Jack Mintz, starring in Horsefeathers

Don’t get me started on Mintz.

You should have heard him try to explain to me how he calculates tax leakage....it’s no wonder he got it wrong, if he can’t even explain it cogently.

He calculates what the taxes would be if people invested in the their RRSP, the way the government assumes they SHOULD and as prescribed by the government's “edict”. Then he calculates the tax revenue from what people actually CHOSE to invest in. Then he takes the difference and calls that tax leakage?

I think he studied under Karl Marx.... or was it the Marx brothers?

Here was Mintz’s nonsensical way of calculating tax leakage as explained by him to me. I think this was from his first movie. The one called Animal Crackers....or was it Horsefeathers?

At least we agree on one thing.....”Finance was wrong”....although I prefer to say ”Finance was fraudulent”.

Mintz can say that Finance is wrong all day long if he wishes, although it would have been nicer if he told that public rather than me in a private email, however Mintz's acknowledging that Finance was wrong, DOES NOT MEAN, by extension, that Mintz is anywhere near to being right.....and he is most certainly not independent..

Here are Jack's Mintzings:

I do want to point out that there is a serious flaw in some analyses especially on the taxation of pension and RRSP accounts. Finance was not right to treat the impact as zero

The proper calculation can be considered in two ways. The first is to recognize someone buying an asset, they get an upfront tax savings by contributing to the registered plan. The tax paid on income and principal in later years is the same in present value terms as the tax savings if there is no change in marginal tax rates. Thus, the only additional tax picked up on income trust investment put into an RRSP or pension plan compared to another similar risky investment is the personal tax on additional withdrawals from better returns. What is one source of those returns? -- it is the savings in corporate tax with the trust structure since pension and RRSP accounts do not pay other tax on the investment income within the plan.

Another way of looking at is is thinking of substituting an income trust investment for a corporate security within the plan. The only additional tax picked up is only if the income trust investment yields a better return than corporate securities. The tax picked up by the government is the time value of additional personal taxes on pension and RRSP payouts due to conversion. If the excess returns is due to corporate savings (at the most), then the annualized personal tax on the excess returns is equal to the personal tax rate on pension withdrawals times corporate tax savings. It is the latter that I included in my estimates.