Thursday, December 20, 2007

Maybe there was method to Mulroney's madness

Really, why would anyone in their right mind want to pay taxes to Ottawa if such tithing isn’t even acknowledged? Perhaps this is behind Mulroney’s madness. Maybe Mulroney had insight from his years in government into how the Department of Finance fails to acknowledge the taxes that are paid by Canadians on RRSPs and retirement accounts. Or as former Finance official Jack Mintz confided “Finance was wrong to treat the impact as zero.”

As for Mulroney, earning income and not paying taxes simply meant failing to live up to one of society’s most basic obligations, called paying your own way.

The corollary to Mulroney’s situation, would be to actually pay taxes to Ottawa, but for Ottawa to not acknowledge their receipt or existence. That’s exactly what the income trust fiasco is all about: the non acknowledgement by the Harper government that taxes are being paid to Ottawa on the 38% of income trusts held in RRSPs. This is how Jim Flaherty concocts his false tax leakage argument. By ignoring the taxes paid on 38% of income trusts held in RRSPs. This is fraudulent, as there is no credible economic or finance reason to not acknowledge these taxes. As bad as that is, the problem is then compounded by the Harper government, who then used this flawed methodology to devise a policy that is regressive to these very people whose taxes are not being acknowledged. As further punishment, these people are losing an important investment choice and have sustained a permanent loss of $35 billion in their life savings, as a sole result of Harper’s actions, which are the corollary to Mulroney’s.

Failure to acknowledge taxes on the part of government is as socially unacceptable as the failure to pay taxes. If I am not mistaken, this was the flash point for the American Revolution. Taxation without representation.

Meanwhile all Canadians will pay for this income trust tax policy blunder, as the Harper government has already precipitated the loss of $1.4 billion in annual taxes to fix an alleged $500 million problem. But it gets worse. The Harper government’s decided preference for foreign investors like Li Ka Shing and Abu Dhabi Energy will mean that Ottawa will forego an eventual $7.5 billion in annual taxes.

Who would want to share in that manufactured liability? Which political party wants to stand idly by, as that inevitable outcome visits upon tax paying Canadians? Brain Mulroney included, bless his belated voluntarily disclosed retroactive soul.


Dr Mike said...

Now let me get this straight--the government says that I do not pay any taxes on my RRSP.

Now you are sure about that-- when I begin to withdraw money I do not have to pay any taxes.

Holy crap--I am laughing--no cat food for me.

Mr Flaherty, you are one hell of a nice guy--what can I say but thanks.


nineofiveland said...

How about we set up on Facebook like they have done for the copyright issue?

Brent? Dr Mike? anyone?

Robbed said...

It's a good thing Chief Big Chin paid his taxes on all those covert thousand-dollar bills, albeit belatedly. Who does he think he's fooling? It's obvious he saw the writing on the wall and made a deal with the CRA through his tax lawyers. Why do we Canadians put up with these CON-BASTARDS?RRRR

Why it matters to all Canadians said...

How these clowns killed the goose that lays the golden eggs .. and why all Canadians will feel the pain.

I have a RIF that pre Jimmy's Bad held mostly Income Trusts and generated more monthly cash than I withdrew i.e. the total value of the RIF was increasing. Seemingly unknown to Finance I was paying tax on ALL of these withdrawals at the highest tax rate. On my demise this growing pool of capital would have rolled to my spouse who would continue to withdraw monthly and pay full tax while the total capital value would have continued to increase. On her passing CRA would have received roughly half the total remaining RIF.

Post Jimmy's Bad all of my ITs have dropped in value, some have been sold, some have reduced their distributions due tax uncertainty and monthly cash flow no longer covers my withdrawals. Since I need the same amount to live on I am eating into capital, my RIF will be gone before I am. Now Finance still gets exactly the same amount of current tax from me, but they have screwed the country out of all that future stream of tax and the chunk at the end.

Short term pain (mine) for long term pain (all Canadians).

Happy Holidays to all (except Steve, Jim, John, Tony, Bev etc)