Monday, May 4, 2009

Flaherty’s Pension Income Splitting costs $3.9 billion, only benefits 14% of Seniors

“Secret” Memo from Deputy Minister of Finance (Rob Wright) to Jim Flaherty dated November 21, 2006

Fiscal Impact of Income Splitting for Seniors:

2006-7 - $163 million
2007-8 - $675 million
2009-10 - $710 million
2010-11 - $745 million
2012-13 - $780 million
2013-14 - $820 million
Total Cost: $3.895 billion

Subject: Re: Income Splitting for Seniors: Who actually benefits?


How many will actually benefit from Flaherty's discriminatory pension income splitting scheme?

1. Of the 30% of seniors who receive a pension I would say may as many as one quarter are widows/widowers, single, divorced, separated. That brings down the number of eligible seniors to 22.5%.

2. Of the 22.5% who are eligible as many as 25% may have spouses who have significant income of their own and who may be in a tax bracket not too different from the spouse receiving the eligible pension income. In their case there will be little or no tax reduction resulting from pension income splitting. We are down to 16.7% of seniors receiving a pension.

3. Many of the remaining seniors receiving a pension but who had low paying jobs are in the lowest tax brackets and pension income splitting with a spouse/partner receiving OAS will not mean very much if anything.

4. All factors taken into consideration pension income splitting may not be of any useful benefit to more than maybe 12-14% of seniors.

5. Of those the ones who will benefit the most are seniors with fat pensions and stay at home spouses/partners. A retired federal judge or a retired deputy minister with a pension of over $100,000. with a stay at home spouse with no significant income will benefit handsomely. They will even be able to reduce or eliminate the clawback of OAS.
Question: What will be the real cost of this discriminatory scheme be for the government. ANSWER: Most likely a fraction of the big numbers Flaherty will announce in his budget.

Yves Fortin

Meanwhile. Look at how that “bought-off” supposed seniors advocacy seniors group, CARP, spun this:

Pension Income Splitting is the Cinderella Tax Story for Seniors

Collingwood Enterprise-Bulletin (ON) Fri 12 Jan 2007

Senior citizens concerned about losing income trusts as a low-tax investment vehicle can rest a little easier with the federal government proposal to allow income splitting. There is no shortage of eligible seniors: according to Statistics Canada there are more than 3.2 million people over 60 who are living common-law or legally married. Blah Blah Blah goes CARP...having been completely spun by the spin

BIO: Mr. Fortin started his career at the Department of Foreign Affairs and then joined the Department of Finance where he became a senior international finance official. He served as Economic Counselor at the Canadian Mission to the European Union in Brussels, and as senior economist at the Asian Development Bank in Manila, the Philippines. Mr. Fortin was Executive Secretary of the IMF/World Bank Committee of Governors on Development, and later a member of the Executive Board of the Inter- American Development Bank in Washington D.C. He has also served as Permanent
Representative of the European Bank for Reconstruction and Development in Poland, where he was involved in privatization programs and the financing of the emerging
private sector.

1 comment:

Dr Mike said...

This gov`t has the spin factory to end all spin factories.

The seniors were duped .

I talked to many on the street & they assumed from what the gov`t had said that they were all eligible for "splitting" & that must be a good thing.

Not one of the eight I had contacted knew the details but just assumed it pertained to them.

Unfortunately , not one of the eight qualified but all would vote for the Cons in a heartbeat because they still thought it was I who was full of crap because after all it was they who were the gov`t & not I.

Shame on this gov`t.

Dr Mike