Tuesday, October 5, 2010

James Daw of the Toronto Star has become Flaherty's latest apologist

What kind of selective account of Flaherty’s record in office is James Daw of the Toronto Star trying to feed us, in the article below that reads:

"Jim Flaherty Canada’s minister of finance has introduced major innovations to the nation’s tax and savings system during his four years in Ottawa. The Oshawa-Whitby MP has ushered in tax-free savings accounts, registered disability savings plans, pension income splitting and the working income tax benefit, nicknamed WITB."

What about Flaherty's disaster policies like HST, his income trust tax (that blew up $35 billion of Canadians hard earned savings and Flaherty's elimination of withholding tax paid by foreigner investors on debt? (and the leveraged buyout ramifications of that inane policy that folks like BHP are taking full advantage of in situations like the leveraged buyout of Potash Corporation, to name but one).

Looks like James Daw has become Flaherty’s latest apologist. Must have been the chance to rub shoulders with Jimmy at Jimmy’s garden party that won James Daw over.

4 tips Jim Flaherty is giving his three sons
By James Daw
Toronto Star
Oct 04 2010

Jim Flaherty Canada’s minister of finance has introduced major innovations to the nation’s tax and savings system during his four years in Ottawa. The Oshawa-Whitby MP has ushered in tax-free savings accounts, registered disability savings plans, pension income splitting and the working income tax benefit, nicknamed WITB.

Meanwhile, the federal member for Oshawa-Whitby and his wife Christine Elliott, the provincial member, have been preparing their 19-year-old triplets for a life on their own. Galen, a McGill University varsity football player, spent the summer at broker GMP Securities LP in Toronto. Brother Quinn, a varsity soccer player the University of Western Ontario, worked in the research department at Macquarrie Capital Markets Canada also in downtown Toronto. (The federal Ethics Commissioner cleared both jobs.) Their brother John attends Anderson Collegiate and Vocational Institute in Whitby.

I pulled Flaherty aside during a garden party at his historic stone farmhouse and asked him what advice he’s giving his boys. Here’s what he said:

1. Education is vital

That’s the first and most important thing. Once you have a good education, the world is your oyster; really. You can live anywhere in the world and move from job to job. You can retrain and be trained.

Half of the jobs that people will work at in the next 10 or 20 years don’t exist now. So the idea of having some focused, narrow education, to go do this particular job for the rest of your life is unlikely.

Once you are well educated, and you are not afraid to work – because work is important, not just to make money, but to have character and to feel good about yourself – then save. Employing one’s skills and aptitudes creates a sense of purpose and accomplishment. Being useful is good for the soul as well as the pocketbook.

2. Spend less than you earn

I am a big Warren Buffett fan, and understand the miracle of compound interest. I think my sons are starting to as well, making money at summer jobs and so on. They are starting to see they can invest and earn interest and have that interest multiply.

These are the fundamentals and it will help later when they save for retirement. I try to encourage them to use tax-free savings accounts (TFSAs), because a dollar saved now is worth such a multiple over a lifetime.

TFSAs or registered retirement savings plans? Tax free accounts are more flexible. Then once you do that you go RRSP. But it is virtually an open field with TFSAs. In 20 years, most capital gains should be immune from tax if people use them properly. And governments will do nothing but raise the (annual contribution) limit over time. No government will abolish tax-free savings accounts now we have created them. They wouldn’t have the nerve.

3. Buy property

Real estate is a good long-term investment. But pay off your mortgage as soon as you can. Investing in the purchase of a principal residence early on is a tax-free way to accumulate capital. Then move on to another principal residence. Renting doesn’t produce capital gains.

The (boys) have grown up on a large piece of land in a fairly large house. I expect their experience (as adults) will be smaller and greener, probably more urban and transit focused. (Galen and Quinn were up early this summer to catch the GO train to get to summer jobs at Bay Street investment houses by 7 a.m.)

4. Be frugal

(There are) risks with debt, especially credit cards. We have given (the boys) credit cards in the hopes they will learn to manage them, because so many people get into so much trouble with credit card debt. The tendency some young people have is to over-extend themselves on credit to buy fancy houses and cars which they can’t really afford if, for example, interest rates rise. So, it’s important to avoid over-extending on credit, especially on depreciating assets such as cars.

I would also really discourage them from buying expensive homes and cars.

We will see what they actually do when they get out of university, whether they buy expensive cars. (Flaherty senior drives a Chevy) I consider that such a waste; money you could use doing other things.



Anonymous said...

I wonder if the boys got jobs at Goldman Sachs?!?


Anonymous said...


Looks like they are well qualified???

Just ask GMP and Macquarrie Capital.

Hey, Macquarrie Capital, aren’t they Australian just like BHP? Hmmm......


Dr Mike said...

The TFSA was great idea as long as you are 25.

For us old retired geezers , they are of minimal long-term use & we should have been allowed to grandfather them back say 10 years to allow us the same benefit as the younger in the country.

When we suggested this to him , our wonderful Fin Min Jimmy told us to get stuffed.

He is also the father of the income trust fiasco that again cost us seniors a right to a well-fed retirement.

As far as I can tell , Jim is still about as effective as he was when he was our Fin Min here in Ontario when he tried to hide his new deficit as he left the provincial portfolio---at that point , what he told us to be a billion dollar surplus , turned-out to be a several billion dollar shortfall.

This guy couldn`t add back then so how can anyone trust him today.

Dr Mike Popovich

Transcanada said...

Ahh good, Jim finally got around to reading "The Wealthy Barber", an excellent beginners guide to financial planning and thinks he's a genius!

Anonymous said...

. . . of course?!? What's $35Bill to guarantee the success of one's little Irish offspring . . . .

Bruce Benson said...

Seems most of the media consider Flaherty the best thing since sliced bread. These jerks trip over themselves trying to get a story line. They portray him as Mr. Knowledgable and the master of anything financial. I wonder why none of the press remember what this Flaherty idiot has destroyed not to mention the destruction to come. Sickening.

rabbit said...

The income trusts had to go. Some of Canada's biggest corporations (e.g., Telus) were on the verge of having all or much of their business held in income trusts, which would have devastated corporate tax revenue.

Brent Fullard said...


You (along with James Daw) take the prize for being dense, if not gullible.

Where, dare say, is your proof for such an argument?

Where, dare say, is Flaherty's proof for such an argument?

Just because it sounds plausible, doesn't mean that it's true, which is the trap you have fallen into.

Meanwhile every reputable group that has looked into this matter of alleged tax leakage, concludes the opposite of what you are alleging. I am talking about HLB Decision Economics, BMO Capital Markets, RBC Capital Markets. PwC, Deloitte, etc etc.

Who and/or what studies are you relying on?

All Flaherty has for "proof" of tax leakage was 18 pages of blacked out documents.

Dr Mike said...

Hey Rabbit , you reading from the Con play book on trusts again??

You have made a ridiculous statement that cannot be backed-up by any facts.

Now if you want real tax leakage , just take a look at the leveraged sale of Potash which is about to be blessed by your beloved Cons.

Dr Mike Popovich

PS---what kind of wing-nut chicken name is Rabbit anyway??

You not willing to stand behind your statement with your own name??

As far as I am concerned , anything posted anonymously isn`t worth the time to write it.