Taxing the poor, taxes our common sense

December 3, 1999 By: Stu Innes

For some time now we have heard rumblings of "tax reform". There have been studies, meetings, consultations, comments, media reports and so forth.

Yet as the results begin to trickle out we see that the fundamental approach to taxation has remained unchanged. If it isn't broke, don't fix it, only works as an approach to an existing situation if it isn't broke. In fact the taxation system is more than "broken", it has been, and will remain a contributing factor in poverty and redundant social program expenses. Consider that "all" taxpayers are to benefit from an increased "personal exemption increase" proposed to move from $5800 or so to $8500 or so. That's just great if you earn $8500 per year. Heck you won't have to pay tax on that top $2700. You will save big dollars there! Or will you? In fact if you are earning $8500 per year you are in all likelihood a social services client eligible for, and in regular receipt of social assistance. Even if you earn a great deal more than $8500 you are probably eligible. So as odd as it may seem we have people receiving social assistance and paying income tax. This ladies and gentlemen amounts to nothing more than a "make work program" for those government employees in the social services dept. Additionally this taxation of "significantly low" wage earners also tends to demean their efforts at doing the best that they can to improve their lot in life, as they must give up their hard earned dollars to a society which then turns around and brags about how responsible has been for paying a regiment of staff to return those dollars in the form of social assistance! Never mind that the tax man has his "hand out" in every retail outlet Canada wide without regard for "means"!

Let's suppose just for a minute that common sense prevailed and a process was put in place where those in our society were allowed to keep "all" the money they earned "up to the poverty level". What is that number $11,000 or $12,000? The experts should be able to tell for certain but I would guess that the individual caseloads of social assistance workers would not only stabilize but would realize a dramatic drop in numbers. At the very least the amount of money moving through the system would fall significantly.

Would this not simplify the Revenue Canada side of the workload as well? Significantly fewer little piddly $1000 or $2000 or $3000 dollar taxpayers to process, tax and then refund!

To go one step further, the increments presently used to determine a level of taxation for lower and higher wage earners work ok, but does a person making $80,000 or $100,000 + per year really need to enjoy the same "personal exemption" as the person who earns $10, 000 or $30,000?

Of course they don't! A simple sliding scale with simple increments could reduce the allowed personal exemption as income levels increase. At some point individual taxpayers would be considered wealthy enough to pay tax at the prescribed rate on "all" the money they earn. (Maybe $75,000 or $90,000?) An individual presently earning $45,000 dollars pays over $10,000 income tax
after personal exemption and dependant/RRSP deductions. If their personal exemption was reduced, their taxable income would be slightly higher, so they would be able to RRSP a few more dollars, and perhaps realize a lower to tax rate due to overall savings to society. The spin-off effects would not be all bad and certainly not unpredictable.

As a responsible society we must all be concerned with fairness, and presently our tax system as well as the proposed changes to it, combine with and effect our economy and our individual taxpayers at every level without regard for equity or common sense, in my humble opinion.

Stu Innes
ICQ 11200313


*December 3, 1999 By: Stu Innes*

	For some time now we have heard rumblings of "tax reform". There have been studies, meetings, consultations, comments, media reports and so forth.

	Yet as the results begin to trickle out we see that the fundamental approach to taxation has remained unchanged. If it isn't broke, don't fix it, only works as an approach to an existing situation if it isn't broke. In fact the taxation system is more than "broken", it has been, and will remain a contributing factor in poverty and redundant social program expenses. Consider that "all" taxpayers are to benefit from an increased "personal exemption increase" proposed to move from $5800 or so to $8500 or so. That's just great if you earn $8500 per year. Heck you won't have to pay tax on that top $2700. You will save big dollars there! Or will you? In fact if you are earning $8500 per year you are in all likelihood a social services client eligible for, and in regular receipt of social assistance. Even if you earn a great deal more than $8500 you are probably eligible. So as odd as it may seem we have people receiving social assistance and paying income tax. This ladies and gentlemen amounts to nothing more than a "make work program" for those government employees in the social services dept. Additionally this taxation of "significantly low" wage earners also tends to demean their efforts at doing the best that they can to improve their lot in life, as they must give up their hard earned dollars to a society which then turns around and brags about how responsible has been for paying a regiment of staff to return those dollars in the form of social assistance! Never mind that the tax man has his "hand out" in every retail outlet Canada wide without regard for "means"!

	Let's suppose just for a minute that common sense prevailed and a process was put in place where those in our society were allowed to keep "all" the money they earned "up to the poverty level". What is that number $11,000 or $12,000? The experts should be able to tell for certain but I would guess that the individual caseloads of social assistance workers would not only stabilize but would realize a dramatic drop in numbers. At the very least the amount of money moving through the system would fall significantly.

	Would this not simplify the Revenue Canada side of the workload as well? Significantly fewer little piddly $1000 or $2000 or $3000 dollar taxpayers to process, tax and then refund!

	To go one step further, the increments presently used to determine a level of taxation for lower and higher wage earners work ok, but does a person making $80,000 or $100,000 + per year really need to enjoy the same "personal exemption" as the person who earns $10, 000 or $30,000?

	Of course they don't! A simple sliding scale with simple increments could reduce the allowed personal exemption as income levels increase. At some point individual taxpayers would be considered wealthy enough to pay tax at the prescribed rate on "all" the money they earn. (Maybe $75,000 or $90,000?) An individual presently earning $45,000 dollars pays over $10,000 income tax after personal exemption and dependant/RRSP deductions. If their personal exemption was reduced, their taxable income would be slightly higher, so they would be able to RRSP a few more dollars, and perhaps realize a lower to tax rate due to overall savings to society. The spin-off effects would not be all bad and certainly not unpredictable.

	As a responsible society we must all be concerned with fairness, and presently our tax system as well as the proposed changes to it, combine with and effect our economy and our individual taxpayers at every level without regard for equity or common sense, in my humble opinion.

	Stu Innes ICQ 11200313