# CPP Reform



## Ihatetaxes (May 5, 2010)

http://www.theglobeandmail.com/news...r-pension/article14677222/#dashboard/follows/

As I business owner I cringe thinking about how much CPP we could be paying (with so many high income earning employees). As a taxpayer I suppose I like it since it would force savings for more people therefore lowering the number of citizens being paid OAS and GIS.

Thoughts?


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## AltaRed (Jun 8, 2009)

The onus should be entirely on the employee for 100% of the additional contributions. It is neither the taxpayer nor employer that should take responsibility for the lack of discipline on saving for retirement. Business, of course, can make this happen anyway by reducing (or not increasing) employee wages for an offset for increased costs. After all, this is an employee benefit.

This subject may have already had some discussion on CMF, but it certainly has had considerable discussion on FWF.


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## MoneyGal (Apr 24, 2009)

_It will never happen_. Reforming the CPP funding formula (including the contribution formula) is more difficult than amending the Canadian constitution.


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## andrewf (Mar 1, 2010)

Canada is suprisingly rigid in that regard. Same goes for all the angst about the Senate. It can never change...


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## Davage (Nov 14, 2012)

I really wish that I could opt out of CPP and keep that money in my own retirement fund.


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## andrewf (Mar 1, 2010)

Meh. It's like wishing you could opt out of welfare, employment insurance, military defense, policing etc. No one thinks they need these things until they do, and in the mean time resent the taxes collected to pay for them.


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## Daniel A. (Mar 20, 2011)

Change has been needed for many years already.

A good start would be raising the limit from 51000.00 for contributions.
When I worked mine was paid usually by the end of May.

65% of working people have nothing other than CPP & OAS.
I never worried much considering I have a private DB pension that I have been collecting.

If that 65% figured out that all they need to do is vote the rest of us will be paying.
Its better to get something out of them at the front end.


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## HaroldCrump (Jun 10, 2009)

The following article presents a good perspective:

_Canadian pensions: should we be forced to save?
Voluntary contributions don't have a great track record_

I found the last part very relevant:

*Would you like the government to force everyone else to save for their retirement? Or would you like to pay for it?*

This issue was discussed on the Big Picture Panel on the LOLX show yesterday.
Following is an 8-minute clip
http://www.cbc.ca/player/News/TV+Shows/Lang+&+O'Leary+Exchange/ID/2410249627/

As expected, the debate is heated and highly polarized.

But I can sense the rhetoric against the TFSA getting louder.
There is a camp of people that believe the TFSA is a _tax-break for the rich_.
It is clear from the debate above that hard-left lobbyists ("think tanks") like Armine Yalnizyan belong to that camp.

The vitriol against TFSA is just oozing out.

I believe it is almost certain that the Harper govt. proposal of doubling the TFSA to $10K will never see the light of day.
It is increasingly becoming apparent that this govt. will not get re-elected in 2016.
Or, at least, won't win such a thumping majority.
That would be the end of the double TFSA dreams.

Far more concerning is whether the existing program may be clawed back at some point, such as making TFSA withdrawals non-exempt from means testing, and/or having some sort of cap on TFSA balances.


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## Eclectic12 (Oct 20, 2010)

HaroldCrump said:


> The following article presents a good perspective:
> 
> _Canadian pensions: should we be forced to save?
> Voluntary contributions don't have a great track record_
> ...



... and that's the key issue.

Those who are saving & have been disciplined about it want to control their own but in my experience, ignore the larger numbers who don't know or aren't saving. While it's conceptually great to say "buy beware" or "let them reap the consequences", it's pretty clear that the tax payer is going to fund a chunk of the missing retirement money.

So unless there's some way to get the message across so that numbers change dramatically - is it really bad thing to force retirement savings?


Cheers


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## HaroldCrump (Jun 10, 2009)

Eclectic12 said:


> So unless there's some way to get the message across so that numbers change dramatically


I don't know what other magic way could be there to deliver this message.
There are two types of groups within the non savers category - those are can't (low income), and those that can but don't (the middle income earners, but high spenders).



> is it really bad thing to force retirement savings?


I personally don't think it is bad at all.
I am all for it.
One way or another, we are being "forced" to pay for retirement any way - ours as well as everyone else's, via taxation.

Those that are against "forcing" people to save for (their own) retirement, should also be equally against forcing someone to save for _someone else's _retirement.


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## humble_pie (Jun 7, 2009)

HaroldCrump said:


> ... I can sense the rhetoric against the TFSA getting louder.
> There is a camp of people that believe the TFSA is a _tax-break for the rich_.
> It is clear from the debate above that hard-left lobbyists ("think tanks") like Armine Yalnizyan belong to that camp.
> 
> ...



good stuff

i don't think it can be said too often in this forum to make TFSA hay while the sun shines

but what sort of "cap on TFSA balances" could they impose? that would be like the minister of finance saying Here's a tricky set of hoops, If you can run through all of them successfully you will receive X number of tax-free dollars, If you can't run the hoops then Ta!


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## MoneyGal (Apr 24, 2009)

It would be a cap on contributions, i.e., total lifetime contribution room capped at $x (like lifetime CGE - lots of "lifetime" caps as precedents). You can't cap the balances. There's lots of people out there with $M RSPs, I know some of them.


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## liquidfinance (Jan 28, 2011)

HaroldCrump said:


> The following article presents a good perspective:
> 
> _Canadian pensions: should we be forced to save?
> Voluntary contributions don't have a great track record_
> ...



You could easily change other elements of the tfsa if it was doubled. You could double the limit to allow the tax free break but not allow re contributions after withdrawal. Have a $10k limit but not let the balance roll over. 

So if you fail to save the $10k in the year then you can't add the following year. 

Many things to look at. $5500 is a rather small amount. It maybe a good account if you can grow it. But really how much of a tax break is $5500 for the super rich?


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## Toronto.gal (Jan 8, 2010)

HaroldCrump said:


> 1. But I can sense the *rhetoric against the TFSA getting louder*...There is a camp of people that believe the TFSA is a _tax-break for the rich_.
> 2. hard-left lobbyists ("think tanks") like *Armine Yalnizyan* belong to that camp.
> 3. believe it is almost certain that the Harper govt. proposal of doubling the TFSA to *$10K will never see the light of day*.


*1.* It was that way from the very beginning, but you're right, it's growing louder. 
*2.* I change channels whenever she appears. :rolleyes2: 

'A small minority of Canadians have stuffed $19-billion in assets into these accounts in less than two years. A lot of those people have their money in low-yielding savings accounts. *But a privileged few who have maxed out their RRSP and RESP room can use this account as mad money, investing in high-risk, high-return ventures and doubling or tripling their savings in a few short years. Tax free.*' :bull_head:
http://www.theglobeandmail.com/repo...from-tfsa-the-wealthy-for-sure/article617427/

*3.* Don't be too sure.


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## Eclectic12 (Oct 20, 2010)

HaroldCrump said:


> I don't know what other magic way could be there to deliver this message.
> 
> There are two types of groups within the non savers category - those are can't (low income), and those that can but don't (the middle income earners, but high spenders).
> 
> I personally don't think it is bad at all.


Yes ... though I should add the cavaet that I'm assuming it's a reasonably run program, where the politicians aren't redirecting money to their pet projects etc.




HaroldCrump said:


> One way or another, we are being "forced" to pay for retirement any way - ours as well as everyone else's, via taxation.
> 
> Those that are against "forcing" people to save for (their own) retirement, should also be equally against forcing someone to save for _someone else's _retirement.


As I look at some of those around who could be saving more but are choosing not to - the idea of them being forced to put more aside appeals to me. I have no problems helping to fund those who don't have the income or have had major life setbacks.


Cheers


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## andrewf (Mar 1, 2010)

Doubling TFSA contribution limits is undeniably a significant tax break for upper-middle class and up Canadians. It's a roundabout way of cutting taxes on wealthier Canadians, which will only serve to make the tax system more regressive. A couple would be able to contribute $1,034,000 in today's dollars between 18 and 65 years of age. Anything approaching that figure is far out of reach for lower income Canadians. We'll have Canadians with multimillion balances in their TFSA, potentially being eligible for GIS and paying no tax. Maybe we should start means testing healthcare on a net worth basis...

I totally understand that people like not paying tax. I max out my TFSA myself. But tax shelters like TFSA that will make substantial amounts of capital untaxable focus the burden on a narrower tax base, and more heavily on the poor. I may be one of those that benefits, but it tickles my sense of fairness.


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## Eclectic12 (Oct 20, 2010)

humble_pie said:


> ... but what sort of "cap on TFSA balances" could they impose?
> that would be like the minister of finance saying Here's a tricky set of hoops, If you can run through all of them successfully you will receive X number of tax-free dollars, If you can't run the hoops then Ta!


 ... and that's any different than the gov't announcing changes to the trust tax structure?

That's where I'm curious as to who might be elected and what they is within their thinking.




MoneyGal said:


> It would be a cap on contributions, i.e., total lifetime contribution room capped at $x (like lifetime CGE - lots of "lifetime" caps as precedents). You can't cap the balances. There's lots of people out there with $M RSPs, I know some of them.


Yes, caps on contributions would have past history. But since the most common rallying cry by those opposed is that those with cash or big incomes can fully use the TFSA, it would not surprise me if a future gov't decided on a cap on the balance.

How would a cap on the TFSA balance be much different than something like a $500K capital gains exemption? 
I suppose it would add lots of overhead monitoring it but then again, the cap could be on withdrawals - which keep the advantage of growth within the TFSA, similar to an RRSP.




liquidfinance said:


> You could easily change other elements of the tfsa if it was doubled. You could double the limit to allow the tax free break but not allow re contributions after withdrawal. Have a $10k limit but not let the balance roll over.


That's one option ... though I suspect since most of the angst is against those with money avoiding taxes, it probably wouldn't dampen the complaints all that much.




liquidfinance said:


> ... So if you fail to save the $10k in the year then you can't add the following year.


I interpret this as a separate example of an adjustment ... though I suspect this would generate the same criticism of not addressing what the detractors are upset about.

What I could see the detractors pushing for is some sort of income test that would make the TFSA withdrawal count against gov't programs such as OAS or CPP. Or if it is intended to be sweeping, the income test would trigger a tax of some sort.




liquidfinance said:


> Many things to look at. $5500 is a rather small amount. It maybe a good account if you can grow it. But really how much of a tax break is $5500 for the super rich?


Problem is the detractors are painting the picture of those who are using it that have had good advice so that they making big money and contrasting it with those who aren't able to make use of it.

The actual performance is secondary to the stark picture of the rich getting richer at expense of the lower income types, in addition to avoiding "paying their fair share".


Cheers


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## MoneyGal (Apr 24, 2009)

A cap on balances is both far too intrusive and difficult to monitor, while being simultaneously easy to game.


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## kcowan (Jul 1, 2010)

I think all this "reform" is aimed at making it more palatable to cut back on the welfare programs of OAS/GIS. Wait for the claw back levels to be adjusted down.


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## Toronto.gal (Jan 8, 2010)

^ You have reminded me about the 'desperate lack of ideas' in some countries. :02.47-tranquillity:

http://www.bbc.co.uk/news/uk-politics-24369514


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## HaroldCrump (Jun 10, 2009)

Toronto.gal said:


> ^ You have reminded me about the 'desperate lack of ideas' in some countries. :02.47-tranquillity:
> http://www.bbc.co.uk/news/uk-politics-24369514


And this:
http://www.bbc.co.uk/news/uk-politics-23325667


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## liquidfinance (Jan 28, 2011)

Toronto.gal said:


> ^ You have reminded me about the 'desperate lack of ideas' in some countries. :02.47-tranquillity:
> 
> http://www.bbc.co.uk/news/uk-politics-24369514


I couldn't agree with him more!

I also agree with the proposals they are putting through about making those who have been unemployed for 2+ years working for there benefits by serving the community in some way. 

It all comes down to people believing they are better than the job which are available and refusing to work. For sure there are some genuinely unemployed but this is heading way off topic.


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## liquidfinance (Jan 28, 2011)

HaroldCrump said:


> And this:
> http://www.bbc.co.uk/news/uk-politics-23325667


£26k is more than the average brit earns so why should benefits be more than that?

It has been far too easy for people to live off benefits. Especially once a couple of kids are added into the mix.


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## SpendLessEarnMore (Aug 7, 2013)

This just does not make sense to me at all. How is the TFSA affecting those that are opposed to it. It sounds like a child not getting their way and taking his ball home.

And I think it benefits the middle-income earners the most. It's like pocket change "for the rich."



HaroldCrump said:


> The following article presents a good perspective:
> 
> _Canadian pensions: should we be forced to save?
> Voluntary contributions don't have a great track record_
> ...


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## HaroldCrump (Jun 10, 2009)

SpendLessEarnMore said:


> This just does not make sense to me at all. How is the TFSA affecting those that are opposed to it.


Because (the logic goes), it reduces govt's tax revenue.
Esp. at a time when we have such high deficits.

Tax saving schemes should be unwound, not new ones created.
More and more taxes should be appropriated from the working middle classes.



> It sounds like a child not getting their way and taking his ball home.
> And I think it benefits the middle-income earners the most.


I agree, but that is not how some see it.


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## andrewf (Mar 1, 2010)

SpendLessEarnMore said:


> This just does not make sense to me at all. How is the TFSA affecting those that are opposed to it. It sounds like a child not getting their way and taking his ball home.


TFSA affects everyone because it reduces the share of taxes that some are paying. If tax shelters didn't affect anyone else, why not let people shelter all their income?



> And I think it benefits the middle-income earners the most. It's like pocket change "for the rich."


Those with high incomes face the highest marginal tax rate. The rich derive the greatest benefit in absolute $ terms. In terms of % of tax bill reduced, it would probably benefit people in the 6 figure income range most. That's just an estimate. Surely not your typical Canadian earning a median salary ($11k a year is a huge chunk of the after-tax value of the median Canadian salary).


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## Eclectic12 (Oct 20, 2010)

andrewf said:


> TFSA affects everyone because it reduces the share of taxes that some are paying. If tax shelters didn't affect anyone else, why not let people shelter all their income?


+1 ....




andrewf said:


> Those with high incomes face the highest marginal tax rate. The rich derive the greatest benefit in absolute $ terms. In terms of % of tax bill reduced, it would probably benefit people in the 6 figure income range most. That's just an estimate.
> 
> Surely not your typical Canadian earning a median salary ($11k a year is a huge chunk of the after-tax value of the median Canadian salary).


There's another aspect as well ... how many of those middle income earners barely knew what a TFSA was and for lack of info/time, if they did use one, setup some form of savings account?

Are the high earners and their advisors likely to be using a TFSA for a savings account?


And that's before considering who is likely to take bigger risks?


Cheers


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## SpendLessEarnMore (Aug 7, 2013)

Yes you pay no taxes but you have more disposable income to spend it in the economy which will be taxed on consumer spending anyways and help businesses. I think TFSA actually benefits the poorer people more me being one of them as it doesn't push our marginal tax rate up and when we need the money we can withdraw it without being taxed. Whereas the RRSP would benefit the richer more and they don't have an immediate need for cash.

But since when is paying more tax good. Government blows billions and we're worried someone is not paying taxes on a couple thousand or hundred of undeclared income? I always believe the beneficial way to improve the economy is for consumers to spend more.


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## andrewf (Mar 1, 2010)

Give that TFSA costs $X billions over the next 20 or 30 years, what would help the poor more... doubling TFSA contribution limits, or using that revenue to lower the rate on the lowest tax bracket, or raise the basic personal amount?


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## Eclectic12 (Oct 20, 2010)

SpendLessEarnMore said:


> But since when is paying more tax good.
> 
> Government blows billions and we're worried someone is not paying taxes on a couple thousand or hundred of undeclared income? I always believe the beneficial way to improve the economy is for consumers to spend more.


I see the point about gov't waste but suspect the impact is far greater than you are thinking.

Our normally slow moving gov't noticed, decided it was a problem, discussed possible penalties, proposed changes and *made the revised penalty effective the day after *the proposed changes were announced. Not when the legislation to change the TFSA rules was passed. 
http://www.fin.gc.ca/n08/09-099-eng.asp

The only reason I can think of for this quick response is that the tax revenue being lost was significant.


Cheers


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## My Own Advisor (Sep 24, 2012)

"TFSA affects everyone because it reduces the share of taxes that some are paying. If tax shelters didn't affect anyone else, why not let people shelter all their income?"

+10


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## HaroldCrump (Jun 10, 2009)

Let us define these evil "rich" people that are taking advantage of the TFSA and robbing the country of billions of $$ of tax revenue.
Causing cuts to social program, leaving people to die in the gutter - that is the concern, innit?

How many such evil people are we talking about - that is the top 5% or so, give or take?
That is a very small number of people.

These folks do not need the TFSA.
They are able to structure their affairs in ways to maximize other tax loopholes very well.
They hold their wealth in the corporations, receive dividends and capital gains instead of income, and many other tax strategies many of us are not even aware of.

Sure, they would have immediately seen the advantages of the TFSA and are able to leverage it even further, but it is a miniscule % of their overall financial affairs.
The total contribution limit is $25,500 to date.

But just in order to "punish" those handful of rich people, and deny them any further tax advantages, we are willing to take away this saving and investing vehicle from the other millions of working Canadians?
Millions that have no pensions (other than CPP), and very few tax shelters other than RRSP.

If the idea is to "punish" rich people and extract more taxes from them, there are far larger tax loopholes that can be closed first, instead of dissolving or clawing back the TFSA.
The capital gains taxes can be raised, dividend taxes can be raised, capital gains exemption can be removed or clawed back.

It is amazing that the _tax-anything-that-moves _wolves are baying for blood of the TFSA right from day 1 because it is the easiest target.
The lowest hanging fruit.
They would like to take the TFSA away, let the govt. tax the very last red cent out of us to provide generous guaranteed pensions to itself and its faithful employees.


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## sags (May 15, 2010)

Most of the "tax free" revenue lost to the government will be left in the pockets of intelligent investors or people who pay for intelligent investment advice.

They would have found tax relief in some fashion anyways.

The other 90% of TFSA holders will earn scant amounts of savings account or GIC interest............not worth worrying about.

I say leave the TFSA alone and worry about enhancing the CPP for EVERYONE fairly.

For crying out loud..............we have the experts at the CPPIB...........and the former CEO of the Teachers Pension fund giving free advice on how to do it.

They say it CAN and SHOULD be done.

Or should we listen to some right wing columnist, with no clue how to manage hundreds of billions of dollars, telling us it can't be done?


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## MoneyGal (Apr 24, 2009)

sags said:


> Most of the "tax free" revenue lost to the government will be left in the pockets of intelligent investors or people who pay for intelligent investment advice.
> 
> They would have found tax relief in some fashion anyways.
> 
> ...


Please cite your reference that the CPPIB is calling for an increase in CPP premiums and payouts.


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## sags (May 15, 2010)

I also have a problem that asset millionaires qualify for the Guaranteed Income Supplement.

That just isn't right.


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## 6811 (Jan 1, 2013)

sags said:


> I also have a problem that asset millionaires qualify for the Guaranteed Income Supplement.
> 
> That just isn't right.


OK... so 65's and older could conceivably live off CPP, OAS, and GIS without touching their million dollar assets. But wouldn't these assets eventually be taxed as estate taxes? I don't know what death tax rates are but wonder if it would be worth it: hanging on to the assets VS drawing them down?


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## sags (May 15, 2010)

The CPPIB takes no stand officially on CPP expansion.......but their website comments that they would be able to administer any expansion of the fund with mandatory contributions.

http://www.cppib.com/en/public-media/faq.html ................question # 18

Former Chief Actuary of the CPPIB........Bernard Dussault has been quite vocal in his support of expansion of the CPP.

Here is a link to one of his presentations on CPP expansion, which contains a link to his power point presentation.

http://www.carp.ca/2012/12/07/pension-expert-bernard-dussaults-presentation-on-cpp-enhancement/


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## kcowan (Jul 1, 2010)

6811 said:


> I don't know what death tax rates are but wonder if it would be worth it: hanging on to the assets VS drawing them down?


Only taxes are the accumulated capital gains of crystallization upon death.


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## fraser (May 15, 2010)

I would not expect the current Government to do anything with regard to CPP. There will be lots of talk, etc. prior to, and perhaps during the next election but I cannot see anything being done. 

They have their hands full at the moment-especially with Premier Clark going on record again, and throwing down the gauntlet with regard to Northern Gateway, the pathetic state of the coast guard in BC, and Canada's complete inability to deal with any substantial oil spill on the Pacific Coast.

Plus all the other moral and criminal issues that some Government members seem to be attracting-not to mention the Keystone decision in 2014.


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## andrewf (Mar 1, 2010)

Harold, I can't help but feel you mean me when you mention TFSA wolves. For some reason you think I'm fixated on the very rich. My point doesn't have much to do with them. The fact is, the only people would would benefit from a doubling of contributions are people with much higher than median incomes, shifting the tax burden from the well-off to those with low incomes. And if the goal is to give relatively wealthy people a tax break, why not be transparent and just lower the marginal tax rate for the higher brackets? 

I never said the rich were evil. That is a product of your hyperactive imagination.


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## HaroldCrump (Jun 10, 2009)

andrewf said:


> Harold, I can't help but feel you mean me when you mention TFSA wolves. For some reason you think I'm fixated on the very rich.


I didn't mean specifically you, although you have made your position quite clear as well.
You are not alone, in fact, you are in good company with that line of thought.
I was referring to the entire camp comprising of people like Armine Yalnizyan, the CUPE, the United Steelworkers Association (all of them frequent guests on the LOLX), as well as several mainstream media columnists.



> My point doesn't have much to do with them. The fact is, the only people would would benefit from a doubling of contributions are people with much higher than median incomes, shifting the tax burden from the well-off to those with low incomes.


 But the TFSA is a great retirement planning program, next only to the RRSP and in some ways perhaps better than that (more flexible).
For the vast majority of median income earners with no govt. pensions, there are very few tax shelters and retirement savings programs around.
The rich do not need the TFSA (although they may be taking advantage of it).
It is the middle income earners that need it.

As for the above median income earners, that is any family making more than $56K, give or take, no?
That is hardly "rich".
In any case, it is not a crime to be above median income earner.
Most of those folks have invested a lot in their education, training, and are working very hard for that income.
Making more than $56K is hardly an enviable position.

I don't see the same problem you do i.e. the lower income earners "missing out" on social services and retirement income.
They will have GIS, OAS, and CPP, even if they did not contribute anything to RRSP.

If we want to increase GIS, fine, I am in favor of that.
Increase the OAS clawback and transfer those monies towards increasing the GIS - I am fine with that.

If the TFSA is a tax break for the rich, well, so are the over-generous guaranteed govt. pensions that are burning a hole in our budgets at all three levels of govt.
How about we start clawing those back first, and transferring those resources towards providing more social services.
Ironically, those lobby groups are the first in line baying for the blood of TFSA.



> That is a product of your hyperactive imagination.


Well, at least one of has some imagination :biggrin:
Just Kidding !


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## Daniel A. (Mar 20, 2011)

Guess the thread got highjacked some time back.


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## andrewf (Mar 1, 2010)

Sorry for helping to take this thread of topic. I think harold thinks I'm advocating for the elimination of the tfsa. I'm just opposed to the doubling of contribution levels, which won't benefit people much unless they are in the upper quintiles of income. 

I think it's hilarious that you lump me in with Armine, just because I don't favour complicated, obscure tax cuts for rich people when, if that is our goal, it's much more straightforward to lower marginal tax rates. I'm hardly a bleeding heart socialist.


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## Eclectic12 (Oct 20, 2010)

My Own Advisor said:


> "TFSA affects everyone because it reduces the share of taxes that some are paying. If tax shelters didn't affect anyone else, why not let people shelter all their income?"
> 
> +10


I would qualify this to be that it reduces the taxes that almost everyone is paying ... though likely, the gov't will adjust to make up for for it.

Bottom line is the the only ones I can see who the TFSA won't reduce their taxes are those who can't afford to or choose not to use it.


Cheers


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## Eclectic12 (Oct 20, 2010)

HaroldCrump said:


> Let us define these evil "rich" people that are taking advantage of the TFSA and robbing the country of billions of $$ of tax revenue.
> Causing cuts to social program, leaving people to die in the gutter - that is the concern, innit?


I'm seen comments that those make more income will have made more use of it but there's a lot more than just the top income earners making use of it.

Trouble is - several have pointed out the deficits that exist.
Are you thinking the public servants who have a gold plated pension and middle income level won't be making use of the TFSA? 
Or are you thinking that like the 5%, it won't add up to anything significant?

I'm pretty sure the CMF-ers here aren't all in the 5% but suspect when it's all added up - there's tax revenue that has to be made up somewhere.





HaroldCrump said:


> How many such evil people are we talking about - that is the top 5% or so, give or take?
> That is a very small number of people.
> 
> These folks do not need the TFSA ...
> ...


*shrug* - by the accounts I've read, those abusing the TFSA penalty rules were small in number in 2009 yet the gov't saw it as a significant enough problem to act quickly.

As I mentioned about - I can think of a lot more people than just the 5% who will be reducing the tax revenue.




HaroldCrump said:


> But just in order to "punish" those handful of rich people, and deny them any further tax advantages, we are willing to take away this saving and investing vehicle from the other millions of working Canadians?


It sounds to me that you putting the words of those in the article into the posts here ... I can recall people objecting to doubling the TFSA amount to $10K a year ... I don't recall anyone recommending it be abolished.




HaroldCrump said:


> ... If the idea is to "punish" rich people and extract more taxes from them, there are far larger tax loopholes that can be closed first, instead of dissolving or clawing back the TFSA. The capital gains taxes can be raised, dividend taxes can be raised, capital gains exemption can be removed or clawed back ...
> 
> They would like to take the TFSA away, let the govt. tax the very last red cent out of us to provide generous guaranteed pensions to itself and its faithful employees.


Agreed that there are better targets than presumably, the article contributors idea to shutdown the TFSA.

At the same time - the TFSA and doubling the contribution allowance is cutting tax revenue, no matter how it is sliced (and for more than the 5% you are referring to).


Cheers


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## the-royal-mail (Dec 11, 2009)

Yeah whatever. The vocal left wingers seem to think that those of us who have invested in ourselves and work hard owe something to those who do not. Socialism will bankrupt us if we allow this vocal minority to hijack the public agenda.

Read the Ant and the grasshopper and cue the quote demons.


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## andrewf (Mar 1, 2010)

In other words: "I've got mine, Jack". The poor can rot in the streets and die outside the hospital.


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## HaroldCrump (Jun 10, 2009)

Eclectic12 said:


> I'm pretty sure the CMF-ers here aren't all in the 5% but suspect when it's all added up - there's tax revenue that has to be made up somewhere.


Yes, for sure the TFSA is a loss of revenue.
But no more than any kind of tax shelter including RRSP and pension contributions, tax credits, tax deductions, etc.
_Everything_ reduces tax revenues.

Or, they could just cut spending.
In fact, that was the original idea behind this government's TFSA initiative - cut spending to balance the budget, _then_ double the TFSA.
There are a bunch of other outstanding tax credits awaiting a balanced budget as well, such as the adult fitness tax credit.

For the record, I do not like such surgically targeted tax cuts either, such as the child or adult fitness tax credit, the public transit credit, etc.
It makes the tax rules more complicated than they already are, and requires tax payers to keep detailed records of scores of $50 receipts for 7 years.

An across-the-board marginal tax rate cut would be far better.

But since that aint happening, I'd take the TFSA and the fitness credits in the meantime.
Just like the RRSP deduction.



> by the accounts I've read, those abusing the TFSA penalty rules were small in number in 2009 yet the gov't saw it as a significant enough problem to act quickly.


There is a difference between _use_ and _abuse_, innit?
The program was created in order to make people use it.
Doubling of the contribution room is also meant to be used, not abused.



> As I mentioned about - I can think of a lot more people than just the 5% who will be reducing the tax revenue.


Why is revenue reduction a problem?



> At the same time - the TFSA and doubling the contribution allowance is cutting tax revenue, no matter how it is sliced (and for more than the 5% you are referring to).


I never said that it is not a tax cut.
The name is _Tax Free_ Savings Account innit?

The way you write this, it seems to imply there is something wrong in a tax cut, it is wrong to cut tax revenue.
The deficit problem can also be solved from the expense side of the income statement.
Why does deficit always mean more taxes - it can also mean less spending.


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## HaroldCrump (Jun 10, 2009)

andrewf said:


> In other words: "I've got mine, Jack". The poor can rot in the streets and die outside the hospital.


andrewf, how many people do you actually see rotting on the streets and dying outside the hospital?
And you often accuse me of hyperbole :rolleyes2:

By most accounts, we are doing better in that regard than almost all other G20 countries.


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## sags (May 15, 2010)

Whatever the plan is for retirement funding,

It has to be mandatory and include both employee and employer contributions.


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## andrewf (Mar 1, 2010)

HaroldCrump said:


> andrewf, how many people do you actually see rotting on the streets and dying outside the hospital?
> And you often accuse me of hyperbole :rolleyes2:
> 
> By most accounts, we are doing better in that regard than almost all other G20 countries.


My comment was directed at TRM (assiduously following his no-quotes-allowed policy). For clarity though, I quote him now:



> Yeah whatever. The vocal left wingers seem to think that those of us who have invested in ourselves and work hard owe something to those who do not.


In other words, people who have money are morally superior. Those who don't have money should not receive any support from society (socialism), and should sink or swim (where sinking is rotting in the street and not receiving medical care they can't afford to pay for). No hyperbole here, unless TRM meant something other than what he said.


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## Eclectic12 (Oct 20, 2010)

HaroldCrump said:


> Yes, for sure the TFSA is a loss of revenue.
> 
> But no more than any kind of tax shelter including RRSP and pension contributions, tax credits, tax deductions, etc.
> _Everything_ reduces tax revenues.


Really? 
You see the tax revenue reduction from a TFSA = RRSP & pension contributions?

For the TFSA, that's after-tax dollars that are then tax free from any future tax.
For the RRSP / pension contribution, the contribution and growth is tax free but the withdrawals are taxed.

Unless there's a lot of people planning in advance to minimise the taxes due on RRSP withdrawals - I'm not seeing the same impact on tax revenues.




HaroldCrump said:


> Or, they could just cut spending.
> In fact, that was the original idea behind this government's TFSA initiative - cut spending to balance the budget, _then_ double the TFSA ...


If you believe the gov't is going to stick to this - then why not highlight this instead of the resignation in your statement:


> I believe it is almost certain that the Harper govt. proposal of doubling the TFSA to $10K will never see the light of day.





HaroldCrump said:


> For the record, I do not like such surgically targeted tax cuts either, ... An across-the-board marginal tax rate cut would be far better.
> 
> But since that aint happening, I'd take the TFSA and the fitness credits in the meantime.
> Just like the RRSP deduction.


The bigger question is are they delivering on balancing services offered versus costs for those services.





HaroldCrump said:


> There is a difference between _use_ and _abuse_, innit?
> The program was created in order to make people use it ... Doubling of the contribution room is also meant to be used, not abused.


I'm guessing the abusers were far less than 5% and yet had a significant impact. 
At the same time - it seems pretty clear that a lot more than 5% are contributing to their TFSA.

At some point the numbers using it are automatically going to mean a significant drop in tax revenues, whether for the individual it's a drop in the bucket of their overall wealth or not.




HaroldCrump said:


> Why is revenue reduction a problem? ...
> The way you write this, it seems to imply there is something wrong in a tax cut, it is wrong to cut tax revenue.
> The deficit problem can also be solved from the expense side of the income statement.
> Why does deficit always mean more taxes - it can also mean less spending.


As I recall, you keep posting that the cost side is not being addressed (or at best, in a superficial way) and there are deficit issues.
Upthread, you were bemoaning the anticipated death of the doubling of TFSA, with no mention of cost cutting.

So in a deficit situation and with superficial cost cutting - what would be your plan to make up for the additional pressure from doubling the TFSA contribution room? 

Or would you be campaigning to make sure the gov't doesn't raise costs & bring in the double TFSA contribution room as an attempt to get elected?


Cheers


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## andrewf (Mar 1, 2010)

It's really simple. Don't double TFSA contribution room. Cut the marginal tax rate on the first bracket by the same amount (equivalent in foregone revenues). It's a broad benefit for most everyone, not just those that have high incomes that can contribute an additional 5500 on top of maxing their existing TFSA and RRSP contributions.

But yeah, I know, me preferring broad tax cuts to tax cuts targeted on those with high incomes makes me a commie...


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## HaroldCrump (Jun 10, 2009)

Eclectic12 said:


> If you believe the gov't is going to stick to this - then why not highlight this instead of the resignation in your statement


It is a difference between what I would like to see, vs. what is likely to happen.
If this govt. does not get re-elected with a majority in 2016, I don't believe the TFSA will be doubled.

Anyhow, my point above is the anti-TFSA campaign in general, not just about doubling it.
This govt. has been under fire for cutting taxes, including reducing the GST by 2%.



> At some point the numbers using it are automatically going to mean a significant drop in tax revenues


So what?
Usage of any kind of tax shelter, credit or deduction means a "significant" drop in the govt's tax revenues.
Why create a tax shelter or deduction if you don't want anyone to use it?
If people use it, yes, it will reduce tax revenues - that is the whole point.



> whether for the individual it's a drop in the bucket of their overall wealth or not.


Right, and that was my point about the 5%.
For many people, the TFSA is _not_ a drop in the bucket - it is very important.
If not right now, it will become important after another 5 - 10 years when each individual will have about $50K of contribution room.
Assuming the program survives until then.



> As I recall, you keep posting that the cost side is not being addressed (or at best, in a superficial way) and there are deficit issues.
> Upthread, you were bemoaning the anticipated death of the doubling of TFSA, with no mention of cost cutting.
> So in a deficit situation and with superficial cost cutting - what would be your plan to make up for the additional pressure from doubling the TFSA contribution room?


Yes, I am bemoaning superficial cost cutting.
Just like some are bemoaning the advent of the TFSA and the 2% GST cut.



> Or would you be campaigning to make sure the gov't doesn't raise costs & bring in the double TFSA contribution room as an attempt to get elected?


Yep, I will enter my nomination papers the same day you file yours.
So you really believe introducing the TFSA was a vote winning gimmick?


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## andrewf (Mar 1, 2010)

"So you really believe introducing the TFSA was a vote winning gimmick?"

Of course it is. Same with the non-promise in the 2011 election to maybe consider doubling it after the 2015 election if we were all good boys and girls.


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## Eclectic12 (Oct 20, 2010)

HaroldCrump said:


> It is a difference between what I would like to see, vs. what is likely to happen.
> If this govt. does not get re-elected with a majority in 2016, I don't believe the TFSA will be doubled.


As tempting as it is to follow in your footsteps, I won't interpret what you'd like to see as being a doubling of the TFSA contribution limit, regardless of what state the gov't books are in.




HaroldCrump said:


> Anyhow, my point above is the anti-TFSA campaign in general, not just about doubling it.
> This govt. has been under fire for cutting taxes, including reducing the GST by 2%.


 ... if the costs had been cut and the books were in better shape, I'd expect the anti-TFSA & anti-double the TFSA contribution types would have no momentum.




HaroldCrump said:


> So what?
> Usage of any kind of tax shelter, credit or deduction means a "significant" drop in the govt's tax revenues ...
> 
> Yes, I am bemoaning superficial cost cutting.
> Just like some are bemoaning the advent of the TFSA and the 2% GST cut.


The "so what?" is the disconnect between what I understand you've described as un-supportable gov't costs and your desire to see tax cuts expanded.




HaroldCrump said:


> Yep, I will enter my nomination papers the same day you file yours.


I meant by persuading other voters ... but if you feel you can be more effective by running for office ... fill your boots.




HaroldCrump said:


> So you really believe introducing the TFSA was a vote winning gimmick?


 ... and this is why I figure the discussion is done ... my post & your quote of it clearly refer to a vote winning gimmick scenario for a future election which somehow has informed you of what I thought of the TFSA from day one.


Cheers


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