 in untaxed investment earnings over 40 years. Then at age 65 you can start withdraw just the annual earnings of $92,857 in perpetuity. It will not be counted as taxable income. The TFSA has basically created a legal substitute for an off-shore tax shelter, from which mostly the well-to-do will benefit.


Is it 6% nominal or 6% real?

6% real is not modest at all. I guesstimate that 99% of the population will fail to earn it.

6% nominal = 4% real. It's a more realistic number, but not exactly modest in the present environment. Remember that bonds yield 0% real. To earn 4% real, you need a stock-heavy portfolio, and a strong stomach to weather the roller coaster ride. I guesstimate that 95% of the population will fail to earn 4% real in the very long run.

That leaves a small minority who are willing and capable.

Contribute $10K/yr from age 25 to 65 at 6% nominal; assume 2% inflation; the portfolio will be worth $701K at age 65 adjusted for inflation. 

$400K in nominal lifetime contributions = $181K adjusted for 2% inflation. 

$701K - $181K = $520K gain expressed in today's dollars.

The numbers are not as bleak as you painted them.


----------



## 1.5M (Apr 21, 2012)

GoldStone said:


> Is it 6% nominal or 6% real?
> 
> 6% real is not modest at all. I guesstimate that 99% of the population will fail to earn it.
> 
> 6% nominal = 4% real. It's a more realistic number, but not exactly modest in the present environment. Remember that bonds yield 0% real. To earn 4% real, you need a stock-heavy portfolio, and a strong stomach to weather the roller coaster ride. I guesstimate that 95% of the population will fail to earn 4% real in the very long run.


The real return of SP500 with dividends reinvested and adjusted with inflation is 7.425% in the last 40 years. http://dqydj.net/sp-500-return-calculator/

Your argument that 95% of the population will fail to do more than 4% means that you think 95% of Canadians and 95% of Canadian money managers are brain dead.


----------



## GoldStone (Mar 6, 2011)

1.5M said:


> The real return of SP500 with dividends reinvested and adjusted with inflation is 7.425% in the last 40 years. http://dqydj.net/sp-500-return-calculator/


You can throw that number out the window. I explained you why just the other day. I suggest that you re-read my post.

Hint: stocks can't return 7.5% real when bonds return 0% real.


----------



## OnlyMyOpinion (Sep 1, 2013)

1.5M said:


> 95% of Canadians and 95% of Canadian money managers are brain dead.


That % sounds about right with regard to investing.


----------



## 1.5M (Apr 21, 2012)

GoldStone said:


> You can throw that number out the window. I explained you why just the other day. I suggest that you re-read my post.
> 
> Hint: stocks can't return 7.5% real when bonds return 0% real.


So for how long bonds have been returning 0% real? Is it 6 or 7 years now? I guess stock returns had to be 4% real last 6 years, right?


----------



## mrPPincer (Nov 21, 2011)

1.5M said:


> The real return of SP500 with dividends reinvested and adjusted with inflation is 7.425% in the last 40 years. http://dqydj.net/sp-500-return-calculator/
> 
> Your argument that 95% of the population will fail to do more than 4% means that you think 95% of Canadians and 95% of Canadian money managers are brain dead.



When in fact 95% of Canadians will invest in a 100% SP500 portfolio after a hyperbolic rise, right?
http://www.google.ca/finance?chdnp=...q=INDEXSP:.INX&ntsp=1&ei=es5CVYHSOIm_sweciYAw


----------



## 1.5M (Apr 21, 2012)

mrPPincer said:


> When in fact 95% of Canadians will invest in a 100% SP500 portfolio after a hyperbolic rise, right?
> http://www.google.ca/finance?chdnp=...q=INDEXSP:.INX&ntsp=1&ei=es5CVYHSOIm_sweciYAw


Only if you invested 40 years ending in March 2009 you made 4% real, that the worst possible return, most random 40 years periods will return well above 7%.


----------



## GoldStone (Mar 6, 2011)

1.5M said:


> So for how long bonds have been returning 0% real? Is it 6 or 7 years now? I guess stock returns had to be 4% real last 6 years, right?


About 3 years. But even if it was 6 or 7 years, short term performance is mostly noise.

Stocks earn 3-4.5% risk premium over bonds in the very long run.
http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html

Check Geometric Risk Premium table at the bottom of the page.


----------



## My Own Advisor (Sep 24, 2012)

I would use 3-5% real returns for stocks, long-term, over 10+ periods.

Anything over 5% real return is quite optimistic IMO.


----------



## mrPPincer (Nov 21, 2011)

1.5M said:


> http://dqydj.net/sp-500-return-calculator/


Hmm.. just tinkered around with that calculator a bit, hard to argue with that if the numbers are accurate.
I wonder if they got the inflation numbers right.


----------



## 1.5M (Apr 21, 2012)

GoldStone said:


> About 3 years. But even if it was 6 or 7 years, short term performance is mostly noise.
> 
> Stocks earn 3-4.5% risk premium over bonds in the very long run.
> http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html
> ...


If 6-7 years is short term, why are you using short-term performance for bonds? They've been 0% only for a few years. According to you that's mostly noise. 
If stocks earn 4.5% risk premium over bonds (which probably the are doing), then the long-term average bond rate is 3-4% because stocks have returned 7-8% in real terms.


----------



## 1.5M (Apr 21, 2012)

My Own Advisor said:


> I would use 3-5% real returns for stocks, long-term, over 10+ periods.
> 
> Anything over 5% real return is quite optimistic IMO.


If you don't take into account dividends, the return is 4-5%, with reinvested dividends it's 7-8% for SP500.


----------



## GoldStone (Mar 6, 2011)

1.5M said:


> If 6-7 years is short term, why are you using short-term performance for bonds? They've been 0% only for a few years. According to you that's mostly noise.


I'm not using short-term performance for bonds. I'm using their current yields to figure out their expected future returns.

US 10 year gov't bonds yield 2.09% nominal today. What happens if you buy and hold to maturity for 10 years? You get 2.09% nominal return, assuming that you will be reinvesting coupons at the same starting yield.

Ditto for 30 year bonds. Starting yield: 2.79% nominal. Expected return: 2.79% nominal.




1.5M said:


> If stocks earn 4.5% risk premium over bonds (which probably the are doing)...


4.5% risk premium over bonds is actually at the very high end of the historical range. From 1965 to 2014, it's been only 3.14%. Look at the data I linked.


----------



## 1.5M (Apr 21, 2012)

GoldStone said:


> I'm not using short-term performance for bonds. I'm using their current yields to figure out their expected future returns.
> 
> US 10 year gov't bonds yield 2.09% nominal today. What happens if you buy and hold to maturity for 10 years? You get 2.09% nominal return, assuming that you will be reinvesting coupons at the same starting yield.
> 
> Ditto for 30 year bonds. Starting yield: 2.79% nominal. Expected return: 2.79% nominal.


Yeah, but the yields are expected to be higher soon enough and eventually will return to their historical average. We are talking about returns over 30-40 years here. I don't think you can predict stock returns over 40 years based on historical low bond yields in the last 4 or 5 years. Maybe 30 years bonds in 2018 will yield 8%.


----------



## Guban (Jul 5, 2011)

cannew said:


> Lots of arguments about a moot issue. Be grateful that they increased tfsa to $10k and save as much as you can as long as you can. Use rrsp, tfsa, resp, and drip's, to save for your future so you won't need to worry about oas\gis. If your retirement savings can generate sufficient income to keep you happy in retirement, you'll live happy.
> 
> If they change the rules later, adjust to them and continue to save for your future.


+1


----------



## Guban (Jul 5, 2011)

1.5M said:


> Usually, as a* responsible government,* when you come up with big changes in people finances,


I'm sorry, I thought we are the *Canadian* money forum. If we had responsible governments, we wouldn't have the super high debts and deficits. Maybe I'm just a bit sore about this, seeing as I live in Ontario!


----------



## 0xCC (Jan 5, 2012)

Don't other countries have similar TFSA style accounts? I don't really understand the US accounts at all but they have 401k's and IRAs (and different flavours of IRAs I think). How do the rules for those accounts differ from the rules for the TFSA?

Someone else mentioned on one thread that in the UK they have some sort of tax sheltered account that has a much higher yearly contribution limit than then current TFSA limit.

Some of these accounts have been in place for decades, how do the governments of those countries deal with the loss in revenue? Are the TFSA rules different enough that the revenue losses are a lot bigger?


----------



## bgc_fan (Apr 5, 2009)

0xCC said:


> Don't other countries have similar TFSA style accounts? I don't really understand the US accounts at all but they have 401k's and IRAs (and different flavours of IRAs I think). How do the rules for those accounts differ from the rules for the TFSA?
> 
> Someone else mentioned on one thread that in the UK they have some sort of tax sheltered account that has a much higher yearly contribution limit than then current TFSA limit.
> 
> Some of these accounts have been in place for decades, how do the governments of those countries deal with the loss in revenue? Are the TFSA rules different enough that the revenue losses are a lot bigger?


The US has the traditional IRA (similar to RRSP, where you get get a tax deduction on the contribution) and Roth IRA (similar to TFSA with tax-free withdrawals). 401k is just a pension plan. A key difference is that the contribution limit is the TOTAL of the contributions to the traditional and Roth IRA, unlike us where we have different contribution limits. Also, the limits are pretty low, $5,500 if you are younger than 49.


----------



## gibor365 (Apr 1, 2011)

0xCC said:


> Don't other countries have similar TFSA style accounts? I don't really understand the US accounts at all but they have 401k's and IRAs (and different flavours of IRAs I think). How do the rules for those accounts differ from the rules for the TFSA?
> 
> Someone else mentioned on one thread that in the UK they have some sort of tax sheltered account that has a much higher yearly contribution limit than then current TFSA limit.
> 
> Some of these accounts have been in place for decades, how do the governments of those countries deal with the loss in revenue? Are the TFSA rules different enough that the revenue losses are a lot bigger?


I mentioned UK Investment Saving accounts and they very similar to TFSA....but , yes, have much bigger amounts and even Junior ISA
http://en.wikipedia.org/wiki/Individual_Savings_Account


----------



## 1.5M (Apr 21, 2012)

gibor said:


> I mentioned UK Investment Saving accounts and they very similar to TFSA....but , yes, have much bigger amounts and even Junior ISA
> http://en.wikipedia.org/wiki/Individual_Savings_Account


This means Canada is not the first country with legalized tax evasion for the rich. Next we need to have a lobby mechanism like in US to legalize the bribes paid by the rich to the politicians.


----------



## Guban (Jul 5, 2011)

1.5M said:


> This means Canada is not the first country with legalized tax evasion for the rich. Next we need to have a lobby mechanism like in US to legalize the bribes paid by the rich to the politicians.


Tax evasion, by definition can not be legal.

There you go with the rich again! TFSAs benefit everybody.


----------



## 1.5M (Apr 21, 2012)

Guban said:


> TFSAs benefit everybody.


Now seriously, you really believe that?


----------



## gibor365 (Apr 1, 2011)

1.5M said:


> Now seriously, you really believe that?


Majority believes it and they are right!


----------



## gibor365 (Apr 1, 2011)

> This means Canada is not the first country with legalized tax evasion for the rich.


 Canadian progressive tax system benefits only "poor"! The only fair tax system is flat tax system , where everyone regardless of income pays same % in taxes, like in Serbia or Bulgaria 12%, Russia 13% etc..



> My average rate of return in the last 10 years is 11.6% which is more than 8% adjusted for inflation.


 you are too rich  your stated return is too high and should be taxable 

If you calculate average return at 20%, your numbers will be even more impressive :biggrin:


----------



## sags (May 15, 2010)

The main problem I have with these types of "self savings" for retirement programs is they are poor substitutes for real solutions to retirement income for most people.

Unless people are industrious savers, shrewd investors, and competent with tax analysis, they will fail to reach the target.

How many "average" Canadians fit that description ?

If the TFSA was at least partially mandatory through employment contributions, with the option of a simple portfolio check off choice.........I would have less concern.

For a government that claims the OAS/GIS is unsustainable..............they are sure heading a lot of people into that direction as a major source of their retirement income.

But according to Joe Oliver himself, the future generations isn't something they spent any time thinking about.


----------



## 1.5M (Apr 21, 2012)

gibor said:


> Canadian progressive tax system benefits only "poor"! The only fair tax system is flat tax system , where everyone regardless of income pays same % in taxes, like in Serbia or Bulgaria 12%, Russia 13% etc..


Yeah, Canada should be more like Russia. Wish there would be just a handful of controlling oligarchs and 95% of the population in deep misery. Wait, we're not far from that, we just need a couple more decades of con rule.

The Canadian tax is progressive only for the poor, as above about $150k it fails to "progress" any longer. Plus the most important income category for the rich (capital gains) is taxed at 50% regular rate. Now with TFSA that rate will drop to 0, so the rich will pay even less.


----------



## Guban (Jul 5, 2011)

1.5M said:


> Now seriously, you really believe that?


Yes, I believe that TFSAs benefit everybody that uses them.


----------



## Guban (Jul 5, 2011)

1.5M said:


> The Canadian tax is progressive only for the poor, as above about $150k it fails to "progress" any longer. Plus the most important income category for the rich (capital gains) is taxed at 50% regular rate. Now with TFSA that rate will drop to 0, so the rich will pay even less.


I sense a great deal of hatred towards the rich. I sincerely hope that you are not ever going to be rich.

How much further "progress" would you like past $150k? It is already at about 50% here in Ontario. That means people only get to keep half of the money that they work for. Sounds pretty unfair to you, huh? You'd like to see them keep even less. I may even agree with you, if only I felt that tax revenue was spent wisely. Sad to say, however, this is not true. The real problem, as I see it, is not with the tax rates, but with government spending.

For the truly rich, how much is a TFSA account that they can contribute a maximum of $41,000 even matter?


----------



## Guban (Jul 5, 2011)

sags said:


> The main problem I have with these types of "self savings" for retirement programs is they are poor substitutes for real solutions to retirement income for most people.
> 
> Unless people are industrious savers, shrewd investors, and competent with tax analysis, they will fail to reach the target.
> 
> ...


Unlike 1.5M, I don't pretend to know exactly what the TFSA was intended for, but I am guessing that it was not for retirement exclusively. It certainly can be used that way, but I would hate to see TFSAs as a mandatory savings vehicle to supplement retirement income. Another layer of complexity? There are lots of Canadians that don't even understand the withdraw/recontribution rules, and don't care to understand.

I can't disagree with the main point you are making, though, sags. If we want to boost retirement income, though, the TFSA is not the way to do it. We should increase the existing ones: OAS, GIS and CPP.


----------



## Guban (Jul 5, 2011)

bgc_fan said:


> The US has the traditional IRA (similar to RRSP, where you get get a tax deduction on the contribution) and Roth IRA (similar to TFSA with tax-free withdrawals). 401k is just a pension plan. A key difference is that the contribution limit is the TOTAL of the contributions to the traditional and Roth IRA, unlike us where we have different contribution limits. Also, the limits are pretty low, $5,500 if you are younger than 49.


ROTH IRAs are a lot less flexible compared to TFSAs. They are truly meant as a retirement account. Roths don't allow the withdraw and the recontribution flexibility. They also have a 10% penalty for withdraws before age 59 1/2 years of age.

http://www.investopedia.com/articles/retirement/03/030403.asp


----------



## Eclectic12 (Oct 20, 2010)

1.5M said:


> Guban said:
> 
> 
> > ... TFSAs benefit everybody.
> ...


Yes ... those who qualify are a wide range, where compared to a few years ago - there is an opportunity to tax shelter money.

One can debate who uses/benefits the most or whether it is appropriate to expand the contribution room ... but "no choice" versus "choice" is a benefit.


Cheers


----------



## bgc_fan (Apr 5, 2009)

Guban said:


> ROTH IRAs are a lot less flexible compared to TFSAs. They are truly meant as a retirement account. Roths don't allow the withdraw and the recontribution flexibility. They also have a 10% penalty for withdraws before age 59 1/2 years of age.
> 
> http://www.investopedia.com/articles/retirement/03/030403.asp


I was just referring to the similarity regarding tax treatment. Also pointing out the fact that they are fairly limited in contribution room.

I wasn't intending to discuss all the differences, just the ones regarding tax leakage as that was the topic that was brought up when I replied.


----------



## 1.5M (Apr 21, 2012)

Guban said:


> Yes, I believe that TFSAs benefit everybody that uses them.


Well, that qualification ("everybody that uses them") makes is totally different from your first statement. I agree with your new statement. The problem is, a small minority will use TFSA up to it's cap, and it was designed to be like that.

I for one, will take advantage of the new cap, and will pay no taxes due to it.


----------



## 1.5M (Apr 21, 2012)

Guban said:


> I sense a great deal of hatred towards the rich. I sincerely hope that you are not ever going to be rich.
> 
> How much further "progress" would you like past $150k? It is already at about 50% here in Ontario. That means people only get to keep half of the money that they work for. Sounds pretty unfair to you, huh? You'd like to see them keep even less. I may even agree with you, if only I felt that tax revenue was spent wisely. Sad to say, however, this is not true. The real problem, as I see it, is not with the tax rates, but with government spending.


I don't hate the rich, I actually like some of them (like Bill Gates or Warren Buffett). The problem with most of them is they are controlling the governments and are making laws that continue to increase the income inequality. 
I don't want a more bloated government that it is now, I want a stop to the increase in income inequality. 

No, I don't want people making $150k to pay 50% in taxes. I want people with $150k to pay 15% taxes, I want people making less than $50k to pay 0% taxes. At the same time, I want people making 10 times more than $150k to pay 50% taxes, and people making 100 times more than $150k to pay 80% with no loopholes. That would be a really progressive tax system, not what we have now.


----------



## gibor365 (Apr 1, 2011)

> 95% of the population in deep misery


 What a joke! You watching too much Hollywood movies!



> I don't want people making $150k to pay 50% in taxes. I want people with $150k to pay 15% taxes, I want people making less than $50k to pay 0% taxes. At the same time, I want people making 10 times more than $150k to pay 50% taxes, and people making 100 times more than $150k to pay 80% with no loopholes. That would be a really progressive tax system, not what we have now.


I also want it! But how many people in Canada have income "10 times more than $150k " = $1,500,000 ?! and how many "100 times more than $150k " = $15mil?! With such system Canada will be bankrupt in 1 year!


----------



## 1.5M (Apr 21, 2012)

gibor said:


> I also want it! But how many people in Canada have income "10 times more than $150k " = $1,500,000 ?! and how many "100 times more than $150k " = $15mil?! With such system Canada will be bankrupt in 1 year!


You can adjust the actual percentages so that the budget would balance. But it's a fact that if people making over a mil per year would pay more percentage in taxes with no loopholes than people making ten times less than that, then the taxes for people making $150k would go down and not by a small margin.


----------



## londoncalling (Sep 17, 2011)

If this were to occur, how many of those individuals paying 80% of earnings > $15 million would move away and give up their Canadian citizenship?


----------

