Friday, May 15, 2009

Leaving out the first 38% tax, is Flaherty’s sole justification for a second, 31.5% tax?

How’s this for the intellectual underpinnings of Flaherty’s so called tax fairness plan:

Leaving out the first 38% tax, is Flaherty’s sole justification for a second, 31.5% tax

Flaherty has confirmed in public, everything Canadians need to know to repudiate Flaherty’s tax on income trusts, namely:

(1) 38% of income trusts are held in RRSPs

(2) RRSPs pay taxes at the average rate of 38% on a deferred basis, during which time they are growing in value at a rate higher than the government cost of borrowing (Economics 101)

(3) Canadian budgeting has been mandated by the Auditor General to be done on a accrual basis that takes deferred taxes on RRSPs into full account

(4) Flahrty’s spurious tax leakage claims, are in defiance of (1), (2) and (3). The net effect of which is RRSPs are being taxes at the rate of 62%, meanwhile interest paid to foreigners on corporate debt is taxed at ZER0, again courtesy of Flaherty?

Therefore, Flaherty’s tax leakage claim is false, as including these ignore taxes means that income trusts cause no tax leakage, whereas the $100 billion in takeovers by foreign private equity and the like caused by Flaherty’s policy has caused over $1 billion in annual tax leakage, a number that will soon rise to $7.5 billion if our paid elected representatives in Parliament continue to do nothing. That is a lot to pay for complete inaction. Especially given there is no offsetting benefit to be derived from this policy and a litany of other adverse consequences, including we have a dysfunctional system of governance in this country that can’t understand something as complex as 1, 2, 3, noted above.

Case closed. Deal with the problem now. Move on to the next issue. You will actually have accomplished something over which Parliament has total control.....unlike Swine Flu, and the many other matters that are best dealt with by Health Officials, who unlike our Finance Officials aren’t incompetent and/or intellectually dishonest and are actually concerned about the welfare of Canadians at large and not just those who incessantly lobby for bespoke tax policies. Have you ever heard of Health officials being lobbied for bespoke health care and disease control, for certain Canadians and not others?

1 comment:

Dr Mike said...

Since Flaherty considers RRSPs tax exempt , he should refuse to take the tax money from RRSPs that are cashing out this year.

Seems only fair.

Dr Mike