Wednesday, May 6, 2009

My proposal to Jim Flaherty would generate $2.3 billion in ANNUAL tax revenue to fund EI etc.

Today I proposed a solution to Jim Flaherty’s income trust policy blunder by creating a new savings vehicle that would be situated between the existing RRSP and TFSP retirement savings vehicles and maximize tax revenue for Ottawa. This new saving vehicle would be the place where income trusts currently held in RRSPs would be moved to and the taxes paid on the distributions would be taxable in the year earned as opposed to deferred, as explained here

This would be a win-win-win solution for both government and the 75% of Canadians without pensions and would stimulate the economy in a multitude of ways.. It would generate a huge new stream of taxes and protect these Canadian businesses from foreign takeover and leveraged buyouts. The new tax revebue would equal $2.3 billion a year as follows:

Total distributions paid annually by income trusts: $16 billion
Percent currently held in RRSPs : 38%
Average tax rate paid by holders of RRSPs: 38%

Tax revenue collected under new proposal : $16 billion x 38% x 38% = $2.3 billion

This would be a huge WIN-WIN-WIN. It leaves Jim Flaherty with no excuses, unless he wants to start arguing on the basis of what this policy’s true ulterior purposes were.

Does Jim Flaherty really want to reveal those ulterior purposes or accept my proposal which addresses head on his ostensible reason for this tax.....namely alleged tax leakage.....which is now gonzo.

1 comment:

Dr Mike said...

Sounds better than good to me.

If this were to be implemented , then we would have one bunch of very pissed-off corporations because now they are behind the eight ball again.

The playing field would be leveled & now they will have to pay better dividends just to compete----ouchhhhhhh.

This would give the Cons a way out of this mess as they would have massive amounts of new tax money up front , no waiting.

We would be happy as we would hopefully receive the full tax credit.

I could really go for this.

Dr Mike

PS---I wonder how many folks from Finance in Ottawa have given this site & plan a boo---that might be a real eye opener for sure.

Even if this piques their interest to the point of developing something similar of their own would be a step in the right direction.