When we (hopefully) have children in the next couple of years, we will get to split our incomes, saving $2,000 per year by reducing the tax Joanna pays. If we have two kids, two years apart, then we will get to claim the benefit for 20 years, saving us $40,000 in total.
Mr. Harper also brought in the Universal Child Care Benefit. It is a taxable benefit, so for our two children the benefit will be worth about $26,000 over the course of their childhood.
But where we really do well is with the expanded Tax‑Free Savings Account contribution room. Within Joanna’s first year in practice, we had both maxed out our TFSA contributions, so unlike 92 per cent of Canadians, we could benefit from the ability to make additional contributions.
By allowing us to save an extra $9,000 a year in our TFSAs, assuming a six per cent nominal rate of return over the next 35 years, the new contribution room will give us a cool $750,000 in tax-free earnings. Here in Alberta, that’s an extra $280,000 we get to keep. We continue to benefit after we retire, as the combined $2.6 million in our TFSAs will produce about $150,000 annually in income that is not only tax-free, but also allows us to collect Old Age Security payments.
Thus the potential value to us of the Conservatives being re-elected is $346,000 over the course of our working lives. That’s a lot of money, even for us.
The problem is, we’re not the ones who need it. Let’s imagine a similar family who is about to start having children, the only difference being that they have an annual income of $50,000 per year. If they have one earner, then they will save $600 per year on income splitting; if they have two earners, then they save nothing. In total, the benefit will be worth $12,000 or $0.
They will get the same UCCB cheque as we do, but will pay slightly less tax, so that benefit will be worth $30,000. And there is no way they will be saving more than the existing TFSA limit, so the expanded contribution room is useless. Their maximum benefit is $42,000 and only if one of them leaves the workforce. We both work and we still get $346,000.
We do not think it is right for us to be profiting so handsomely when a large number of our fellow citizens still do not have access to child care, medications or safe housing. Dear Mr. Harper – thanks, but no thanks.
Both the Liberals and NDP have promised to do away with the expanded TFSA contribution room and income splitting. The Grits have also promised to eliminate child benefits for wealthy Canadians.
The New Democrats would bring in universal child care at $15 per day or less, while the Liberals would put the money into expanded child benefits for lower- and middle-income Canadians. Either of these policies would leave the family at $50,000 better off and vastly so with the NDP option, if the family is paying for child care.
The big question in this election is about money and who should get it. If we are getting that money, you are not getting it. This is a zero-sum game, as these tax breaks have very little economic effect – and could actually have a negative effect by discouraging young parents from working.
We will do our small part to keep the government’s finances in order for more important things by not using the extra TFSA room. We encourage our fellow well-to-do compatriots to do the same; ultimately, though, this is an issue that will be resolved at the ballot box.
If you think the government has more important things to do than giving money – our money, your money – to wealthy folks like us, then go out and vote.
Original Article
Source: edmontonjournal.com/
Author: ROBBIE BRYDON, JOANNA ODA
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