Mad as hell

YELL modified

This will be my last blog post that’s the least bit political. For this week. In addition, I will avoid traveling to Alberta for a while, so my privates don’t end up adorning a jacked-up F150’s trailer hitch.

But, actually, people now hate me from all over. Like Iain, a civil servant in Ottawa, who sent me this kind note yesterday:

The blog today is gross. I’ve read every day for years, often read all the comments too; this is the worst. Garth seems less like a wise councillor and more like a bitter old rich white guy with nothing to offer but tired, boring, right-wing dogma. Maybe he is just angling for a show on that Sun “News” network? Is that still running (?)

It isn’t. Besides, Ezra Levant hates me, too.

The ‘gross’ part here yesterday, I guess, was suggesting that politicians who tell you there are simple solutions to complex problems are probably lying. And yet voters sop it up. Also, dividing society into “me” and “them” is a losing proposition. In other words, if Alberta’s economy sucks because oil royalties evaporated, then jacking taxes on corporations while spending more on people is a recipe for remorse. The blog teemed with comments from folks who think companies are fat and greedy, and that goring rich people will solve most of society’s funding issues.

Naturally, this is what the NDP and other progressives wish you to believe. It’s intuitively appealing. You’ll hear this again loudly in three months when the federal election campaign starts. History is full of contests won by politicians who divide, rather than unite. After all, it’s forever easier to scare and inflame than it is to inspire.

For Iain to call me a bitter old rich white guy is rhetoric. That’s political, too. It makes me into something (in his mind) which is negative, and different from him. We all do it. But wise people try to move beyond that kneejerk response to their own inadequate situation. I’m sure Iain will learn this as he ages and looks forward to his federally-sponsored, defined- benefit pension.

But that’s a sideshow. The main event is who actually pays the freight in Canada, and where the money goes. Are corps paying their fair share? How about bitter, old rich white guys? And where does all the money we pay actually end up going?

One of the debates since the NDP swallowed Alberta is what to do with corporations. The sentiment among the lefties is companies can be taxed far more, with no consequence. That’s naïve, but it will take a few years for this to become apparent to Albertan voters. Corporations are collections of people in a common enterprise, and apart from government, they create all of the jobs. Profits are either reinvested in growth and more jobs, or distributed to shareholders who capitalized the enterprise. If there are losses, no taxes are paid and people lose their paycheques.

Many people posting here, it seems, have never had to make payroll. They may not even understand that most of their own CPP and EI premiums are paid by their employer, as well as pension contributions. Payroll taxes are high, and come in addition to the corporate tax rate on profits.

Anyway, here is where the money in Canada comes from. The charts below are from the Annual Financial Report of the government of Canada for the last fiscal year.

REVENUES modified

And here is where the money goes. Note that about 18% of the taxes collected are required to run the government, with 8% used for defence and 10% to pay interest on the debt. Most of the rest ends up being transferred to people (for Canada Pension and OAS mainly) or to other governments (health care and education). Last year the government spent about $5 billion more than it collected, and this was added to the roughly $615 in outstanding federal debt.

EXPENSES modified

Maybe these pie charts help to explain why there are no simple solutions to big problems. Society is complicated and citizens expect a lot. Taxes are high in this country, but so is the level and quality of most services. Deciding who should pay, and how much, must be balanced with maintaining economic growth so there are enough jobs now and healthy companies to employ your grandkids. Increasing corporate tax cannot be done in isolation, or the unintended consequences can be a bitch.

Finally, how about the bitter old rich white guys who make millions writing free blogs where they give away their collective wisdom?

To be a 1%er in Canada, you need an income of slightly more than $200,000 – about half what it takes to join the elite in the US. BORW guys earning over this level are taxed at a 48% marginal rate in Ontario (a surtax is boosting that above 50%), at 46% in BC and 39% in Alberta. (Expect this last number to soon change.)

Thirty years ago the 1%ers paid, in total, 13.4% of all the income tax collected in Canada. These days the one per cent account for just over 22% of all the tax, while the other 99% pay 78%. In fact the 99% used to pay about 87%, so the burden has increasing been shifted from the many to the few.

I’m thinking of starting a protest movement. Who’s in?

304 comments ↓

#1 Realitybytes on 05.07.15 at 6:16 pm

First of the lefties!

#2 Brydle604 on 05.07.15 at 6:17 pm

While I agree with Garth that Real Estate prices are generally bid up by local buyers binging on cheap Mortgage interest rates, here is another article entitled “The questions Canadian politicians don’t want us asking about Chinese money” published in the Ottawa Citizen.

http://ottawacitizen.com/opinion/columnists/glavin-the-questions-politicians-dont-want-us-asking-about-chinese-money#ixzz3ZUKuloTn

#3 TurnerNation on 05.07.15 at 6:17 pm

#1Gartho? Shabba.

#4 ShawnG in TO on 05.07.15 at 6:26 pm

“BORW guys” — new term to add to the FAQ
haha

#5 RayofLight on 05.07.15 at 6:27 pm

What kind of Financial net worth would you need to be in the 1%,everything is about income,not net worth ?

#6 Brydle604 on 05.07.15 at 6:27 pm

I’m thinking of starting a protest movement. Who’s in? Garth

I am in! Where is my protest sign?

#7 logarhythm on 05.07.15 at 6:28 pm

First? You’re a good man Garth..

#8 North Burnaby on 05.07.15 at 6:30 pm

North Burnaby is booming!!! http://theamazingbrentwood.com/livecam.html

#9 Karma on 05.07.15 at 6:33 pm

Me!

And apparently a significant number of Brits!

Go David Cameron Go!

#10 Suede on 05.07.15 at 6:33 pm

What about bitter young naive complainers looking for handouts instead of giving them?

#11 Mark on 05.07.15 at 6:34 pm

I personally don’t see what the big deal with taxing profitable corporations is. The dividend tax credit ensures integration with the personal income tax system. Hence, if corporate taxes are raised, the dividend tax credit will also rise, and ultimately such will result in a reduction of tax liability for individual owners of businesses.

Additionally a higher tax at the corporate level reduces tax leakage when shares are bought by non-taxable entities including pension funds and other tax-exempt trusts (ie: RRSPs, TFSAs, etc.).

What remains to be seen is whether the NDP will take a knife to the not-very-productive parts of the public service or not. Whether they will act aggressively to remove the Tory cronyism in the functions of government or not. Of course, it will inevitably be replaced with some of their own, but long-term entrenchment of public servants has created a very inefficient and non-merit-based system in Alberta.

Last but not least, changing the royalty regime might push capital towards non-O&G activities in Alberta. After all, there’s still people out there who want to make money, right? The economy has become way too severely lopsided in favour of housing and the O&G industry, and not enough in areas like technology, an industry that has basically been dying in Alberta since the early 2000s.

#12 ILoveCharts on 05.07.15 at 6:35 pm

Garth for Prime Minister in 2015! Do it Garth. Blog dogs can be your MPs. I’ll take a pay cut to be an MP for a few years.

#13 Squirrel meat on 05.07.15 at 6:35 pm

In addition, I will avoid traveling to Alberta for a while, so my privates don’t end up adorning a jacked-up F150’s trailer hitch.
———————————–
Do you have what it takes.

#14 Jimmypage on 05.07.15 at 6:35 pm

Sign me up!

#15 Shawn Allen on 05.07.15 at 6:36 pm

The top graph seems to show there is room to increase the tax on corporations. (They pay 13.5% versus 48.1% for individuals)

In Canada, the Federal tax on corporations is 15%. In Alberta we add 10% for a total of 25%.

In the United States the federal corporate tax rate is 35%. (But there may be little or no additional state tax in most states). Statutory corporate income taxes are clearly higher in the U.S. In fact, a lot higher. You don’t see that mentioned too often, do you?

Disclosure: I own a small corporation that has paid taxes for the last ten years. 11% Federal and 3% provincial. Total 14%. I don’t take the money out so that is all they get for now 14%.

Starting this year or next I will start to take out a dividend or salary and so my tax rate will increase.

#16 ShawnG in TO on 05.07.15 at 6:36 pm

” Thirty years ago the 1%ers paid, in total, 13.4% of all the income tax collected in Canada … ”
this can be explained in different ways. perhaps back then the 1% didn’t make 50x average salary (and bonuses)

taxation system is complicated, because the target of the system is not simple. Compare Bell with Mom and Pop bakery. If you reduce tax for Bell, will you actually get better service? most likely not. Bell executives will get paid more, then some leftovers for the shareholders. It’s different for Mom&Pop store, where you might get better cakes, or extra employee.

Company employees are expensive in Canada, but tax cuts still does not translate to more jobs.

#17 Look in the mirror on 05.07.15 at 6:39 pm

I will choose to believe you’re a lying greedy asshole Garth, because I refuse to believe you’re this stupid. The reason the 1% is paying a greater proportion of tax in this country today is because they’re also taking a greater proportion of income, both in nominal terms, inflation adjusted terms, and as a percentage of GDP. Even if that wasn’t the case (which it is), the discussion as you’ve presented it is inherently dishonest. Since the unit used for income tax is the individual, the percentage of overall tax paid is deceptive, which is exactly why you’re using it to appear as the victim even as you make more money than people who work much, much harder than you.

Of course people like you would tell the common folk that all this financial and economic stuff is “complicated”. Keeps you in Hummers and Harleys and living in the fancy parts of Toronto, while more than half the city makes less than 15 bucks an hour. And you’re not the only one.

Like it or not Garth, you’re living in transformational times for Canada in your old age. I know that as a Conservative your sensitivity to disgust is sky high. I expect you’ll find plenty more things to be disgusted about as our society evolves.

You are my guest here. Act like it. — Garth

#18 JRH on 05.07.15 at 6:41 pm

It’s different this time ?

#19 NoName on 05.07.15 at 6:42 pm

“I’m thinking of starting a protest movement.”

http://mackaycartoons.net/wp-content/uploads/2015/05/2015-05-07.jpg

#20 lala on 05.07.15 at 6:44 pm

Lala the Zoro don’t protest, he flows with the system. Cant beat them, join them. Sooner you treatise that better for you. Tax men can’t touch my cash.

#21 Nosty, etc. on 05.07.15 at 6:45 pm

“The sentiment among the lefties is companies can be taxed far more, with no consequence.”

See how wonderfully well France is doing under Hollande. Youth unemployment, ‘tho not as high as Spain, is up there.

#256 Bottoms_Up on 05.07.15 at 12:46 pm — “Therefore, the government is ‘for the people, by the people’. NOT “for corporations, by the people.”

Think again. In an ideal, fully functioning world, yes but this will never be an ideal, fully functioning world. It is not designed to be one. Check this out. Sheeple are always expendable.

#22 Bill Gable on 05.07.15 at 6:45 pm

Iain is in a minority, and pal, you are making a fool of yourself.

Let’s focus on this blog.

Here we have – FREE advice from a gent that has ‘been there and done that’.
I can’t find any fault in generosity – and if you don’t like the message – don’t shoot the messenger – go and look someplace else and try and find you what you get here.

Byeno suarte, amigo. *Google translate if you have to.

#23 rawdiswar on 05.07.15 at 6:45 pm

We are the 1%! We are the 1%!

Wait what?

#24 Bill Gable on 05.07.15 at 6:46 pm

Er – that would be BUENO SUARTE. Oops.

#25 slam on 05.07.15 at 6:47 pm

“But, actually, people now hate me from all over. ”

They don’t hate you, they just can’t handle the truth so they need to find someone to be angry at.

#26 JustMe on 05.07.15 at 6:48 pm

The inequality bubble is accelerating, worse than ‘29, even 1789

The Wall Street Journal reports “the top 3% of families saw their share of total income rise to 30.5% in 2013 from 27.7% in 2010, while the bottom 90% saw their share fall.”

The inequality gap is now at 1929 levels, in fact, the widest it has been in a century, A couple years ago a Credit Suisse Global Wealth Report gave us a snapshot of just where this explosive inequality bubble is headed, reminding us of something far worse than the 1929 Crash, but of the 1790s when inequality triggered the French Revolution, and 17,000 lost their heads under the guillotine.

The Credit Suisse data reveals that just 1% own 46% of the world, while two-thirds of the world’s people have less than $10,000. Forbes also reports that just 67 billionaires already own half of Planet Earth’s assets.

History is warning us: Inequality is a recipe for disaster, rebellions, revolutions and wars.

http://www.marketwatch.com/story/the-inequality-bubble-is-accelerating-worse-than-29-even-1789-2015-04-14

#27 HogtownIndebted on 05.07.15 at 6:48 pm

“Thirty years ago the 1%ers paid, in total, 13.4% of all the income tax collected in Canada. These days the one per cent account for just over 22% of all the tax, while the other 99% pay 78%. In fact the 99% used to pay about 87%, so the burden has increasing been shifted from the many to the few.”

Nice Tea Party talking point, Garth. But it confuses cause with effect. It also fails to consider what the 1% SHOULD be paying, given their access (acknowledged by you) to various manners of tax avoidance schemes and advisors to help them play that game, paying much less than they fairly should pay. So that figure masks the even greater society-destroying wealth disparity that has developed over recent decades.

Those taxes and incomes spread out among a better and more fairly paid populace would do much more for all of us, much more efficiently per dollar spent.

There is zero, absolutely no connection between executive compensation and performance. People who have studied such point out that the real value of executive performance cannot even be determined until 5-10 years after they have gone. But we support this ridiculous game of ‘justifying’ such excesses, now even infecting the government and non-profit sectors. (First thing I ask of anyone coming door to door for charity is how much does their CEO make – if they can’t answer or I know it’s over $100K, I bid them farewell)

It’s all a backslapping, ‘Bob’s yer uncle’ game perpetuated by the elites, permeated through all sectors.

It won’t end well.

https://www.youtube.com/watch?v=QzQYA9Qjsi0

#28 Heddok on 05.07.15 at 6:49 pm

Great as usual Garth
As a BORW guy myself I wince when accused of not “paying my fair share” of societal cost.

Some guy on the CBC (economics prof) had this statistic. The top Quintile in Canada pays $22,000 per person annually in taxes. The bottom Quintile pays. $400.

When we were working both my wife and I paid about $215,000 in tax annually X 35 years. Plus all the CPP, EI and GST. We are paying for services for a lot of Canadians and proud to do so.

#29 Smoking Man on 05.07.15 at 6:50 pm

Forgive them Garth for they knot know what they do.

Years and years of school, taught by professional teet sucking socialists.

I pay annually, taxes in the millions, my job at the tax farm , the entire direct deposit is instantly re directed to the CRA.

I’m a gambler, I risk, I win some and lose some.moistly win.

I have no respect for the 99% because they don’t respect them selves.

Last week , some cowardly hi level manager at the tax farm instructs my manager to get him to convert me to full time, 160 k a year..and benefits…

Bahaha was my reaction.. Huge cut vs cinsulting and I can’t speel. I won’t accept.. Been offerd a gig in NYC at about 500k usd for a gig that I could do while stoned and hammered at the same time.

Nothing compared to challanges or characters I face daily now.

My point is , if you are weak and humble, honest and good, you will be run over. Thank your commie teacher for that.

I’m going to get that sr manager fired …

The nerve..is all I’m saying.

You see 99% ERS its all about balls, big balls.

And great acting skills..drama class is so under rated.

#30 Mark on 05.07.15 at 6:51 pm

Additionally, higher corporate tax rates are a great incentive for corporations to borrow to invest and to pay out dividends. One of my chief criticisms of Canadian corporations is that they have historically been under-leveraged relative to their asset base. With borrowing rates at all-time lows, it would make a lot of sense for firms to take advantage of the ability to pay off a lot of their equity liabilities with newly issued debt, rather than to merely be hoarders of cash on which they face a recurring tax liability and minimal returns.

Take Suncor for example. Trades at a $43B market cap, with a net of $35B of book assets, most of which, such as oilsands reserves, plant and equipment, have been significantly depreciated. If you started out with $43B of cash today, it is very likely that one could not build even half the assets of a company like Suncor. The valuation is ridiculously low, and Suncor’s liabilities, mostly long-term, will depreciate in a rising rate environment, as inflation simultaneously pushes up the value of their output. Warren Buffet has described this as buying dollars for quarters. I tend to agree. You can see the same in much of the gold industry, which tends to actually perform better in the grips of socialism throughout the world.

On that note, anyone remember the 1990s? A NDP government in Ontario. A Liberal government in Ottawa. Collapsed oil prices. Yet the TSX tripled. Yeah, really bad for the investor class… Right.. The times were so good in fact that nothing with the economy such as employment numbers, confidence, etc. since has come even close in comparison.

#31 Doug on 05.07.15 at 6:51 pm

The only reason, in my mind, to tax corporations is to also recoup some (not all) of the costs associated with Gov’t or Crown Corps building infrastructure to kickstart business development in an area (ie. the power transmission system extensions to undeveloped areas, highway extensions etc). Some of these big projects would not occur without the government footing some of the bills (it then begs the question as to why we would contemplate temporary foreign workers at cheap rates if we rely on personal income tax to fund government spending). Some of these are done on very precarious business plans.

#32 Smartalox on 05.07.15 at 6:52 pm

Garth, I’m not a 1%er, but after reading this blog for a few years, I know that it’s highly unlikely that BORWGs pay the full marginal tax rates, especially if they’re taking income in the form of dividends or other forms of compensation.

The Canard for this argument is Warren Buffet claiming that he pays less in taxes than his secretary. It’s a US example, to be sure, but similar principles apply in Canada don’t they?

#33 Irwin on 05.07.15 at 6:54 pm

> bitter
> old
> rich
> white
> guy

4 out of 5 ain’t bad – that’s me.

#34 Freedom First on 05.07.15 at 6:55 pm

Yes, most unfortunately, too many people have the attitude of “tax the rich”, with the rich being anyone who has more than they do.

And today, I will stay away from mentioning which gender is doing the majority of the hard work, and which gender is doing the majority of the whining.

#35 VICTORIA TEA PARTY on 05.07.15 at 6:56 pm

ALBERTA: LESSON TIME IN BIG HAT COUNTRY

This is the problem when people, given the right to vote, marry and whatnot, don’t understand the consequences of actions, any actions.

Corporations, not governments, represent the life-blood of nations. The alternative is Venezuela. Got it? St. Garth of pie charts has explained it all well enough.
The question here, is anybody getting the message?

Albertans have plunked their fortunes with a bunch of untried left-wing pols (kinda like the Dave Barrett NDP tribe in BC in 1972 that ended in utter disaster in December 1975) whose policies may cause more than a few stomach aches.

Most important is that Alberta’s business reputation, which is a good one generally, is being judged by “others”, holders of potential capital, who dwell in New York City, London, Frankfurt, Moscow, Beijing.

Regardless of how much you hate capitalism, there are certain people you NEVER mess with when it comes to seeking investors. Perish the thought.

I can’t wish Notley’s crowd good luck. So far they don’t deserve any.

The voters of Alberta have reeled in a steer of a differnt hue entirely.

#36 Love my Kia (Wealthy Pinko) on 05.07.15 at 6:58 pm

Profits are fine. My problem is when companies MAXIMIZE profits without consideration of anything other than shareholders. Corporate responsibility and giving back to their communities in a significant and meaningful way is all but gone outside the PR office.

Society is becoming much more of ‘THEM vs US’ because of the growing gap between the rich and poor. Without a healthy middle class being readily employed to bridge that gap there will be a few wealthy and poor will be found en masse.

These extremes I believe will lead to more conflict, with history as any indication shows why we see revolutionary action. Perhaps the NDP is the polite Canadian version of a revolution.

#37 saskatoon on 05.07.15 at 6:59 pm

how’s about bitter, old black guys?

or bitter, old hispanic guys?

or bitter, old asian guys?

or bitter, old black women?

these people are also rich.

don’t people who talk like this realize that they are themselves, in fact, being deeply racist/sexist?

divide and conquer.

racism/sexism is a one way street, it seems.

#38 Brunett43 on 05.07.15 at 7:00 pm

Garth, I don’t think you’re a grumpy old rich white guy. Maybe rich, but hey good for you! I’ve only been here a few weeks but I like what you have to say. You’re honest and blunt and I’m not looking for any fairy tale scenarios. I came from a very political upbringing, my parents post WWII immigrants who came here for a better life, and were hard working stock. They saved and rarely used a credit card, everything was cash. My dad retired with a nice GM pension back in 1980 and passed away in 2004, mom still gets half of that. She sold the house and is in not bad financial shape. Unfortunately they didn’t know much about investing, afraid of the risks and didn’t make much on their savings. When interest savings rates were at I think it was as high as 17% my my dad could have locked in but Mom would let him !!! Bad move for sure.
I have a good size investment portfolio and a small mortgage so I’m trying to learn what I can to keep informed. That’s why I’m here….to learn. I enjoy reading your blog so don’t change, just say it like it is!

BTW….My dad use to put up his NDP signs during the elections and I use to rip them out during the night…lol…it was embarrassing! I’m more of a centrist so elections can be a real pain for me.

Great charts btw…always good to know.

#39 Paully on 05.07.15 at 7:00 pm

The first lecture in Tax Theory 101 says that corporations don’t pay tax. Period. Taxes are always paid by individual citizens. Higher corporate taxes lead to higher prices for the end user, who ultimately shoulders the load.

#40 JSS on 05.07.15 at 7:01 pm

Garth for leader of the Wildrose Party!

#41 mike on 05.07.15 at 7:02 pm

I’m with ya Garth! Just tell me when and where.

#42 The American on 05.07.15 at 7:05 pm

Garth, you’re doing very well should you choose to run for Prime Minister in the future. The question is about perfect timing. Let me know. Americans know dirty politics better than anyone. I can lend some thoughts. And yes, you would win… by a very healthy margin (even in the Canadian 7,423 party system).

#43 Godth on 05.07.15 at 7:10 pm

Archived – Where Your Tax Dollar Goes
http://www.fin.gc.ca/taxdollar06/text/html/taxdollar06_-eng.asp
1. Interest Payments
“The largest single federal spending item was interest payments on Canada’s public debt (that is, money borrowed by the central government over the years, which has not yet been repaid to the lenders). These payments-to institutions and people who hold federal bonds, treasury bills and other forms of the debt-cost $33.8 billion. That’s just over 15 cents of every tax dollar.”
I repeat:
Liberate the Bank of Canada, Intrepid Think Tank Urges
http://thetyee.ca/Opinion/2015/04/17/Liberate-Bank-of-Canada/

Besides this you told us yourself Garth that the whole system is finito by 2030.

#44 Yogi Bear on 05.07.15 at 7:13 pm

I’m tired of paying for these public sector entitlements that the country cannot afford.

I made the decision (a while ago) to leave Canada. I will realize this decision within 10 years. As a bonus, after 2 years overseas I can withdraw my RRSP all at once with a 25% withholding tax which is a huge discount to my current marginal tax rate.

I’ll let the public sector leeches find their pound of flesh elsewhere. I won’t be paying for your gold plated pensions.

#45 mitzerboy aka queencity kid on 05.07.15 at 7:13 pm

u can count me and my old huntin dog in garth

#46 CJOttawa on 05.07.15 at 7:13 pm

Good post. If anyone wants to actually more about the “complexities of prosperity,” there’s a great book called “The Birth of Plenty” by William Bernstein. A heavier one that deals only with the economics side is “Economics in One Lesson” by Hazlitt.

TL;DR: you/I/governments can’t make economic decision in a vacuum. It’s fine to say “we’ll raise taxes on corporations/the rich/whoever” but those groups may decide to move elsewhere, depriving governments of more tax revenue than they gained by raising the rates. Economics is the study of unintended consequences.

#47 Investorz on 05.07.15 at 7:14 pm

Politics is depressing, let’s talk about market forces.

Home Capital stock is down 5.5% today, after reporting a fine quarter, with less defaults. US still hating on us, shorting Genworth and HomeCapital, even if both had good earnings.

Too bad you can short a specific house: I’d love to short my neighbor.

#48 ILoveCharts on 05.07.15 at 7:15 pm

Just saw this on my facebook:

“Don’t have a Million dollars? If you buy this home with someone else you don’t need a Million dollars! Both levels have the same high quality finishing including heated bathroom floors, stainless appliances, and gas stoves. Co-Buying is a great way to break into the market and not as complicated as you might think. Come see for yourself this Thursday, May 7th from 5:30-6:30pm!”

#49 kilby on 05.07.15 at 7:15 pm

Started out right in the middle…Like the rewards of being right and the compassion and caring of the left, now at 64 I am willing to let the left give things a try again and see how they have progressed.

I don’t think Alberta is going to sink, maybe NDP for just four years but if that is enough to get the rabid right to settle down a little….. So sick of the “Harper Government” “the Harper Conservatives” and would like to see them talk a little more about the economy and less about their terrorists…

#50 bb on 05.07.15 at 7:19 pm

I don’t get the pie chart. Isn’t the government getting revenues mainly from Canada’s own commodities export and oil? 48% from personal income tax seems to be huge considering the population is less than 40 million.

#51 Really? on 05.07.15 at 7:21 pm

I find it interesting (and that’s a euphemism for misleading) that you are complaining that 1% now pay greater share of taxes without saying anything about whether they now make greater share of income.

#52 Ralph Cramdown on 05.07.15 at 7:21 pm

Thirty years ago, the 1% took a far smaller percentage of the pie. Income inequality has been increasing. So yeah, they paid a smaller percentage of the total back then.

I found this post while looking for a chart of Canada’s Gini coefficient (a measure of income inequality) over time:
http://luan-ngo.blogspot.ca/2012/05/no-jobs-no-hope-no-cash.html

But really, talking about the “1%” in terms of annual taxable income is a mug’s game meant to confuse the 99%. The important 1% is in terms of assets. Unrealized capital gains don’t get taxed. Warren Buffett pays himself $100,000 a year, and owns billions in Berkshire stock that pays no dividend. If the company didn’t pay tax, he’d only be paying tax on that $100,000 per year. And when he dies, there’s no deemed disposition of his shares for tax purposes, and his heirs get then with a new cost basis, their value on the day he died. Doesn’t quite work like that in Canada, but there’s ways.

Alberta MLAs voted themselves a “transition payment” of three months salary for every year served, which is essentially a 25% pay hike.

And there’s this:
http://www.macleans.ca/economy/business/the-rising-salaries-of-canadas-top-50-ceos/

What did that guy at Barrick say the other week, as he awarded himself a 1/3 increase in pay to reward himself for presiding over a 1/3 decline in the share price, on the occasion of a shareholder vote 75% against the compensation plan? Oh yeah, “We have heard you loud and clear… and F— you!”

Thomas Piketty’s point is that if you don’t tax wealth, it will grow exponentially and without bound. And we don’t all get rich — the skew continually goes to those that already have the most.

#53 Joe Anderson on 05.07.15 at 7:23 pm

Voting for the NDP because you are dissatisfied with the incumbent government or the economy is akin to the old saying of “cutting off your own nose to spite your face”. In other words, not a very sensible thing to do as it hurts you the most. There are better options…always. Good luck, Alberta.

#54 Mister Obvious on 05.07.15 at 7:23 pm

I guess I missed it.

I’ve been reading this blog for years too and I didn’t find yesterday’s post to be any more outrageous or inflammatory than any other of Garth’s musings over the years. In fact, it’s in perfect keeping with the political flavor I’ve come to expect here.

Why so huffy? Was it that NDP thing in Alberta?

People, you gotta lighten up a bit. Here in BC the NDP bungles its way in for a single term every 10 or 15 years, screws up a few major initiatives, then gets righteously punted out again. So what?

It’s like getting a cold or having a market correction. It happens from time to time and you’ve just gotta roll with it. That which does not kill us makes us stronger.

I might even vote NDP in the next federal election. But I wouldn’t try that trick in any riding other than Vancouver Center. That’s because the NDP don’t have a hope here. Hedy Fry will be the liberal MP till doomsday anyway. Her numbers are very high and that will not change.

But I don’t want to vote (indirectly, of course) for Justin or Steve simply because I don’t care for either of them. But I do like Tom. He seems like a good guy for a pinko.

So, for me at least, it can be a popularity contest without consequence. Tom might take some comfort that his numbers are up by at least one in my town and it might help contribute in a very tiny way to keeping those other guy on their toes.

Maybe that’s the kind of thing they were trying to do in Alberta but somehow it went very wrong. Or else not.

#55 Johnny Silver bear on 05.07.15 at 7:24 pm

Your logic is seriously lacking. It is your blog-and all- but KNOWONE- does a better job of dividing and name calling then you!
“For Iain to call me a bitter old rich white guy is rhetoric. That’s political, too. It makes me into something (in his mind) which is negative, and different from him.”
Keep ignoring ALL of the non-msm/banking lies and look at any of the real data-like manufacturers index, durable goods orders or baltic dry index along with the 1000’s of store closures. Politicians are LIARS, always have been always will be. They serve the elite. The last good one was JFK and we all saw what happened to the guy who took on the federal reserve with presidential order 11110! Learn your monetary history already. Your out of touch with modern derrivitive-based exponential growth and are doing serious damage to anyone who follows your “investment” advice. The debt bubble will collapse- September. Bye Bye. Got Gold? You have been told!
Yeah yeah-“gold bug” this and “barbaric relic” that. Why has JPM accumulated 50,000,000 ounces of te silver it is manipulating lower?? Grow up.

#56 timoftrees on 05.07.15 at 7:24 pm

I aspire (and work my butt off) to earn my place amongst the one percent to reward my wife, my boys and my husky for putting up with the poverty, deprivation, risk and demands of running a small business (and, the Lord willing a ‘someday’ large, successful money making corporation).

Our nation was built on youthful energy and work ethic. Capitalism and the private sector. Immigration and ideas.

Government work (excepting police military …etc) is a great employment opportunity for women, though I’m suspicious of men who choose to become civil servants and then whine about how hard they have it. We should be encouraging our boys to work hard, suck it up, start businesses and keep at it.

A nation of civil servants is an emasculated nation that does not bode well for the future.

I have respect for

#57 Karma on 05.07.15 at 7:25 pm

#25 slam on 05.07.15 at 6:47 pm
““But, actually, people now hate me from all over. ”

They don’t hate you, they just can’t handle the truth so they need to find someone to be angry at.”

Truth! It’s sad that the majority of humans are always myopic and masochistic when it comes to how their actions affect the rest of society.

Jim Prentice was right, just like Ontarians can blame only themselves for re-electing the Liberals.

Nevertheless, things don’t change drastically overnight. I wouldn’t be surprised if in 2 years the NDP in Alberta are as popular as the Socialists in France…

#58 Leo Trollstoy on 05.07.15 at 7:27 pm

I wish I was a bitter old rich white guy.

Wait a second…

#59 Smoking Man on 05.07.15 at 7:29 pm

You want to make loot, you got to take risks.

The shit your feed daily, safety. Well 99% of the population agrees with you.

Let’s take the worced bet possible, you lose everything, been there done that a few times now..

It ain’t that bad, a band aid, a shot of tequila , back in biz.

#60 Karma on 05.07.15 at 7:31 pm

#34 Freedom First on 05.07.15 at 6:55 pm
“Yes, most unfortunately, too many people have the attitude of “tax the rich”, with the rich being anyone who has more than they do.

And today, I will stay away from mentioning which gender is doing the majority of the hard work, and which gender is doing the majority of the whining.”

Generally, women do wayyyyyyy more actual work (paid and unpaid) than men. It’s something like a 70%/30% split with women doing more work.

So it’s a good thing you’re not going to mention anything today…

#61 Who pays tax? on 05.07.15 at 7:33 pm

#39 Paully on 05.07.15 at 7:00 pm
The first lecture in Tax Theory 101 says that corporations don’t pay tax. Period. Taxes are always paid by individual citizens. Higher corporate taxes lead to higher prices for the end user, who ultimately shoulders the load.

Individuals don’t pay tax, period. Taxes are always paid by corporations. Higher personal taxes lead to less money available for consumption, thus to lower profits by corporations who ultimately shoulder the load.

#62 (^_^) on 05.07.15 at 7:34 pm

BROW over BORW?

“Pardon me, BROW, do you have any Grey Poupon?”
https://www.youtube.com/watch?v=5xomArI4aJ0

tn.

#63 McFly on 05.07.15 at 7:34 pm

#17 Look in the mirror
***********************

Haters gonna hate

#64 I'm stupid on 05.07.15 at 7:34 pm

It’s not that hard to accumulate 1 million in assets and becoming a 1%er.

Saving $350 per week for 30 years will get you there if properly invested. If you choose not to make the sacrifices it takes to do it don’t complain. I’m sure 70% of the population can cut bs spending to save that much money.

A generation ago when the difference between rich and poor was smaller it wasn’t because things were better it was because the middle class saved much more money. That didn’t leave much room for huge pay packages for top executives. Today Mercedes’ have become ordinary cars not because we’re richer but because the middle class chose to gorge on debt. Well enjoy!

#65 Herf on 05.07.15 at 7:37 pm

“After all, it’s forever easier to scare and inflame than it is to inspire.”

I would suggest that it’s also easier to scare and inflame than it is to govern competently or make good public policies.

#66 Smoking Man on 05.07.15 at 7:39 pm

Jesus, I haven’t been out on the town since the insident back at the xmass party.

Only drink alone or at casino.

I’ve changed , tons of hottie’s , I could care less. I’m an observational beast , finaly no hormons , im a writer now.

Thank you god .

#67 RayofLight on 05.07.15 at 7:39 pm

David Rosenberg says world interest rates have only been this low three times in the past 500 years. Where do you think they will be going from here?

#68 EB on 05.07.15 at 7:41 pm

“What about bitter young naive complainers looking for handouts ”

It’s cool guys, he said we can take any rug we want.

#69 Smartalox on 05.07.15 at 7:43 pm

#39 Paully:

Corporations owe taxes for the infrastructure and civil services that increase productivity, ensuring that greater shares of revenue end up as profits.

Garth,

What about your oft-made argument that governments should tax wealth, instead of income. Wouldn’t this mean that the 1%ers would pay more? Indeed, many $200k earners might pay less, having accumulated less wealth, while some reporting less than $200k in income may have much accumulated wealth?

#70 Former Fool on 05.07.15 at 7:45 pm

Bravo Garth!!! What a great post!

Canadians (and Albertans) need to understand: corporations and other businesses are our PARTNERS! They exploit resources for economic gain and to allow societies to function; they provide technology that one couldn’t develop on their own (try building your own smartphone); they provide jobs; they provide health benefits; they provide salaries for ordinary citizens to have a decent lifestyle; they provide investment opportunities and return on capital! In return, citizens provide labor, physical and intellectual, to allow businesses to operate. We are partners, not enemies!

If in Alberta, the NDP aggressively taxes businesses, especially the big corps, they will scale back investments and reduce costs to maintain profitability. Very simple. Yes, that will include job cuts. How the hell do people not see this? And people who have the one asset strategy, voting for a party that will indirectly drop the value of their most valuable asset, and put them underwater?!? LOL!

I’ve looked at the NDP platform (which has since been removed from their site, last I checked), and they are promising to balance the budget by 2018. In the meantime, they want to take on 11 BILLION DOLLARS OF DEBT in order to pay for all their promises! Insanity!

You only missed two things in your post yesterday and today Garth. First, the PCs did this to themselves. It started with Stelmach and ended with Redford. Prentice was the lucky guy who inherited this mess. Lots of corruption and a huge attitude of entitlement in the PC party. Redford was the last straw for me, personally. But I voted WR, not NDP. Second, governments are so inefficient! Why is it that, when times get tough, governments do not look internally to see how they can aggressively cut and manage costs? I work for a company that sells goods and services. When profits are down, we don’t magically snap our fingers and raise revenues 5%, like governments can do with taxes. We slash costs. And that includes jobs. Why can’t governments become lean and efficient?

Anyway, all I care about is making money from this whole situation, while everybody else cries and complains about big business. Still sticking with the diversified balanced portfolio!

#71 Joel6Pack on 05.07.15 at 7:46 pm

Harper puts his Calgary house up for sale.

http://lightworker29501.com/2015/05/06/harper-puts-his-calgary-house-up-for-sale-hours-after-rachel-notleys-ndp-win/

If true, can the RE agents find the MLS#.

#72 David on 05.07.15 at 7:51 pm

These days the one per cent account for just over 22% of all the tax, while the other 99% pay 78%. In fact the 99% used to pay about 87%, so the burden has increasing been shifted from the many to the few.

Given that wage gains over roughly the same time frame have been disproportionately skewed towards upper income earners, notably the 1%, this is exactly what you would expect. This would still be true with a flat tax.

Does anyone have a reference to tax rates from 1985?

#73 BORN on the BAP on 05.07.15 at 7:53 pm

Boring
Old
Red
Neck
on
the
Bald
Alberta
Prairie

Luckily I’m mobile and so is my capital. One thing the NDP hasn’t learned; money is like people, it has legs.

Manana

#74 Marc in Montréal on 05.07.15 at 7:55 pm

“Google 2.4% Rate Shows How $60 Billion Is Lost to Tax Loopholes” – Bloomberg.com

Nothing against capitalism, but I think it needs some (major) adjustments.

http://www.bloomberg.com/news/articles/2010-10-21/google-2-4-rate-shows-how-60-billion-u-s-revenue-lost-to-tax-loopholes

#75 Michael on 05.07.15 at 7:59 pm

The wealthy are paying more of the tax because they are getting more of the pie. The top tax rate is lower today than it was 30 years ago.

http://www4.hrsdc.gc.ca/[email protected]?iid=22

#76 ANON on 05.07.15 at 8:04 pm

“I’m thinking of starting a protest movement. Who’s in?’

Until someone from the whole range of the political or mathematical spectrum has a good explanation how non-existing cumulative percentages of the principal can be paid back, I’ll just sit here with the popocorn and the home brew, enjoying the joviality, thank you very much! :)

#77 Oot der Hoos on 05.07.15 at 8:04 pm

Once again I say: the left are not the only ones about compassion and caring.

I am about compassion and caring. I am conservative.

The divide and conquer communist themes are depressing. Now I see “this class” “that class”. yuck. It is ugly communist revolution techniques.

#47 Investorz mentioned shorting houses and changing the topic.

We could set up a futures exchange and avoid the real estate fees, and house building, and the new land transfer tax, house insurance. Many buyers likely did not want a house anyway and Investorz can sell a house futures contract to all buyers … pegged to the average house price index. Go Investorz!

Some buyers just want to “not miss out on the price run up in case they want to own a real house some day”.

PS:
Slightly higher interest rates for 30 years would have stopped a lot of the commie complaining about income differences and house price inflation, for example. That is my economic theory. 6 years at 1.5% was not healthy. It was not stimulus.

Obama is a muslim communist revolutionary who was seen in 1987 to be the one out of Chicago to “take away freedom from this land” as per the seven year old, Mena Lee, all grown up: http://www.trunews.com/thursday-may-7-2015-mena-lee-grebin-pt-1/

#78 pinstripe on 05.07.15 at 8:05 pm

Most Albertans had no choice but vote for any party but NOT PC.

alberta has gone through the biggest boom in the history of the province. today we are not only broke but many billions in debt. Where did all the money go from the boom times? no pc MLA has an answer to that question. they shrug their shoulders and say I dunno.

the alberta pc government forced most Albertans to lose all trust and confidence in their governing. most Albertans were forced to vote ABC. ndp was a reasonable choice.

the opening of the govt books by Rachel will reveal the extent of the Mess. the cupboard is bare. apprentice was wise to kick over the podium and get the hell out of town asap.

at the coffee shop, the focus is starting to shift towards doing the same to harpo et al. People have been betrayed by the pcs. people are MAD as hell.

The biggest lesson is that elected government members look after themselves and screw the people any chance they get.

I voted pc since lougheed became involved in alberta politics. Not on may 5.

#79 Michael on 05.07.15 at 8:07 pm

The top tax rate for bitter rich white guys was 80% in 1965…

http://www.cga-canada.org/en-ca/AboutCGACanada/CGAMagazine/2008/Jan-Feb/Pages/ca_2008_01-02_prof_taxstrategy.aspx

#80 Lynne Fay on 05.07.15 at 8:11 pm

In.

#81 4 AM Sunrise on 05.07.15 at 8:12 pm

Is this still a real estate blog?

I come to you with a message of hope with respect to those naive Millennial virgins. I spoke to a financially astute young man who said he started teaching himself about investing and TFSA’s about 4 years ago.

I did some digging on the internet (because I’m a nosy snoop) and I discovered that his childhood home went into foreclosure…4 years ago.

Coincidence? I don’t think so. Nothing like being kicked out of the house by the bank to make a child rethink real estate as a financial strategy. Maybe if more youth watch their homes go into foreclosure, they’ll rethink things, too.

#82 Setting the Record Straight on 05.07.15 at 8:12 pm

http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2015/03/texas%20vs%20non%20texas.jpg

#83 prairieboy43 on 05.07.15 at 8:18 pm

Go to Alberta Outdoorsmen forum, if you want to read about bitter Alberta people.

#84 Marc in Montréal on 05.07.15 at 8:19 pm

@Nosty, etc. #21

“See how wonderfully well France is doing under Hollande. Youth unemployment, ‘tho not as high as Spain, is up there.”

Don’t know how well you follow French politics but Hollande’s PS aint a left-wing party anymore:

“Le PS a embrassé très tôt la doxa néolibérale” – L’Express

Le discours de Valls au Medef, un coming-out «néolibéral» pour la gauche du PS – Le Figaro

(I could go on and on)

A French Patriot Act was even voted just a few hours ago.

http://www.lefigaro.fr/politique/le-scan/citations/2014/08/27/25002-20140827ARTFIG00321-le-discours-de-valls-au-medef-un-coming-out-neoliberal-pour-la-gauche-du-ps.php

#85 Gregor Samsa on 05.07.15 at 8:19 pm

Garth misleadingly leaves dates off his claim that the rich are paying more taxes now than “before.” When was before? 2013?

This chart of historical tax rates over the past 100 years says different: http://imgur.com/34L5wQr

(note, it’s US data, but Canada correlates closely).

One should also note that the most prosperous time in human history, the 1950s, when one wage earner supported an entire family, occurred with the highest historical tax rates on the rich.

Garth claims that the tax burden has recently shifted from the many to the few. You know what else has recently shifted from the many to the few? The WEALTH!

#86 HammerGuy on 05.07.15 at 8:23 pm

Lets all rescind our citizenship’s for violation of social contract, then form a new country with Garth as president.

#87 waiting on the westcoast on 05.07.15 at 8:24 pm

Just tell Iain that all Canadians basically constitute the 1% when compared to the entire globe… (well maybe the top 3-5%). So – let’s take all of our money/resources and send them to truly impoverished people in Asia/Africa/etc. and give up our mocha lattes and cool tats!

Its easy to give away someone else’s massive efforts / risk taking for themselves… not so easy to have yours stripped away.

I am a (RO/2)WG but definitely not bitter ;-)

#88 live within your means on 05.07.15 at 8:27 pm

I know who I’ll be voting for & won’t be for the neocons or the NDP. Saw what the DNP did to screw up where I live.

#89 the Jaguar on 05.07.15 at 8:33 pm

Corporate taxes aside, many companies donate in big and small ways to the communities they serve. TD Bank just cut a cheque for one million dollars to the Calgary Public Library for its new building. Many others make similar donations to hospitals, schools, you name it. Too many people prefer to target anyone or anything rather than do a little self examination to see if some of the blame lies within.

#90 Ralph Cramdown on 05.07.15 at 8:33 pm

#64 I’m stupid — “It’s not that hard to accumulate 1 million in assets and becoming a 1%er.”

That won’t make you a 1%er:

“[Family units] in the highest quintile had a median net worth of almost $1.4 million [in 2012].”
http://www.statcan.gc.ca/daily-quotidien/140225/dq140225b-eng.htm

The median family in the top quintile is, by definition, at the cutoff for the top 10%. So $1.4 million in household assets puts you in the top 10%. Keep saving and investing. I am.

#91 [email protected] on 05.07.15 at 8:34 pm

The blog teemed with comments from folks who think companies are fat and greedy, and that goring rich people will solve most of society’s funding issues.

————–
People aren’t that naive but also not naive enough to believe your rhetoric about how giving them a zero tax rate and abolishing unions will make things better either, Canada and Alberta have one of the lowest corporate tax rates in the developed world , large corps have all the tools necessary to utilize tax havens and they do. They have enough lobbyists and politicians in their pocket to serve all their needs how much further should we bend over while big oil pollutes Canada’s land and water ? Thanks for showing us your values and who your really behind . Cheers

#92 SmallTownSteve on 05.07.15 at 8:44 pm

You get the government you deserve. (Well I sure as heck didn’t vote NDP )Albertans will soon learn the adage “careful what you wish for.”
Notice the instant drop in Canadian energy stocks despite oil climbing back around the $60/barrel mark?
The world took notice. We are screwed. Things were bad enough already. They won’t be gettin better.
When people start losing their homes, their assets, their jobs I will not feel one bit of compassion for them. They voted for this. They will need to be held accountable for their actions.
Oh and say hello to a provincial sales tax, even more gas taxes and welcome yourselves to an increased risk of poverty.
Socialism is great! Until you run out of other people’s money…
Yes there will be more represented equality now. You will all be equally poor. Equally miserable and as a result what will this increased horde of newly poor people do? Vote for the NDP again to “save” you.
I think I might be moving…

#93 I'm angry 2 on 05.07.15 at 8:46 pm

I am sooo angry a mansion in USA or a freakin rathole in Canada… But how do I get around the 6 month limit because I know I cant get a green card but I got the cash and I’m wanting to settle in my own place I’ve been waiting since 2005 because it was way overvalued then and should have logically crashed but …. We know how stupid that went … Housing is way overvalued here by 50 plus percent simple as that and screw it? I worked hard for my money and I won’t be a sucker now!!! Im just at a loss because I’m sick of waiting for the crash!

#94 Sideshow Rob on 05.07.15 at 8:48 pm

Garth it takes a great man to be hated from coast to coast in this fair land. I am truly envious.

#95 Herm on 05.07.15 at 8:49 pm

As a life long Albertan I’m absolutely thrilled at Tuesday’s election result. In spite of being told by newspaper editorialists and other assorted corporate boot-lickers that we have to think straight and vote Conservative, Albertans thought for themselves and opted for progressive change.

Instead of government for corporations, we’ll have a government for the people. And as much as you would deny it Garth, the corporations through their money and control of the media have advanced their agenda and corrupted our democracy… not quite to the extent of the United States, but heading in the same direction.

I hope come the fall that the rest of Canada will take from this: If Albertans can find it within themselves to elect a NDP government, why can’t we.

I have to close with one last comment Garth; aren’t you embarrassed driving a Hummer?

#96 Setting the Record Straight on 05.07.15 at 8:49 pm

@85
One should also note that the most prosperous time in human history, the 1950s, when one wage earner supported an entire family, occurred with the highest historical tax rates on the rich.

&&&&&&&&&&&&
Do you really think the 50s would have existed forever except for an error not taxing higher incomes enough? A world where Europe was on its knees and developing nations were not developing and competing with low skilled workers in NA?

#97 derekinyyc on 05.07.15 at 8:49 pm

Ah, Garth. Long-time reader and first-time commenter.

1) The Alberta NDP is not a left-wing party.

2) The policies they campaigned on are designed to ensure Albertans get a fair share from profitable corporations when the economy picks up, not to cripple them at the very time our key resource has swooned.

3) Say what you want about the NDP, they’re not stupid. They know they very likely only have one shot at ruling, for any overreach the electorate sees will immediately result in a resurgent (and united) right

4) I expect that if the oil sector doesn’t rebound by 2017, you’ll see a delay in the increase to the minimum wage (which very few people make anyway). Likewise with the royalty review.

5) The panic we’ve seen from investors since Tuesday comes from the same place as your blog post – that corporations are the be-all and end-all, that anything that affects the bottom line is the end of the world, and that the NDP will hit them hard and fast. None of which is true.

Anyway, keep up the blog! You (and reality) have me and a lot of people off of real estate – it’s something we as Millenials need to work hard for rather than assuming we’re entitled to it.

#98 Joe Schmoe on 05.07.15 at 8:50 pm

Thanks for the charts Garth.

It costs the company I work for 15-20% more to hire Canadians vs. doing the work in the US. And what HR told me was “at least 15-20%”

It is a heavy manufacturing company.

Our margins have deteriorated to about the 0% level in Canada due to competition from low cost labour countries.

2000-4000 jobs will be lost in Canada when they shut down.

How much corporate tax increase can be borne in this situation to encourage them to keep the lights on?

I bet 2000-4000 Canadians are going to think this situation though in the summer.

I’d pay 2% more in tax to keep my job.

#99 Setting the Record Straight on 05.07.15 at 8:53 pm

“Corporate taxes aside, many companies donate in big and small ways to the communities they serve. TD Bank just cut a cheque for one million dollars to the Calgary Public Library for its new building. Many others make similar donations to hospitals, schools, you name it. Too many people prefer to target anyone or anything rather than do a little self examination to see if some of the blame lies within.”

This should be stopped. That belonged to shareholders. Let individuals decide to whom or to what to donate.
That’s just management publicity seeking.

#100 Toronto_CA on 05.07.15 at 8:54 pm

Corporate tax rates in Canada have lowered dramatically in the last decade. The “worldwide” tax rate used by the parent company of a very large reinsurer I used to work for (as a tax director) was 33%. Our rate was 24.1% (boosted by Quebec income), I know because I had to fill in the forms to explain the difference between our tax rate and our parent.

Is this good for Canada that the tax rate for a typical company went from over 30% to below 25% in the few years following the recession? I guess we’ve got a budget surplus now and lower unemployment at least. Meanwhile personal rates for those earning over $150k are climbing ever higher in Ontario (and Federally if Trudeau comes to power).

Too bad the average Canadian isn’t a big 5 bank. They could enjoy tax rates around 15-17% (thank Barbados!)

#101 Lee Bow on 05.07.15 at 8:54 pm

Compassion, Garth. Though it’s odd when it’s more profitable for one to spend time using the tax loopholes rather than making more money.

Never been my experience. What are those loopholes? — Garth

#102 Rexx Rock on 05.07.15 at 8:55 pm

To be taxed close to 50 %,you are basically a slave to the government.To top it off our government devalues our currency and wastes huge amounts of taxpayer money.The politicians turn around and give themselves a golden pension and live like kings.Canadians should fear the government and their tyranny more than Isis any day.

#103 Smoking Man on 05.07.15 at 8:56 pm

So a 15 year old kid, driven to madness by a phyco religious freek father.

He’s in a war, he’s shot, lobs a grenade at the people shooting at him.

A soldier dies. Oh yes a medic I’m sorry.

He’s locked up for 13 years, water boarded and mind fkd

Harpo bowing to the religious freeks he likes trys to have him locked up till the end.

Religion = war and death.

On Nectonite religion is forbidden. And everyone gets along.

And they wonder why anti-neocon sentament is in vouge.

#104 Mike in the Okanagan on 05.07.15 at 8:57 pm

I’ve heard the tax burden on the evil rich is even worse in the US. People making less than 40k with kids getting money back even though they pay no taxes. The evil 1% paying over 80% of the total taxes collected.

Back in not so lefty BC today feeling sorry for tangerine Alberta.

#105 lala on 05.07.15 at 9:01 pm

As long as they don’t tax me (they can’t) lala is ok with taxing everyone else. I’m going to cut my own hair today, let’s see what happen.

#106 protest movement on 05.07.15 at 9:01 pm

What protest movement, Garth?

The votes were counted just yesterday, the result was clear and loud.

Everybody should just chill… If the Chinese commies can run the world #1 economy, why are you so worried about the Canadian commies?

#107 Silent the People on 05.07.15 at 9:07 pm

Good post Garth! I don’t know why you deal with some
of these people! Thank you and sign me up!!!

#108 Retired Boomer - WI on 05.07.15 at 9:08 pm

What’s always missing is the depth in the story.

1% = equates to $200K income.

Could be earned income. (Could be cap gains from appreciated stock, dividend income, property sales, deferred comp, from taking dough out of an RRSP).

1%= 30 years ago ‘how many people’ were in this group?
Today ‘how many people’ are in this group? Most countries tax rates are not indexed for inflation. In the US we had that nasty post vietnam inflation until the early 65-80’s. 20K then is 50K now-if not more. Reagan reset tax rates, first too low, leading to the biggest tax increase in US history the following year. We still have rather inexpensive tax rates. Maybe that is why we run a deficit?

We have tax avoidance schemes, and anyone who is not taking the maximum advantage of them for their circumstances, well…they just do not respect their money.

Me, I am shifting the max I can without incurring the next higher tax bracket into my TAX FREE account for further growth. If I croak, the lady gets it, she croaks, the son gets it. After that the needy get it.

Thank You Thomas Picketty, for showing me how capital grows well if not tampered. Thanks Garth for the wise writings, and helping me change the future of this family.

#109 4 AM Sunrise on 05.07.15 at 9:12 pm

#71 Joel6Pack on 05.07.15 at 7:46 pm
Harper puts his Calgary house up for sale.

http://lightworker29501.com/2015/05/06/harper-puts-his-calgary-house-up-for-sale-hours-after-rachel-notleys-ndp-win/

If true, can the RE agents find the MLS#.

I’m not an RE agent, just a nosy snoop. Can somebody who knows Calgary better either confirm or deny this listing?

http://www.realtor.ca/propertyDetails.aspx?PropertyId=15547282

#110 RayofLight on 05.07.15 at 9:16 pm

#59 Smoking Man on 05.07.15 at 7:29 pm
You want to make loot, you got to take risks.
The shit your feed daily, safety. Well 99% of the population agrees with you.
Let’s take the worced bet possible, you lose everything, been there done that a few times now..
It ain’t that bad, a band aid, a shot of tequila , back in biz
————————————————————–
SM, sometimes I think you are basically full of crap. You boast a lot, and keep stating what a gambler you are. You don’t, however , say anything meaningful. You are a currency trader, we get that. Give the blog dogs some insight. Do you just follow candlestick patterns, waiting for “J Hooks”, or do you actually have some insight of the global currency flows? To me, making $ in the market doesn’t take “Balls” and “nerves”, as you say, but rather knowledge. Volatility is not risk, and diversification doesn’t mitigate it. Help us out ,SM, We want to believe.

#111 Andrew Woburn on 05.07.15 at 9:20 pm

#32 Smartalox on 05.07.15 at 6:52 pm
The Canard for this argument is Warren Buffet claiming that he pays less in taxes than his secretary. It’s a US example, to be sure, but similar principles apply in Canada don’t they?
=======================

Warren isn’t counting his share of the taxes paid by his corporations, just on his own personal income. US corporate taxes are among the highest in the developed world. That is why US corporations are leaving so much cash in foreign bank accounts and why the US government is working to keep US corps from moving to foreign jurisdictions.

#112 CJ on 05.07.15 at 9:20 pm

The past two blogs might be your best, Garth.

Thanks for the free advice. You’re like the NDP of media (FREE content for all!).

Seriously, though, thanks!

#113 TurnerNation on 05.07.15 at 9:20 pm

Smoking man. ..I didn’t make it to Blog Dog lodge #6. On a rooftop now.

#Bill51

#114 JO on 05.07.15 at 9:22 pm

Thank you for trying to educate the great many stupid people in this country who think others should be robbed so they can enjoy the goodies they never earned.
We have seen the greatest debt bubble in history and that helped inflate taxes and govt spending. Govts have a major spending problem, not a tax revenue problem. No amount of taxes will ever be enough. Look over to France for a great recent example of this. Those calling for higher taxes on corporations and the “rich” will end up paying the price in the end once this corrupt system implodes over the next 5-7 years.
As if you deserve something for nothing cry babies.
The politics get ugly and deceptive once the false prosperity ends. Look for innocent, successful people to be attacked over the next few years by large and rapidly growing horde of dependant zombies.
Your TFSAs will inevitably be a target eventually.

The tax code needs to be shredded and a new one drafted something along the lines of:
-all income is added to a total regardless of the type
-eliminate all credits and deductions
-eliminate all corporate income tax and all income tax for those making under $50 k
-then anyone making over 50 up to 100 k can pay 10 %, 100 k – 200 k pays 20%, and above that 30 %
-after, slowly raise the HST to 16 or 17 % with a prebate paid monthly to all under 30 k

Something along these lines would work much better not to mention the savings in accounting and compliance for all. Tax revenue would surely surge and they could reduce the cost of collecting the taxes by a large amount

But because this makes too much sense and would take away the deductions and credits rewarded to successful lobbyists, you can be sure it will never be implemented

Be careful what you wish for Pinkos

#115 BG on 05.07.15 at 9:23 pm

Good post Garth.

As an employee I would notice it was easy get trapped in the “David against Goliath” way of thinking.

Now as a small business owner, I sometimes miss being an employee.

#116 Northern Girl on 05.07.15 at 9:25 pm

What about the markets???
I’m so sick of real estate and politics….

#117 Mark on 05.07.15 at 9:31 pm

“Your TFSAs will inevitably be a target eventually.”

Of course. As will all trusteed tax-exempt accounts, with rising corporate income taxes. After all, its not really that fair that people can accumulate untold sums of wealth in these accounts, with little effective taxation. While people who don’t use the accounts are subject to the full burden of integrated taxation.

Basically retirees and pension funds will a choice. Buy corporations that are heavily taxed, and forgo the dividend tax credit. Or buy bonds that pay nothing. Either way, both will destroy wealth. RRSPs and TFSA’s are an illusion over the long term, and are a wealth trap compared to leverage strategies that can actually take advantage of the differences in taxation rates between taxable income, and corporate earnings paid via dividends and subject to the dividend tax credit.

What a crock that was. — Garth

#118 Shawn Allen on 05.07.15 at 9:31 pm

The Graduate Tax Course?

Paully on 05.07.15 at 7:00 pm

The first lecture in Tax Theory 101 says that corporations don’t pay tax. Period. Taxes are always paid by individual citizens. Higher corporate taxes lead to higher prices for the end user, who ultimately shoulders the load.

****************************************I I suspect that in the advanced courses they might explain that there are different individual citizens.

Low corporate tax rates tend to let wealthy citizens pay lower taxes.

I am a Buffett fan, but it’s a fact that he had not paid a single dime in taxes on the gain in his wealth that is linked to his Berkshire shares. is that fair? In his case that part of his wealth is all going charity.

Buffet has always had a bit of wealth and investments outside of Berkshire and that is what he lives on. (By a bit I am talking something that amounts to roughly $500 million these days) Not a single Berkshire share will go to his heirs.

Also in the advanced classes they might teach that corporations cannot automatically pass all cost increases onto consumers. Some they can, and some they cannot. Demand elasticity comes into the picture.

If corporations don’t pay tax, why do they lobby for lower tax rates?

Also if college professors teaching 101 courses are so smart, why aren’t they rich?

#119 crowdedelevatorfartz on 05.07.15 at 9:33 pm

@#8 North Burnaby
“North Burnaby is booming!!! ”
++++++++++++++++++++++++++++++++++++

When the Mountain Shadow Pub is bulldozed to build condos……. THATS when you know the idiots are in charge of the asylum.

Buy buy buy North Burnaby…..prices are going up up up forever !

Riiiiiiiiiiight.

#120 Smoking Man on 05.07.15 at 9:38 pm

#110 RayofLight on 05.07.15 at 9:16 pm
#59 Smoking Man on 05.07.15 at 7:29 pm
You want to make loot, you got to take risks.
The shit your feed daily, safety. Well 99% of the population agrees with you.
Let’s take the worced bet possible, you lose everything, been there done that a few times now..
It ain’t that bad, a band aid, a shot of tequila , back in biz
————————————————————–
SM, sometimes I think you are basically full of crap. You boast a lot, and keep stating what a gambler you are. You don’t, however , say anything meaningful. You are a currency trader, we get that. Give the blog dogs some insight. Do you just follow candlestick patterns, waiting for “J Hooks”, or do you actually have some insight of the global currency flows? To me, making $ in the market doesn’t take “Balls” and “nerves”, as you say, but rather knowledge. Volatility is not risk, and diversification doesn’t mitigate it. Help us out ,SM, We want to believe.
…….

Believe this, we have a short life span. You type words on here, its a risk, a bet of sorts, especially with the topics I cover.

The secret to a full meaning full life is figuring out how to clime the mountain, you might die trying, (my late nephew) but you might make it all the way up, or half way up.

But if you don’t try, that is failure. Pure failure.

Why would you want me to tell you how its done and rob you of the thrill.

Figure it out yourself, plus , what works for me, won’t work for you.

Find your own style.

#121 Washed Up Lawyer on 05.07.15 at 9:38 pm

I expect that by now some of my rants have made it evident that I am not a big fan of Big Oil but let me give them credit where credit is due.

Syncrude, Suncor, Shell etc. have taken Corporate Social Responsibility in Fort McMurray and in the surrounding hinterland very seriously and have a big annual spend on CSR. You can find their CSR annual reports on their websites.

The braniac intellectuals at Harvard School of Business and elsewhere have shown them that sophisticated CSR programs can really boost the bottom line.

It is much more than a donation to a homeless shelter and buying jerseys for the local peewee hockey team. They invest heavily in education and training and the creation of an Aboriginal workforce. Those simulators to train haul truck drivers at Keyano college are not cheap and heavy equipment for the training of our young Aboriginal brothers and sisters comes with a hefty price tag.

The result? A local, gainfully employed and grateful work force that boosts the prospects of the young and helps the companies make money.

Profitability shows up elsewhere. Kudos.

Now back to my usual rant about the ravaged landscape.

#122 Jetfixer on 05.07.15 at 9:40 pm

You are right Garth, it is us and them. Them the public sector employees that get the cushy jobs, pension and endless salary increases. And then there is us, the rest of the slaves that pay the tax to make sure Iain and his comrades can relax and live the dream. It is natural that he does not know how jobs are created. In his mind the government just creates one and there you go. Canada is just cocktail communism folks. If there is a need for money, then I think it is time for the public sector to take a hit and carry some of the burden because it is time to let the private sector catch up. Thanks for rant.

Ps– As wu tang financial would say; You got to diversify yo portfolio!

#123 Harbour on 05.07.15 at 9:41 pm

#71 Joel6Pack on 05.07.15 at 7:46 pm
Harper puts his Calgary house up for sale.
………………………………………………………………………

Harper goes FSBO

#124 Roy on 05.07.15 at 9:41 pm

Corporate tax rates have declined steadily since the 70s. So had the North America’s infrastructure. Maybe some of these corporations should relocate to Angola or Nigeria of they want the lowest tax rate. Race to the bottom playing states and provinces against each other.

Why did Albertans settle for such a low royalty rate? Why isn’t Alyson Redford in jail for stealing tax payers money? Maybe harpo will give her a senate appointment along with the other criminals he hired

#125 ANON on 05.07.15 at 9:41 pm

@#116 Northern Girl

Let’s enjoy the merriment, for now!
I have a hunch that all the talk will be about markets in a month from now, tops. Here, I’ve made a prediction. About the future, no less. Very unwise…

#126 LazyJason on 05.07.15 at 9:42 pm

Why is it legal for Corporations to have holdings in other countries for tax purposes, but not legal for people to do the same?

#127 TJM on 05.07.15 at 9:42 pm

Garth, I enjoy your blog and I have a lot of respect for your point of view; you stand out from the rest of today’s crowd of self-identified conservatives. I’m not convinced by your argument–I remain centre-left in my views, now in my forties and in my peak earning years–even but I do believe it’s made in good faith.

So I’m asking you: How is it that countries like Denmark and Sweden can maintain very high levels of public services and high levels of taxation, without the kind of financial ruin you’re implying would result from the whole NDP angle?

I lived in Denmark for awhile in 2009 as a grad student, where I attended university while paying zero tuition (!) and I was a foreign student (!!) The place seems to work all right. There were no homeless people, and everybody was well-dressed, healthy and polite.

There were downsides. Stores closed on Saturday at noon, which took some adjusting to, but it meant that peoples’ lives weren’t as shopping-oriented and they spent the time with friends or family or reading a book. Going out to a restaurant or a movie was quite a bit more expensive than I was used to, though actually (now that I’m in Ottawa) the difference wasn’t THAT big.

The marginal tax rates are really high in Denmark and a lot of people here will complain that wealthy Danes don’t get to keep more of the money they make. (I think, also, that a lot of less-informed right-wingers don’t make the distinction between marginal and overall tax rates–they hear 50% marginal tax rate and they assume and/or claim that if they make $200k they’ll only be allowed to keep $100k of it.) But the tradeoff is a society with a lot less anxiety. They make it a lot easier for people to get what they need, at the expense of having a smaller number of people have way more than they need and where (perhaps more to the point) every additional dollar buys less and less happiness. I probably would have stayed had my personal life not brought me back to Canada.

So what am I missing here? Sweden and Denmark don’t exactly have our natural resource wealth. (Note that I’ve deliberately omitted Norway from my argument. This is not about a unique North Sea oil subsidy, although the comparisons between Norway and Alberta would be totally fair.) They have small populations. They’re geographically smaller too, but I don’t buy the idea that Canada is expensive to run because it’s all spread out–the vast majority of the population lives in a very small part of the country, and the costs of running that part has more to do with the choices we’ve made to build lots of car-happy suburban sprawl than with any objective geographic reality.)

When I hear left-wing parties talk about their plans in Canada, it sounds a lot like bringing things closer to Scandinavia. I have yet to hear a compelling argument why that can’t or shouldn’t work here. I’m thinking that if anyone can make that argument cogently, it’s you Garth.

#128 Bottoms_Up on 05.07.15 at 9:43 pm

#303 CalgaryRocks on 05.07.15 at 4:14 pm
—————————————————-
I agree that taxes are high, and our greatest expense, there is no doubt about that.

But our taxes buy us a whole lot of things. Like hundreds, if not thousands, of services. I don’t mind paying taxes because it buys civilization.

However, I do have a beef with insurance, costing upwards of hundreds of dollars a month, yet you can’t use it unless you are in a major accident (minor accidents end up costing you more via insurance increases).

On a ratio basis, insurance costs might be 5 or 10% the cost of ‘tax’, that buys many, many more services.

So tell me how this benefits people, and is not overly costly?

#129 Hot Albertan Money on 05.07.15 at 9:44 pm

Why are EI premiums considered revenue for the government?

#130 Obvious Truth on 05.07.15 at 9:44 pm

Truth is that innovators change the world and create jobs, growth and wealth. There are lots of folks out there just taking a cut. Public or private.

But there is much more to life and our complex society than that. We get to develop our own views which fit our beliefs and are likely a product of our experiences. But we reserve the right to change our minds. Having the discussion in a forum like this is the important part. Even if we have to put up with the odd BORWG or anything else you can be deleted for.

What’s fair and just in our society has become defined by the person who promises more of the things that the collective at the moment want. Or at least what the collective believe will help them the most.

For now we have nothing better.

#131 Obvious Truth on 05.07.15 at 9:45 pm

Will growth lead this next leg?

#132 Here there on 05.07.15 at 9:47 pm

As always hate the messenger. Some people getting in a knot. Ready to start a new neonational movement. We will call it, DoubleDouble. Others trying to be cute by using Spanish language. And not very successfully at it. But, really, taxes are paid by the 1% and PC cheerleaders. The percentages are not the point. It give us an excuse to bitch and complaint about the 99%, if they get restless and start squeaking. People forget that thru the years, PC provided a smorgasbord of personages from the federal administration of the country bumpkin which gave away the aeronautic industry by cancelling the Avro. The comic relief team of Kim, Joe and the banana eating of the underwear manufacturer guy. Can’t forget the Ottawa’s flying Manila envelopes stuffed with cash. And the proverbial last, but not least, of the confused senators with sticking fingers. So relax, the NDP have a long way to catch with us.

#133 Some Guy on 05.07.15 at 9:53 pm

Garth, Garth, Garth…. You’re smarter than that. I agree with much of your real estate prognostication, but you wrote:

“Thirty years ago the 1%ers paid, in total, 13.4% of all the income tax collected in Canada. These days the one per cent account for just over 22% of all the tax”

This is classic lying with statistics. You are trying to make it sound like the 1% have a greater burden now than they used to.

The rich are making so very, very, very much more income now, and the 99% have less then they used to, so it totals to more money in dollars relative to everyone else than it used to.

This is actually a shocking sign that inequality is growing, not a sign that the 1% are contributing more.

And the thing is, you know this. You’re not stupid. So, why engage in this spin?

#134 Hot Albertan Money on 05.07.15 at 9:53 pm

Oh, and can we fix BORW up with [email protected]?

#135 tundra pete on 05.07.15 at 9:53 pm

Isnt it nice to have a preview of what is going to happen to Harper and his useless sacks of crap come October. Na na na na, hay hay goodbye!

He will no longer be in the closet, with his cat, pissing in his pants and watching the Leafs lose another one. What a piece of work. Good riddance dork. Truly a shame the damage he has been able to pull off. Not like the moist bed wetters that will replace him stand a chance but it will slow the damage in the long run.

Not sure what will be more appealing all the pissed blog dogs or Garths rhetorical castration of the powers that were. Yippy.

#136 will on 05.07.15 at 9:53 pm

Norway: conservative. Alberta: squanderers. Squandering liberals posing as conservatives.

#137 Cici on 05.07.15 at 9:54 pm

Love this blog, but not joining protest.

Yes, Calgarians went on crazy spending binges, but at the same time, that’s what big corpo and government were pushing them to do. And please don’t anyone tell me that the crazy house prices haven’t been directly profiting municipal, provincial and federal governments, not to mention the banks. If they didn’t want O&G workers to spend so much, they should have been paying them less and putting the difference aside for a rainy day (or days).

Not a leftie communist, thank you, but I do try to steer clear of the classic neo-con rhetoric and clichés too. I’m pretty sure that if we were to go back and analyze corporate profits vs. tax cuts vs. jobs created over the last 20 years, we’d find that in most cases lower tax rates did not translate into more or higher-paying jobs.

Yes, we have to implement policies that encourage business investment, development and growth, but that shouldn’t come at any price or create imbalances such as rampid corruption and/or abuse of resources, policies, laws and regulations, etc.

#138 crowdedelevatorfartz on 05.07.15 at 9:55 pm

@#17 Look in the Mirror

Its been my experience that the majority of the 1%’ers (not the Hells Angels) that earn $200k or more per year worked very very hard to arrive at their financial position in life.
Do you consider doctors, lawyers, managers, executives, etc who spent years in school or building up their practice unworthy of enjoying the perks that their hard work brought them?
Why?
They worked for it. They earned it.
And now they should be financially punished for it?
So what do we do?
Embrace financial socialism where hard work is essentially punished?
Communism …..where hard work wasnt rewarded. Incentive was crushed.
It failed.

I truly hope that you succeed and become one of the 1%’ers.
Im sure your perspective will change when “they” come for you to pay more than your “fair”share.

#139 devore on 05.07.15 at 9:57 pm

#50 bb

I don’t get the pie chart. Isn’t the government getting revenues mainly from Canada’s own commodities export and oil? 48% from personal income tax seems to be huge considering the population is less than 40 million.

What’s not to get? Even when you have the plain numbers in crayon form right in front of you, people still find ways to disbelieve.

These figures are published on a regular basis by stats canada in handy pdf format. Just google “where does your tax money go”.

#140 Cici on 05.07.15 at 9:58 pm

Oh, back to housing, more bad news for Calgarians: Airbnb might not be the best option for renting out “investment properties:”

http://www.cbc.ca/news/canada/calgary/airbnb-renters-who-trashed-calgary-house-used-fake-credit-cards-to-fuel-party-1.3065243

#141 Linda on 05.07.15 at 10:00 pm

Regarding taxes, I do not believe it is ‘fair’ to tax the rich far more than others, because hey, they can afford it. While some people inherit their wealth, many others work like dogs to accumulate it. Punishing them for doing well is not an incentive. Do we want everyone to be mediocre & refuse to try anything new for fear they’ll be punished financially for doing so?

What we have to try to do is be fair. Corporations exist to make a profit, not be social welfare states. Unless they are in private hands, most have stocks/IPO’s that anyone who can scrape up the cash can purchase to ‘share’ in the wealth. If you can’t scrape up the cash, why not? It is neither the fault of anyone or the responsibility of anyone to make sure you live the good life. It is all on you. Choices or circumstances make your achieving ‘the good life’ easier or harder. Again, up to YOU & only you to figure out what works best to achieve your dream. If someone helps you achieve it, great – say thanks & pay it forward or give it back when you can – but don’t expect someone to take care of you so you can live la dolce vida.

The role of government is not so much as to ‘take care’ of you as to facilitate your ability to take care of yourself. Having infrastructure in place so you can travel to/from work & not spend half your day obtaining potable water to drink (for instance) has an importance that can scarcely be understated. Further, no one – government or other – can make 100% of the people 100% happy 100% of the time. There will always be those who will complain their needs/wants were not addressed. The best any government can do is try to address the needs of the majority without penalizing those who excel. We are all of us too ready to look over the fence & think the grass is greener or believe ‘they’ get more than ‘we’ should have received.

#142 Wildnutter on 05.07.15 at 10:00 pm

#109 4 AM Sunrise on 05.07.15 at 9:12 pm

#71 Joel6Pack on 05.07.15 at 7:46 pm
Harper puts his Calgary house up for sale.

http://lightworker29501.com/2015/05/06/harper-puts-his-calgary-house-up-for-sale-hours-after-rachel-notleys-ndp-win/

If true, can the RE agents find the MLS#.

I’m not an RE agent, just a nosy snoop. Can somebody who knows Calgary better either confirm or deny this listing?

http://www.realtor.ca/propertyDetails.aspx?PropertyId=15547282
————————————————————

Not his house.. Pretty much his neighbour. Funny though.

#143 carl on 05.07.15 at 10:00 pm

Saving for retirement, ie: death. Why?

#144 Mark on 05.07.15 at 10:04 pm

“What a crock that was. — Garth”

Garth, you might want to read Dan Amerman’s work. Its basically a similar argument to what he makes — that the stock market can rise significantly in nominal terms through the effects of monetary inflation, but in reality, after taxes, purchasing power is being lost by the investors.

The business world basically lives or dies on leverage. After all, that’s all a business really is — borrow money and invest it at an after-tax return higher than the after-tax cost of borrowing. Over the past few decades, there’s been no realized equity risk premium, so the arbitrage has not served to help business. But if policy makers want to employ the population broadly, they need to figure out how to create an equity risk premium. High corporate tax rates can, ironically, create that risk premium by effectively pushing corporations into more debt financing to avoid the tax burden.

Picture yourself going to one of those less scrupulous financial advisors that pitch leverage heavily. What’s the first argument that comes out of their mouth? “You’ll pay less taxes”. That’s exactly what higher corporate income tax rates achieve for corporations — a greater effective reason for corporations to want to leverage, to save even more tax. While in a low-tax environment, there is less tax deferral arising from the mere act of leverage, and hence, less reason to want to leverage. Indeed, the argument for leverage has been so weak that, at least in the personal finance world, advocating its use has practically been turned into a verboten act amongst regulated professional financial planners. With well respected authors such as yours truly even going so far as to call its advocates, such as was advocated by the late Smith of Smith Manoeuvre fame, irresponsible.

#145 Ray Skunk on 05.07.15 at 10:07 pm

Amazing scenes across the pond tonight!

#146 devore on 05.07.15 at 10:14 pm

#55 Johnny Silver bear

Why has JPM accumulated 50,000,000 ounces of te silver…

It’s a bullion bank. It would be pretty embarrassing of them to not have any bullion. They might be “accumulating” it, because someone believes it will be in demand and priced higher in the future. Then again it might not be. It obviously hasn’t worked out so well so far, why is this such a big problem for you?

#147 Mark on 05.07.15 at 10:16 pm

“Norway: conservative. “

Don’t know why the comparisons to Norway keep coming up. Alberta oil is terribly capital intensive to pull out of the ground and deliver to market. While Norway’s was just a matter of building a relative few offshore oil drilling rigs, at a mere fraction of the price, and tapping the bounties. If Alberta had oil which existed in a physical form that cost similar to Norway’s to extra, Alberta, too, would have an accumulated surplus similar to that of Norway. But the fact is, Alberta’s oil industry was only minimally profitable at $100/barrel after paying market rates for labour, and is decidedly unprofitable at current prices. The NDP need to keep this mind, that increasing any royalties on the resource itself (which itself is of minimal value) will come at the severe expense of future corporate profitability.

The upside of Alberta is that its resources, particularly in the oilsands, are long-life, and will be producible 50 years from now at similar production rates, long after Norway has likely depleted its production almost completely and is living off of its investments. This is why stocks like Suncor, etc., haven’t sold off severely in this environment — the market, at least for the moment, recognizes that these assets are for the long-term, and deserve to be discounted more like a 50-year bond with inflation protection, rather than a short-term fracker.

#148 Cici on 05.07.15 at 10:23 pm

#114 JO

“Govts have a major spending problem, not a tax revenue problem.”
______________________________________________

Indeed…apparently they aren’t even spending the revenue they are “taking in”, but apparently only CBC is reporting on it. A bit reminiscent of the unused Veteran’s affairs funds that also ended up going back into treasury.

http://www.cbc.ca/news/politics/federal-government-fends-off-criticism-over-97m-in-lapsed-funds-1.3065732

#149 Bottoms_Up on 05.07.15 at 10:26 pm

Garth, you look at the change in numbers from a ‘rich guy’ perspective.

If you look at the trend in wealth, rich people are getting richer. The people in the middle are getting poorer.

This in essence would at least in part explain why the top 1% are now paying a greater share towards tax revenues — they have much more money than the middle.

Think about it. Seriously. This is not about overall contributions as a percent. This about how much the rich have vs. others. It’s not good.

Now tell me where the debt-fueled middle-class house fetish fits in. — Garth

#150 devore on 05.07.15 at 10:28 pm

#61 Who pays tax?

Individuals don’t pay tax, period. Taxes are always paid by corporations.

A corporation is just a group of people. Employees and owners. When it is profitable, both owners and employees get paid and pay taxes. When it is not, everyone goes home.

#151 ANON on 05.07.15 at 10:30 pm

#143 carl on 05.07.15 at 10:00 pm

Excellent question, Carl!
To find the answer, you must first know what poverty means. Since probably you never have experienced this first hand, you can google some pics.
Second, you must know what old age means. It is the old people driving in convertible Mercs,BeeEmz, and Porches, right? Good. Now that we have these two mental images, try combining them together: place the people in the Beemerz in the poverty photos. If you’re good at photoshopping, you get the picture. If you’re less than 55 and you read the nightmare-inducing post about The Lucky Guy about 4 days ago, you might be clued in it is concerning you (if you’re under 55). If not, I’ll do the cluing: that guy is really a lucky guy, we, under 55-ers, we’re not so lucky.
So, that is why, in a nutshell; sure, there’s always the bridge option, but it is usually not very appealing, or there would be no old poor people struggling (they do exist, however far fetched that may sound). And they are not dumber or lazier, or less morally superior, they just got to the end of the credit expansion earlier.

#152 bcweatherman on 05.07.15 at 10:30 pm

Carbon tax, GST… the more you pollute, the more you consume, the more you pay. Looks sound to me.

#153 Bottoms_Up on 05.07.15 at 10:31 pm

#141 Linda on 05.07.15 at 10:00 pm
—————————————————-
Guess what? Corporations, and 1%’ers, should be as invested in having a very healthy middle class as the middle class should.

Can you imagine, going back to the dark ages? Guess what, corporations wouldn’t exist. They are starving the hand that feeds them, buy lobbying government for rules and laws that pad their bottom line. These are rules and laws that hurt the middle.

A great example of that is credit card payments. Why would credit card companies lobby the government to allow them to allocate your monthly payment to different interest rate debts, instead of applying the montly payment to the higher interest rate debt first? Disgusting.

#154 Guy Willoughby on 05.07.15 at 10:31 pm

Another good article Garth. You are a wealth on information. I read all the post yesterday and there were people who supported you to.

According to Ludwig Von Mises, what people want is opportunity to make their lives better. We may differ on such thins a the amount of gold a person should have in their portfolio. I am not going to critisize you for being successful. On the contrary, well done.

As far as corporations go, there are a number of corporations moving to Canada (Burger King) because of a tax advantage.

Lets not forget that small business creates a lot of jobs to and should be allowed to do so.

#155 Waterloo Resident on 05.07.15 at 10:36 pm

Hey Garth, sorry for the hard time you’re getting from the other ‘humans’ (if I can call them that as they are barely human) but humans are like that, they are a pain in the A** a lot of the time.

The truth is that if you get up in front of an audience and tell everyone that there are ‘CLOUDS in the SKY’, a few guys will get up and start throwing rocks at you for no good reason. They are just angry and they want someone to pick on, and you got their attention.

That’s just how life is, people are a pain in the A** sometimes.

Remember a few days ago, I said that the little guy is bailing out if stocks and the main reason why the overall stock market is going up and up is because big corporations are borrowing like NUTS, borrowing money at next to zero interest rates and buying up their own stocks. Well here is an article that states exactly what I was saying:

http://www.marketwatch.com/story/why-are-stock-prices-so-high-follow-the-borrowed-money-2015-05-07

#156 nonplused on 05.07.15 at 10:38 pm

#11 Mark

“Tax leakage”??? What is that? Oh I see if people have shares in TFSA’s and RRSP’s then we should tax the bejezus out of corporations. What the heck is the point of a TFSA then? And anyway you are still robbing Peter to pay Paul.

The only reason to raise taxes on corporations is to stop dividends from being paid to out of province owners. If you follow the money, higher corporate taxes in Alberta will mean shareholders in Ontario will get smaller dividends. Within Alberta it solves nothing because it just means Alberta share holders have less income to spend and pay taxes on. But it also means the share price of these companies will be going down (in theory share price is still tied to after tax profit) which means less capital gains taxes all the way around too.

Ontario will find a way to recoup the money that Alberta is trying to withhold.

This election was nothing more than an attempt by the public sector to try and increase their share of the pie at the expense of everyone else. It is a pie after all. You can’t make one piece bigger without making another piece smaller. And due to crappy oil and gas prices, the pie is getting smaller.

And it should be noted that although the NDP wisely took advantages of some really dumb mistakes by the PC’s, the majority of the province still voted conservative (either PC or Wild Rose). They do not have popular support (by that I mean 50% or more of the vote). This is why everyone is so angry about it. There is hardly a riding in the province where the NDP candidate carried 50%, but because the PC and Wild Rose party split the conservative vote, they carried the day. One could argue that was their own mistake, and one would be right, but the NDP are likely to be nothing more than a one term opportunist party.

I also found your theory that we can just become a tech center instead quite humorous. First, you don’t ignore the resources Dog gave you. And second, good luck beating California. I don’t see us taking market share away from Apple, Google, or Oracle anytime soon. Or even Microsoft, even though they richly deserve it and may be the next Blackberry.

Telling Albertans that we can solve all our problems by becoming “tech” is like telling a fat kid they can be a ballerina and rewarding them with Doritos. It may be child abuse. The correct course of action would be to consult a dietician. But that didn’t work here with the election.

#157 HJD on 05.07.15 at 10:44 pm

“The ‘gross’ part here yesterday, I guess, was suggesting that politicians who tell you there are simple solutions to complex problems are probably lying.” Garth

Sounds like a good description of your Conservative suggestion that raising taxes on corporations would have bad consequences. How should the government deal with economic problems? Garth’s simple answer? Don’t raise corporation taxes. It’s time corporations started paying their share of the national tax bill. And let’s throw in a minimum wage of $15/hour. No employed Canadian should be earning less than a living wage. It’s called, sharing the wealth.

Sigh. And where is the guy running the corner pizza joint going to get the money to pay six people making $15 an hour? Oh wait. He won’t. There’ll be three people making $15 and three at home on the dole. Socialist paradise. — Garth

#158 Bottoms_Up on 05.07.15 at 10:45 pm

#122 Jetfixer on 05.07.15 at 9:40 pm
—————————————————
Riiiight….let’s examine how a job is created.

Baby is born to a mother (that mother, let’s say was a border crossing agent, publicly employed). The doctor’s visits she went to while pregnant ensured the health of that baby (oh, wait, that doctor was publicly employed). The baby is educated in the public school system..again, filled with public employees. The baby/child/young adult lives a fairly safe life, thanks again to public services, laws and regulations that are in place. Safe foods to eat. Safe products on shelves. Safe medications. Safe streets.

The young adult goes to university, again run by public employees.

This young adult, whose health and welfare has largely been subsidized by the public, then takes their new skills and joins a ‘private’ corporation.

This person comes up with a good idea while working there that requires the help of two more people to make it happen. The corporation then hires 2 more people. Voila, a couple of jobs have been created.

Now tell me how the public sector are leaches, and everything that is ‘good’ comes out of the private sector?

#159 devore on 05.07.15 at 10:52 pm

#153 Bottoms_Up

Can you imagine, going back to the dark ages? Guess what, corporations wouldn’t exist. They are starving the hand that feeds them, buy lobbying government for rules and laws that pad their bottom line.

Sounds like a problem with the government, not a problem with corporations. Everyone always lobbies for their own interest; as a child, I lobbied for ice cream, candy and TV. Fortunately for my present day health, my parents did not behave as our governments do.

#160 OttawaMike on 05.07.15 at 10:54 pm

OK, we’re back at Cross Country Fool Blog with your host Rex Turner where we field insight from shut-in angry, middle aged, white guys from all over this great country of ours.

Yesterday’s question: NDP win–Apocalypse or Holocaust?

Today’s question: Bitter Old Rich Guys– Endangered or Species at Risk?

#161 foxed out on 05.07.15 at 10:55 pm

Garth

Your own TV show might not be a bad idea….you could be like the Canadian version of Bill O’reilly….but a decaf mellower version of the real thing…maybe the bloggers could come up with a name for the show…instead of the “no spin zone”, maybe it could be called the “no fool zone”

#162 Yuus bin Haad on 05.07.15 at 10:55 pm

I’m in!

“Dyslexics of the world… UNTIE!”

#163 45north on 05.07.15 at 10:55 pm

Garth: don’t let the bastards get you down.

#164 Smoking Man on 05.07.15 at 10:56 pm

#113 TurnerNation on 05.07.15 at 9:20 pm
Smoking man. ..I didn’t make it to Blog Dog lodge #6. On a rooftop now.

#Bill51
……..

Im back home, drinking alone, talking to myself in the privacy and safety of my gazubo. No witnesses.

I love it, mission accomplished, set up a blind date with offspring numbers 3 with a hottie from the tax farm.

Hes a beauty, she’s a beauty …. UCC is saying grand kids.

Number 3 has been in 2 long tern relationships, both girls hated their dads…both phycos.

The tax farm hottie, loves her dad… And my wife’s recipies , this just might work.

Fk I’m good….

#165 Moses71 on 05.07.15 at 11:00 pm

As a Torontonian my whole life until migrating to Calgary 5yrs ago, would someone please tell me why these wrinkles needing assisted living with 24hr care availability-(not long term care) are getting subsidized when they own million $$ assets and are buying their kids new cars?? Yet getting their accommodations covered for $1600/mo vs the $4700/mo private pay??
Never have I heard of this coming from Toronto.
Maybe Alberta needs NDP to to put crap like this back into perspective. Oh! And rent control, too.
Same price to buy a condo here vs rent. Pft

#166 Moses71 on 05.07.15 at 11:04 pm

I think PC’s here were kissing asses to let cash fly out the window. And rents are nuts here. I know buying is better than renting if it’s under certain circumstances like here, but with rents that high, there are low wage hard working people with no options of where to live. They allow nothing for loyalty

#167 Bottoms_Up on 05.07.15 at 11:08 pm

#28 Heddok on 05.07.15 at 6:49 pm
————————————————–
Dude, give your head a shake. Seriously. So you expect people with earnings below the poverty line to be paying a big chunk of their income in taxes?

#168 Krakus on 05.07.15 at 11:11 pm

Hi Garth,

Love the blog but I think you’ve thrown out a bit of non sequitur. While median income has remained the same over the last thirty years (adjusted for inflation) the ratio of median income to average income has decreased over that time indicating a skewing toward richer incomes for that period. Or put another way, the small proportion of the income earners on the right of the distribution are making more relative to the median income than 30 years ago (http://www.progressive-economics.ca/2012/10/04/income-inequality-twitter/). Even StatsCan shows that from 1995 until 2011 the top 20% earners increased their pay by ~$40k vs the middle 60% who increased it by ~$10k – so 4x more (http://www4.hrsdc.gc.ca/[email protected]?iid=22). All this suggests that the top income earners are earning more than thirty years ago and hence it is no surprise that they pay more tax as a proportion of the whole pie, in absolute terms.

Cheers.

#169 HJD on 05.07.15 at 11:17 pm

#157 HJD “Sigh. And where is the guy running the corner pizza joint going to get the money to pay six people making $15 an hour? Oh wait. He won’t. There’ll be three people making $15 and three at home on the dole. Socialist paradise.” — Garth

Thanks for the Conservative “talking points”. The average minimum wage in Canada has remained unchanged in real terms for almost four decades. http://www.ctvnews.ca/business/minimum-wage-in-2013-same-as-1975-statscan-1.1916056

Now you know why. — Garth

#170 joe campbell on 05.07.15 at 11:31 pm

our society spends half of our income so we can drive to work.

NS imports 2 billion dollars in fuel instead of employing people to cut down trees for power.

oil exports make our industries noncompetitive due to a petro dollar. our dollar should be backed by a basket of commodities, and not fiat.

unions that discriminate based on age/seniority should be illegal(it actually already is). even the federal government has a disproportionately old workplace. which imo is against discrimination laws.

tfsa is good when your investments make returns, rrsp is good when your investments make losses. what we actually need is a currency that works and does not create inflation.

#171 Oldmac on 05.07.15 at 11:38 pm

I’ve run my corp for awhile now. CCPC (That’s Canadian controlled Private Corporation for those who don’t know). In Alberta nonetheless. The 14% I pay in taxes (with the benefit of the small business deduction) is far less than most who pay tax on their salary. I cut myself dividends and pay nominal tax on that.

Am I rich?

No. Hell no. I still have to pay WCB, pay in EI and CPP if I ever want to draw pension from the government; and I also have to pay for my own health care plan – things most employees don’t have to worry about. I also have to do all my own investing.

I can’t afford to employ anyone either; not consistently anyway. When there is a downturn, I work more and get paid less.

But you know what? My situation is plenty different than a large oil firm; or say, CP Rail that pays even less tax than I do. I don’t get direct subsidies. I don’t get development grants. I don’t get backroom handshakes.

I’m no communist green party sympathizer either. Being a former roughneck I see both sides of the coin. (And for the petro-engineers that think they’re saving the planet with cutting edge technologies; go mix some drilling fluid without a mask and tell me how safe it is, or re-mediate a spill before the inspectors get there).

But let’s not pretend that the corner store pizza shop owner is the same as an oil exec. Let’s not pretend that these massive corps don’t get favorable deals and have their road to business paid by government subsidies. I don’t get grants to exploit resources that are there for the taking, I can’t shortcut environmental regulations; and I have to MAKE my business – it isn’t there in the ground for me to exploit.

Let’s not pretend like ‘we’re all just a bunch of corporations playing the same game on a level field, paying taxes like the rest of you’. That’s intellectual dishonesty at best; and complete BS at its’ worst.

You’ve spent years differentiating between different scenarios in minute detail – now you’re going to throw all corporations into the same bucket; like we all enjoy the same benefits? You’re smart enough to know better.

When corporate tax rates rise, they increase for everyone, Big Oil and little you included. There is nothing progressive about over-taxing the job creators, be they large conglomerates or the self-employed. This will not save any working man in Alberta a dollar in income tax. — Garth

#172 Kurt on 05.07.15 at 11:53 pm

“Thirty years ago the 1%ers paid, in total, 13.4% of all the income tax collected in Canada. These days the one per cent account for just over 22% of all the tax, while the other 99% pay 78%. In fact the 99% used to pay about 87%, so the burden has increasing been shifted from the many to the few.”

40 or 50 years ago, a CEO made 40 times the lowest paid employee of the same company. Today it’s something like 400. This 0.01 % is included in the 1%, and it is the mind-boggling incomes they make that has caused the 1%’s “share” of taxes to go up. If this sub-group was taxed at the same effective rate as the 80-99.9% group, that share would be even higher still, but they aren’t. I’m ready to join a protest movement, but I don’t think it’s the one Garth has in mind.

#173 Retired Boomer - WI on 05.07.15 at 11:54 pm

Garth – Somebody stated here you are a Conservative?

Gee, from your wonderful written advice, I just thought you were normal???

Disclaimer:

this is written by an American where confusion between ‘liberals’ (Nixon), and ‘conservatives’ (Obama) are more derived through their acts, NOT the labels applied by party affiliation, or media rantings.

Now, can you see where my confusion emanates.

#174 Lorne on 05.07.15 at 11:57 pm

“After all, it’s forever easier to scare and inflame than it is to inspire.”
…..
Isn’t that exactly what the 5 business leaders tried to do when talking to the Alberta people…didn’t seem to be that easy???
Plus, I am pretty sure Rachel has “inspired” many Albertans….and you are right, that was hard to do, but she did it!

#175 Keith on 05.08.15 at 12:19 am

@127 TJM – No one who is benefitting from the current state of affairs in North America wants to concede the success of the Scandinavian model. I know people who have lived there, the difference is that it is very difficult to become really wealthy there, there are very few rich people. Rich people in North America can’t handle the idea of an egalitarian society, it’s very unfair to the wealthy few that “everyone doesn’t have an equal chance to become superrich.”

The Scandinavian model ruins the crony capitalism that is practiced in Canada. It’s funny to here the rhetoric of the free market preached by people who wouldn’t invest a dime if their pals in government hadn’t rigged the outcome in their favour in the first place. If all the corporate and business welfare in Canada was listed and communicated to ordinary people they would be marching in the streets.

@ Mark #147. The comparisons to Norway keep coming up because their royalty and corporate tax regime is one that the Kevin O’learys and Garth Turners claim cannot exist in a global economy. How dare those Norwegians take a royalty of 48 dollars per barrel, when Alberta/Canada take only 8. How dare those Norwegians tax profits at 90%, no corporation will invest a dime.

There will be a capital strike, especially since the Norwegians have (gasp) a state owned oil company (Statoil), just like every energy exporting country on earth, except for … you guessed it, Canada.

Norway stood the right wing bullshit on its head and called the bluff of corporate capitalism. They invited investment, set the terms, and when the oil sector balked, they said fine … go away, the oil will sit under the sea. The investments were made and every citizen in Norway is worth $200k Canadian as their share of the sovereign wealth fund. That’s why comparisons are made. Canada says please invest, name your terms. The citizens get screwed by international capital.

#176 Love my Kia (Wealthy Pinko) on 05.08.15 at 12:25 am

#89 The Jaguar:

Corporate taxes aside, many companies donate in big and small ways to the communities they serve. TD Bank just cut a cheque for one million dollars to the Calgary Public Library for its new building. Many others make similar donations to hospitals, schools, you name it. Too many people prefer to target anyone or anything rather than do a little self examination to see if some of the blame lies within.
————————————
Charity begins at HOME, take care of your employees first. The donations to hospitals and hockey tournaments are little more than self promoting marketing campaigns.

#177 HJD on 05.08.15 at 12:42 am

#157 HJD “Sigh. And where is the guy running the corner pizza joint going to get the money to pay six people making $15 an hour? Oh wait. He won’t. There’ll be three people making $15 and three at home on the dole. Socialist paradise.” — Garth

Thanks for the Conservative “talking points”. The average minimum wage in Canada has remained unchanged in real terms for almost four decades. http://www.ctvnews.ca/business/minimum-wage-in-2013-same-as-1975-statscan-1.1916056

Now you know why. — Garth

Seriously, wouldn’t it have been better to at least index minimum wages to inflation? For decades low and stagnant minimum wages have been accepted as the norm by Conservative and Liberal governments. Wealth creation during the last few decades has been phenomenal, but those at the bottom have seen little of it. While their minimum wage remained the same, my salary increased by several hundred percent. Where’s the justice in this? No one should be quibbling over a $15/hr minimum wage.

#178 Love my Kia (Wealthy Pinko) on 05.08.15 at 12:50 am

I think the root of all this mess is introducing free trade agreements.

Corporations became bullies and threatened to leave us if we don’t bow to their demands. As I said earlier, MAXIMIZING profits to shareholders matter more than corporate responsibility to their employees and communities. Profit is fine, but maximizing it is unhealthy to society. How else can one explain the existence of sweat shops and degrading working standards in poor countries.

A previous poster says corporations ‘give back’ by donating to hospitals and libraries while at the same time they also employ TFW’s, and outsource work to third world countries. We see the headlines of clothing factory collapses, child workers and unreasonable working hours that creep out into MSM from time to time but much of it is shrouded in darkness. These same companies that ‘give back’ by donating to libraries and hospitals would rather you not know about that.

Corporations ‘giving back’ to ‘their’ community are nothing more than shameless self promoting marketing campaigns.

#179 Charity on 05.08.15 at 12:52 am

#157 HJD

I run a charity and employ disabled people who get government help in Alberta. If the NDP follows through on this stupid idea of minimum wage of $15…. Poof is the sound you will hear when all of these similar charities disappear not to mention the loss of employment for those disabled people that get a sense of self worth out of the job they have. And if somehow we are able to make it work I would have to lower their hours as their government support would be reduced dramatically because they got a 50% raise.
PC’s weren’t very bright this last election to say the least but things were balanced. This dumb idea of raising minimum wage to help the poor will kill those that can’t protect themselves.

Go protect the environment instead the trees can use your help more then people.

#180 macroman on 05.08.15 at 1:00 am

Hey Garth, do you have a rule that Mark and Smoking Man can’t post one after the other?

I can’t slit each wrist fast enough.

#181 Nagraj on 05.08.15 at 1:09 am

British election: Bad night for Miliband, HORRIBLE night for Clegg, THRILLING night for Sturgeon whose SNP will seat almost sixty MPs.

What I really want to share tho is this: Here in NA candidates tend to watch returns in private on tv, and when the results are in, each candidate makes his way to his own party headquarters to speak. In England all the candidates are in their riding counting hall, and when the results are in, they’re all lined up on a stage as the returning officer reads out the numbers. Then the winner speaks. Strikes me as more civilized.

Some riding names: Caithness Sutherland&Easteross (who are they?), Poplar&Limehouse (rock band), Preseli Pembrokeshire (?), Northampton South (next to Northleicestershire South West), Southamptonitchen (next to Southamptonscratchen), Sutton&Cheam (Mutton&Cream), Pudley Watford (rains a lot), Bermondsey& Old Southwark (the mo and the w are silent), Spelthor Hawthorne (nom de plume) und so weiter und so weiter

#182 Fortune500 on 05.08.15 at 1:47 am

Good post Garth. Unfortunately, this kind of thinking involves time and analysis, and an open mind. Something that is very rare these days.

So is that $200,000 before or after tax?

Like my blog. Gross. — Garth

#183 David on 05.08.15 at 2:09 am

Even if corporate tax rates get hiked 2% Alberta will still have the lowest tax rates in the G7, if that in fact makes any difference.
The oil and gas industry in Alberta is not some Mom and Pop start up unless one considers the likes of Koch Bros. and Exxon small business.
Acting like owners and collecting full value from depleting resources sounds fairly sensible to at least the majority of Alberta voters as of 5 May 2015. Lots of questions about where did all the money go and why is the cupboard bare.

http://nationalobserver.com/2015/05/04/news/how-canada-made-koch-brothers-rich

#184 BC_Doc on 05.08.15 at 2:21 am

“To be a 1%er in Canada, you need an income of slightly more than $200,000 – about half what it takes to join the elite in the US. BORW guys earning over this level are taxed at a 48% marginal rate in Ontario (a surtax is boosting that above 50%), at 46% in BC and 39% in Alberta. (Expect this last number to soon change.)”

I’m an incorporated medical professional– this option isn’t open to American MDs. About half of what I make a year is paid out of the corp as salary while half is kept in the corp and invested/saved for retirement. This is tax efficient– it keeps me out of the highest marginal tax brackets. My point, though, has to do with the quality of the stats. As a 1%er, if you look at my personal income only, you’d conclude I’m poor compared to my US cousin. If you’re sharp, you’ll look at my corporate gross and net before salary and dividends and see the Canadian 1%ers are doing just fine.

Typical doctor mistake. You save zero tax with this strategy, as all you are doing is splitting the tax load with your corp. — Garth

#185 cmj on 05.08.15 at 2:27 am

Thanks for giving us great charts on what are Canada’s revenues and expenditures. I also went on the Canadian government site to find out what percentage of workers are employed by different sizes of private sector businesses.
August 2013 report of 2012 stats
small business 1-99 employees 7.7 million 69.7%
med business 100-499 employees 2.2 million 20.2%
large business 500+ employees 1.1 million 10.1%

Looking at these numbers, what a burden extra taxes would make on businesses. Government revenues and expenditures is a balancing act between corporate and individual taxes. No simplistic system.
My husband and i owned a small corporation for 17 years employing 12 people. We also worked at our regular jobs to keep the company afloat. I admire all the employers who work long hours and worry on how t make ends meet while providing jobs for many. Taxing them further just doesn’t make sense

#186 Carpe Diem on 05.08.15 at 2:27 am

Ottawa ….

The land of federal workers.

I live here. I hired 2 people last year and my personal income and pension plan took a hit for that.

My goal is to ensure I make government efficient and folks like Iain working hard.

I pay more taxes than he does.
I pay for meds and dentist for my kids.
I had no foreign trips in the last 10 years.
I work f’ing hard for a retirement fund.
I also rent an awesome rural home from a couple, who are federal employees, who are subsidizing where I live … payback!

Government workers gets an insured pension.
Government workers assumes no risk.
Government workers probably wastes tax payer money to keep their budget for next year.

If government workers had to earn their retirement, maybe they would be productive.

Some people, in government, are amazing! I respect a number of them!

I’d fire a bunch and hire competent folks.

Job security for government workers, for me, is a big issue.

If you don’t perform and are useless. Fired!

Keep productive folks, not the dinosaurs and sub-par employees. Fired!

Iain, you complain about “rich folks”. I complain about you. Government workers, in general, are weak decisions maker, follow the “process”, and are inefficient since they get nothing done. They also don’t challenge authority.

Free Enterprise folks, like I, get things done for you and you keep bitching consultants are screwing things up.

Yes, I’d rather see an efficient government versus what I see today.

I’d start at the top-middle. Not the bottom. There is a boomer-infested management (and senior folks) that has to go.

I see 30/40-somethings who wants to make a difference but halted that boomer class because of seniority. They get put in their place to not challenge things.

Me I’d fire a bunch of people. They shouldn’t feel entitled to job security. Performance should.

#187 observer on 05.08.15 at 2:46 am

You wait, as election season starts to get sticky the two area which the politicans will harp on is .

Tax the rich and filthy corporations
The other will be tax the crap out of those foriegners who are buy all the Canadian houses and getting free education from the normal Canadians

#188 Mark on 05.08.15 at 2:54 am

“But you know what? My situation is plenty different than a large oil firm; or say, CP Rail that pays even less tax than I do”

CP Rail was, until recently, a perennial loss-making business that more or less only existed for the benefit of its employees. Shareholders in CP itself made very little on the railway itself, and certainly not a very good return on what would be the present replacement cost of their assets.

Unlike with, say, one of those high-flying social media tech companies, CP had almost no opportunity to shift income.

If you were to run a loss-making business for many years, you, too, at least for the short term, can have a low corporate income tax rate. But eventually, either the losses will stop, or the capital of the business will be entirely depleted.

“When corporate tax rates rise, they increase for everyone, Big Oil and little you included. There is nothing progressive about over-taxing the job creators, be they large conglomerates or the self-employed. This will not save any working man in Alberta a dollar in income tax. — Garth”

Have to disagree with you Garth here. Assuming tax is changed in a neutral fashion, increasing corporate taxes also causes an increase to the dividend tax credit (as implied through the concept of integration).

What does change is that non-taxable entities see higher effective rates of tax. Those RRSPs, RPP’s, TFSA’s, etc., that hold shares of, say, Suncor, end up with less of a dividend stream, and they can’t claim the DTC.

Remember the (notorious) income trust crackdown? Where “F” stopped corporations (re-constituted as Mutual Fund Trusts) from paying out the entirety of their pre-tax cashflows tax-free? Its basically a similar concept, that the government was stopping tax leakage caused by the extensive use of these structures by tax-exempt entities. Since most Canadian retirement money is in tax-exempt vehicles like RPPs, RRSPs, TFSA’s, and since we know that a well-managed TFSA can accumulate literally millions if the TFSA isn’t repealed or limited, it is inevitable that corporate taxation will be amongst the taxes that need to increase to offset such.

There is no dividend tax credit with registered accounts. You are blowing smoke. — Garth

#189 Notta One Percenter on 05.08.15 at 6:43 am

“The ‘gross’ part here yesterday, I guess, was suggesting that politicians who tell you there are simple solutions to complex problems are probably lying.”

And what, pray tell, is the “simple solution” that has been offered for the last 35 years by our politicians?

Oh yeah, right. “Lower taxes on corporations and the rich, so that everyone else will become more wealthy and prosperous too, through investment and trickle-down economics.”

How’s that been working out, Garth? It’s been since at least 1980. Lots of evidence about what’s happened to regular folks since then.

(It might be best to invoke a right to remain silent rather than try to answer that)

It’s no wonder a desperate middle class has come of age that sees no hope for itself to keep its position, let alone advance, other than gambling on a crazy game of real estate ‘greater fool’.

Taxes on the ‘rich’ have not been lowered. The marginal rate for top earners has steadily increased. What’s happened to ‘regular folks’ is their suicidal house lust and its debt-infused consequences. — Garth

#190 saskatoon on 05.08.15 at 7:01 am

ok…

this is it…

the end of the world’s largest housing bubble must be nigh!

http://www.thestar.com/business/2015/05/06/couple-goes-door-to-door-in-their-desperation-to-find-a-house.html

#191 RayofLight on 05.08.15 at 7:24 am

#120 Smoking Man
————-
Touché

#192 George S on 05.08.15 at 7:56 am

#44 Yogi: The reduced rate of withholding tax doesn’t mean that you pay less tax in the end, just that you don’t have to make as large of a down payment on the tax that you eventually owe.

#193 Lotus YVR on 05.08.15 at 8:14 am

And again… watch, listen and read….

https://www.youtube.com/watch?v=QzQYA9Qjsi0

http://www.marketwatch.com/story/the-inequality-bubble-is-accelerating-worse-than-29-even-1789-2015-04-14

R.W. Emerson….Essays: Second Series Written in 1844
Pages 212 and 213- re: New England Reformers

#194 Richardo on 05.08.15 at 8:26 am

I am tired of paying US taxes everytime I go to a US mulitnational like McDonald’s, Home Depot, etc. The IRS has a rule that says profits from these guys in foreign lands gets taxed at 35% when repatriated. However that’s 35% less the actual corporate taxes paid in the country it was harvested in. So if Canada’s corporate taxes are less than 35% are we not just paying US taxes by giving these corporations a tax break in Canada ?!

#195 Andrew on 05.08.15 at 8:29 am

If you do the math between Alberta and Ontario the break even point for income tax is $220,000 per year. Below this point you pay more income tax in Alberta than Ontario, above you pay more in Ontario. The number is just over $150,000 when you compare BC to Alberta.

So where is the advantage of earning income in Alberta when only the top 1% are getting a tax break, the other 99% of workers pay more than than both BC and Ontario.

And its a pretty ignorant remark to say the burden has shifted from the many to the few. Lets also compare the difference in 30 year of income growth between the many and the few.

It’s more ignorant to believe that by increasing taxes on the 1%, already handing over roughly half their income, or corporations, that the many will pay any less. What a fiction. — Garth

#196 Oot der Hoos on 05.08.15 at 8:40 am

A question about Nectootite #103

Do they have a Mao slogan, like “Beat the investor class and redistribute the corporate shares”?

#197 crowdedelevatorfartz on 05.08.15 at 8:47 am

@#181 macroman

Good one.

#198 241A65 on 05.08.15 at 8:48 am

I’m in

#199 Paul from London on 05.08.15 at 9:04 am

Just taxing corporations more will not solve much – it will just transfer the spending power of corporations to governments. Yes, some of the tax revenues will be transferred to people, but just transferring money to people without gaining any productive output is a drag on the economic engine.

Tax rates for corporations that create jobs in Canada should be lower than tax rates for corporations that outsource jobs to lower paying jurisdictions outside of Canada. ie. there should be an incentive to hire domestically. More jobs => more spending. More spending will also result in more jobs…it is virtuous cycle. And on top of that, the consumption taxes like HST will still be there to transfer funds via the government to people in need.

#200 Steve on 05.08.15 at 9:06 am

Fun with acronyms!

“BORW guy” is good, and “BROW” was an interesting variant.

Surprised no one else saw BORWG, with silent W. Resistance is Futile!

Garth, thanks for the daily entertainment and wisdom. Sadly for the socialist celebrators, the NDP’s track record is not that great across the country, and recent history suggests the most likely outcome in AB is a one term stint.

Be interesting to see the pie charts for AB. Government income, and spending, all laid out. No matter if we lament or cheer the NDP win, the election is done and Notley has a wicked task ahead to first find a competent group to staff the AB government, and then see if they can do a good enough job at it for 4 years to have a chance again at the next election…

#201 Ralph Cramdown on 05.08.15 at 9:08 am

The marginal rate for top earners has steadily increased.

TFSAs lower the effective marginal rate for top earners, increasingly over time.
Income splitting for seniors lowers the effective marginal rate for top earners
Income splitting for families with children lowers the effective marginal rate for top earners
Lifetime capital gains exemptions, ditto
No tax on uncrystallized capital gains, ditto
Capital gains taxed at 1/2 rates, ditto
Tax-free perquisites, ditto

The tax system is a complicated beast, and most top earners aren’t simple.

All of those are universal, and not the preserve of the wealthy. You have no point. If middle-income earners choose to feed a mortgage instead of a TFSA, that is a conscious choice. — Garth

#202 BC_Doc on 05.08.15 at 9:13 am

Re#185: Plz exlain/show the numbers Garth. Corp acts like RRSP. Income taxed at corporate rate and then invested. Withdrawn when I’m wrinkly at a lower marginal rate under system of progressive rates. That’s what the numbers my accountant showed me tell. Accountant acts in a fiduciary capacity, unlike financial planners. Point in any case is as a 1%er, govt numbers don’t reflect my true income or net worth.

First, your accountant (by law) works for the CRA, not you. A fee-based advisor acts in a fiduciary capacity, and is not obligated to disclose all information to the CRA, as is your accountant. Basic knowledge you should have. Second, all corporate revenue is taxed at the corp level, then again in your hands as dividends. The sum total of tax paid ends up being equal. Third, your corp cannot shelter wealth at the low small business rate when you retire, as it will surely be reclassified as a passive corporation and the tax rate will rise to the maximum. You need better professional advice. — Garth

#203 Chris on 05.08.15 at 9:17 am

Another really solid post, Garth. The debate about taxes and class in this country in general is way too simplistic.

It takes a certain amount of naivete to think that the current Federal Liberal plan that would boost the top marginal rate to 58.75% in New Brunswick would actually help that province overall. There has to be a point where too much is too much, without a waterfall of secondary effects like physicians choosing to work fewer hours once they get to that marginal level.

Among the middle class, the debate really needs to be refocused on those with defined benefit pensions and those without. That’s where the real middle class divide is. The 1%-ers are a populist sideshow.

#204 Shawn Allen on 05.08.15 at 9:20 am

Seriously?

All of those are universal, and not the preserve of the wealthy. You have no point. If middle-income earners choose to feed a mortgage instead of a TFSA, that is a conscious choice. — Garth

******************************

Also, let them eat cake.

I think the point was that there are dozens of tax breaks and tax-assisted savings vehicles for the wealthy. It’s true.

All of those tax breaks and tax-assisted savings are available to every citizen. Meanwhile the house-lusty have benefited from the lowest cost of money since ever. The point is clear. It’s about choices. — Garth

#205 Sonny on 05.08.15 at 9:21 am

Canada lost 20,000 jobs in April

http://www.cbc.ca/news/business/canada-lost-20-000-jobs-in-april-1.3066254

#206 Shawn Allen on 05.08.15 at 9:21 am

Also, has the marginal tax rate for top earners really steadily increased?

Not my experience. Certainly in Alberta it is lower today than in the early 90’s.

Nationally, yes. — Garth

#207 LH on 05.08.15 at 9:32 am

It’s time for Atlas to shrug?
Garth I didn’t know you were a closet Ayn Rand reader!

signed,

Fellow member of the 0.1%

#208 Some Calgarian on 05.08.15 at 9:35 am

Garth
The big companies are fat, specially the oil companies.
I have been working as a contractor for last 8 years in Calgary.
I left my permanent job to be contractor, because there is so much money that those companies are wasting.
They are worst than government.
Maybe it is difficult for you to believe that, but yes , in spending they are worst than government.
I worked with most of the oil companies in Calgary, and as well utilities companies, and they are spending money on stupid projects that goes to no where.
You know that bridge that goes to no where for Sarah Palin?
Well, we have many bridges like that in every company.

last year I left a contract with TransCanada, even they were paying me 100$ an hour, because I told them you are not going to deliver anything, and they didn’t care.

#209 marketmaster on 05.08.15 at 9:36 am

Garth,
Don’t condescend to people who disagree with you. Here are a few things you may ignore:
-not such a long time ago, income tax existed only on corporations, not people. there was no personal income tax. personal income tax was brought in as a “temporary” measure to finance wars, but as many patches, it stayed on. Now people pay more tax than corporations.
-the fundamental of the economic capitalist system is that the owner class runs the corporations, if they succeed, they take the profit, the upside is limitless, but they should also take the loss when it comes, they should take responsibility. Workers, especially skilled ones, should not bear the business risk. This is the social contract that corporations want to break. This is a dangerous road, that has led to conflict in history, as you preach. Remember all history, not the pieces you like.
-corporations enjoy the status of being “persons” in the legal system, whereas they clearly are not a person. this legal privilege should be removed, as you say, corporations primary mandate is to turn a profit, and real people don’t behave like this.
-many years of high oil prices in Alberta, where did all the windfall profits go? you should attempt to find out that, but good luck, there is no transparency. Oil belongs to all Canadians, not just corporations.

We’ve had income taxes for 110 years. Get over it. — Garth

#210 Leaving Cowtown on 05.08.15 at 9:39 am

Although it won’t affect me so directly anymore, I am surprised so few seem to see the upside for oil of the NDP in Alberta.

Premier Notley may be just the face Alberta needs, a more socially/environmentally friendly one, to give oil production the renewed image and respectability it will need going forward. A few tweaks here and there to production and policy could make a big difference in overall perceptions.

The herd seems to be suggesting all doom and gloom lies ahead for Alberta, even you, Garth.

I am saying that is much too simplistic.

It may well be that only a more socially responsible government will be able to steer Alberta’s economy through the global warming pushback we face.

My bet is Alberta will find a way through, and the new government will be instrumental in that. Prentice’s days would have been numbered anyway if he had won. Notley gets a fresh start and a nice halo.

Not going with the herd on this one, and I’ll take a wait and see approach.

#211 Jetfixer on 05.08.15 at 9:41 am

@ #158 Bottoms_up

Thank you for teaching me how jobs are created and the virtues of public service. I personally always thought babies were dropped off by a stork, but i guess government employees can have them too. Looks like the public system failed me in my education.

I am left leaning personally, and I believe in roles of the government, and regulation, but I feel there is some serious inequity between the private and public. I also feel there is a sense of entitlement within the public sector. With record government debt and a lagging private sector, I think it is insane that public employees(generally speaking) earn the wages and benefits that they do. Especially, when few of the people that pay those wages with their taxes have that kind of well being. With endless tax increases, service charges, tuition hikes, etc., and then to see so many on the sunshine list and golden tickets given out in Ottawa and provincially is crazy. And then to say we should tax business? Well there isn’t enough small businesses to begin with because it is becoming impossible to start. The private sector needs to catch up.

Say, I’m just checking the sunshine list.. What is your name again?

#212 marketmaster on 05.08.15 at 9:41 am

btw: what does North America know about left wing parties, nothing, there is no real left in North America, its something most people ignore here, and do not understand.
9% spent on defense? when we have borders with USA and Russia? What for? What are Canadians scared of? maybe it should not be called Defense, but Offense. Hypocritical. Just kissing #$$#^%$ of USA blunders that are destroying whole countries with their “peacekeeping”

#213 marketmaster on 05.08.15 at 9:51 am

“We’ve had income taxes for 110 years. Get over it. — Garth”

Perhaps we can tell women the same argument: “you have been oppressed for millennia, get over it, stop asking for equality… ”

This is starting to get comical. — Garth

#214 saskatoon on 05.08.15 at 9:54 am

#212 Jetfixer

so….

what you’re saying is…there’s too much government theft happening today…

but…

if there were a little less theft…everything would be better (and ethical)?

another confused, jealous, logically inconsistent lefty.

#215 LH on 05.08.15 at 10:00 am

Look forward to the day we can chill with smoking man and other members of the 0.1% in Garth’s Gulch. Who is John Galt?

#216 Ralph Cramdown on 05.08.15 at 10:02 am

“All of those are universal, and not the preserve of the wealthy. You have no point. If middle-income earners choose to feed a mortgage instead of a TFSA, that is a conscious choice. “

Maybe I need to simplify this a bit, and use a concrete example.

If somebody earns $8,000 in taxable income, plus $3,000 from income inside their TFSA, their tax saving is ZERO.

If their taxable earnings are $75,000 they save maybe $1,000 in tax.

If $250,000, they save $1,500 in tax.

The progressivity which is built into the tax code, and which you point out when you say top marginal rates have gone up, is eroded by every one of the tax changes Stephen Harper has brought in, save one.

We humans appear, on average, to be too simple to have a rational conversation about the appropriate level of taxation, government services, and the distribution of taxation. One side simply screams “MORE!” while the other screams “LESS!”

But just because we’re simple on average doesn’t mean we’re all simple. Every single element of the tax code is the result of: Politicians trying to buy a constituency to win an election, politicians trying to transfer tax burdens from their constituency to the other guys’ constituency, or lobbyists trying to reduce their clients tax burden at the expense of everyone else. As the tax code is complicated, there’s obviously been a lot of this going on.

#217 Statistics Canada on 05.08.15 at 10:03 am

We here at Stats Can ,as we like to call it, decided to include the numbers from Alberta for todays jobs report. Indeed, we have brought forward the numbers in Alberta to include the jobs lost since the Provincial election. The numbers were actually quite good until Tuesday.

#218 Daisy Mae on 05.08.15 at 10:11 am

#54 Mr Obvious: “Maybe that’s the kind of thing they were trying to do in Alberta but somehow it went very wrong….”

*****************

We can’t let that happen at the federal level! So, it is a dilemma….

#219 pBrasseur on 05.08.15 at 10:11 am

«I’m thinking of starting a protest movement. Who’s in?» – Garth

Me, but you’ll need more than that to stop a leftist surge if entitlements become threatened.

And because they are unsustainable they will be threatened.

That’s the risk for Canada, if things go sour, repair them by shooting yourself in the foot…

#220 cowtown cowboy on 05.08.15 at 10:14 am

Great synopsis Garth!

I truly believe Albertans have no idea what they’ve just done. I have worked directly with some of these new MLA’s and while they may have good intentions, some have no experience managing anything let alone experience governing anything…and don’t even get me started on that twit who is now my new MLA who thinks it’s cool to flip off our Canadian flag.

Of course people cry out for change when they feel that change will benefit themselves

As someone who has their own ‘corporation’, I know what it’s like to have to make payroll every month, and woe be to he who should ever be late with their tax remittance…the government doesn’t have much of a sense of humor when it comes to that.

It’s interesting that the main people I see cheering for the new gov’t in AB are those that are already 100% dependent on tax revenue for their livelihoods…teachers, gov’t workers…classic case of biting the hand that feeds.

#221 CHERRY BLOSSOM on 05.08.15 at 10:21 am

I’m in for the protest. I want to protest politicians who can only plan until their next paycheque and can’t give us a hundred year plan. No foresight. They do all these things and don’t consider unintended consequences. I want to make a sign. I want to protest. All the seniors I talk to have one thing on their mind: Stephen Harper has to go. We have to get him out of there. He is a dictator. We don’t want to be in a war. We are peacemakers. He has ruined our Country. He has to go!
Garth just keep writing what ever you want. There are a lot more people who depend on you than hate you.

#222 Ralph Cramdown on 05.08.15 at 10:26 am

#212 Jetfixer — “I am left leaning personally, and I believe in roles of the government, and regulation, but I feel there is some serious inequity between the private and public. I also feel there is a sense of entitlement within the public sector. With record government debt and a lagging private sector, I think it is insane that public employees(generally speaking) earn the wages and benefits that they do. Especially, when few of the people that pay those wages with their taxes have that kind of well being.”

There is serious inequality between public and private sector employees. The public sector has bargained hard and collectively for its share. The private sector has eschewed collective action, so the profits have gone disproportionately to capital (business owners) and management. Check the numbers. These companies aren’t paying people less because they can’t afford to pay more, they’re paying people less because the people won’t demand more. Wage gains have not paced productivity gains. As an aside, I’d point out that a two income household that needs both incomes to pay the huge mortgage can’t afford to spend much time on the picket line. Advantage capital, there.

So while I perfectly understand private sector envy over public sector wages, I don’t think dragging the public sector down to the private sector’s level is necessarily the answer.

No public servants in my extended family, but there is one retired schoolteacher, in her 80s. Want to know where teachers were before collective action?
http://motleynews.net/2015/03/02/copy-of-a-school-teachers-contract-from-1923-weve-come-a-long-way-baby/
And in case you think that’s made up, I’ve personally seen an original Canadian contract executed by a family member with similar terms.

Also, it wasn’t too long ago that the public service wasn’t run generally as a professional body, but as a spoils system. Everybody voted, and if your guy got in, he fired all the other party’s supporters and hired all his party’s supporters — right down to the lowly broom in the public works and maintenance department. In Canada in the 20th century.

#223 saskatoon on 05.08.15 at 10:26 am

#217 Ralph Cramdown

dude…

i think you need to look up what the word “saving” means.

#224 VJGoh on 05.08.15 at 10:32 am

Profits are, by definition, what you have left over after the re-investment in equipment and payroll. If there are profits, those are taxed. So it’s disingenuous to claim that taxing profits will reduce investment per se, as long as investment maintains profits. But of course, we all know that a company is going to try to maintain its profit margins because that’s what companies do.

But your comments about personal taxes at the end of your post are a bit baffling to me. You KNOW–and I know that you know, since you talk about it all the time–that the middle class is getting squeezed and that middle class income is utterly stagnant in the face of inflation. Of course more tax money is coming from the top of the scale–they’re the only ones with income growth!

But here’s something that I’m sure we’ll both agree on: cutting the GST was a mistake, and Alberta probably needs a sales tax. And I hardly think a mildly progressive tax system will be the end of the world. Literally every other province has one, and the top end in Alberta still isn’t that high. The NDP are just bringing them into the present and they’re being forthright and practical about their plan. People voted for it, even in the cities (where most of the rich people are going to be living, I suspect–no offence to farmers, but they’re not terribly likely to be millionaires).

The real challenge that the NDP will have is spending the money responsibly. I live in QC, and I wouldn’t mind the taxes if I didn’t feel like they were just throwing the money into a corrupt pit. That’s the part that grates.

#225 Godth on 05.08.15 at 10:34 am

#213 marketmaster on 05.08.15 at 9:41 am

We’re living in the aftermath of “The End of History”but history carried on. It’s a recipe for disaster.
Make the Rich Panic
http://www.truthdig.com/report/item/make_the_rich_panic_20150503

#226 Millenial In Name Only on 05.08.15 at 10:44 am

If only the BORW’s had gotten off their duffs and had more kids and raised them right we wouldn’t have a generation of “Little Emperors/esses” voting for the gimmedat parties. Anything to keep the party going, why be a boring hard worker when being a sexxxxxy bartender gets you laid???

There is enough blame to go around this time!

#227 pete on 05.08.15 at 10:47 am

Screw all the cry babies here . Everyone should be thanking you Garth for an informative blog . Garth gives you sound financial education/advise free of charge. Garth opens up that secret door and lets you look inside. He practically let’s you sit inside and have a chat with him. Thanks Garth for such a great blog.

#228 Shawn on 05.08.15 at 11:03 am

Poor Choices?

All of those tax breaks and tax-assisted savings are available to every citizen. Meanwhile the house-lusty have benefited from the lowest cost of money since ever. The point is clear. It’s about choices. — Garth

***************************************
Absolutely, if people choose to make too little in income to be able to pit $24,000 into their RRSP, $10,000 into their TFSA and $2500 per kid into the RESP and to also put some non-registered money into tax-advantaged investments like dividends and unrealized capital gains and realized capital gains that is their own choice.

They should certainly have made the choice to earn top 1% incomes in order to afford to participate in all these benefits that are freely available to them.

Actually, income tax policy is about the needs of the government and fairness to all and efficiency and incentives. Not choice.

Choice is important but the topic at hand was income tax policy such as corporate tax rates.

That comment was beneath your obvious intelligence. — Garth

#229 Don Derc on 05.08.15 at 11:05 am

“My point is , if you are weak and humble, honest and good, you will be run over. Thank your commie teacher for that.”

Good point SM – I went to the DEX show in Coquitlam 2 days ago. They wouldn’t let me in because I was unemployed – only “qualified buying customers please” – as I walked out the door I said to myself…”I should have lied at the registration booth”….

awesome blog and blog comments as usual but this one hits home hardest – I believe we live in a “culture of deceit”.

Garth – i’ll follow you anywhere…except Afghanistan.

Carry on wayward sons and daughters….

#230 Dup on 05.08.15 at 11:06 am

Iain seems to be racist… maybe he is the one that is bitter.

#231 Holy Crap Wheres The Tylenol on 05.08.15 at 11:09 am

#66 Smoking Man on 05.07.15 at 7:39 pm
Jesus, I haven’t been out on the town since the insident back at the xmass party.
Only drink alone or at casino.
I’ve changed , tons of hottie’s , I could care less. I’m an observational beast , finaly no hormons , im a writer now.
Thank you god .
____________________________________________

Thats two religious connotations today Smoking Man! Whats going on there buddy, you have an epiphany?

#232 young & foolish on 05.08.15 at 11:18 am

It’s easier to bring the 3rd world to the 1st, than it is to take the 1st world to the 3rd.

#233 Holy Crap Wheres The Tylenol on 05.08.15 at 11:23 am

#29 Smoking Man on 05.07.15 at 6:50 pm
Forgive them Garth for they knot know what they do.
Years and years of school, taught by professional teet sucking socialists.
I pay annually, taxes in the millions, my job at the tax farm , the entire direct deposit is instantly re directed to the CRA.
I’m a gambler, I risk, I win some and lose some.moistly win. I have no respect for the 99% because they don’t respect them selves.
Last week , some cowardly hi level manager at the tax farm instructs my manager to get him to convert me to full time, 160 k a year..and benefits…
Bahaha was my reaction.. Huge cut vs cinsulting and I can’t speel. I won’t accept.. Been offerd a gig in NYC at about 500k usd for a gig that I could do while stoned and hammered at the same time.
Nothing compared to challanges or characters I face daily now.
My point is , if you are weak and humble, honest and good, you will be run over. Thank your commie teacher for that. I’m going to get that sr manager fired …
The nerve..is all I’m saying.
You see 99% ERS its all about balls, big balls.
And great acting skills..drama class is so under rated.
__________________________________________
OK Smoking Man you are nuts if your offered $500 K USD ($625 cdn) in NYC for the same work, then you should go. Ive told my own staff to go when head hunters have chased them down and offered good money that I couldn’t match. Providing your honest about the $160 K offer that is about a 390% increase, so what are you waiting for here? Go man go! No Canadian company is going to give you this kind of cash!
Go man, go don’t look back!

#234 Ralph Cramdown on 05.08.15 at 11:28 am

CMHC’s annual report is out… now in official Tory Blue!

http://www.cmhc.ca/en/corp/about/anrecopl/anre/upload/68315_w_ACC.pdf

Read ’em and weep, boys.

#235 fancy_pants on 05.08.15 at 11:32 am

…tongue in cheek

#236 Jimmy James on 05.08.15 at 11:42 am

Now that Alberta has gone to the left will these replace the “truck nutz”?

http://www.cyclingweekly.co.uk/news/latest-news/check-out-bike-balls-the-worlds-crudest-bike-light-170170

#237 T4 crowd on 05.08.15 at 11:43 am

“We’ve had income taxes for 110 years. Get over it. — Garth”

Perhaps we can tell women the same argument: “you have been oppressed for millennia, get over it, stop asking for equality… ”

This is starting to get comical. — Garth

—————

Not comical at all if your income is on T4 and you can’t run your revenues, expenses through a business or chain of businesses.

The T4 crowd is 100% on the hook, with their balls in the hand of the government.

It will be always easier to squeeze what’s right at your hand at no need to chase.

Try to protest against that – good luck with it.

Of course, you can say that anyone can get off the T4 – but we all know that only sole proprietorship can exist without payroll people until robots and automation fully takes over.

#238 Daisy Mae on 05.08.15 at 11:46 am

#142: “Not his house.. Pretty much his neighbour. Funny though.”

***************

‘FOR SALE’ sign is bogus. LOL

#239 Holy Crap Wheres The Tylenol on 05.08.15 at 11:46 am

#103 Smoking Man on 05.07.15 at 8:56 pm
So a 15 year old kid, driven to madness by a phyco religious freek father. He’s in a war, he’s shot, lobs a grenade at the people shooting at him.
A soldier dies. Oh yes a medic I’m sorry.
He’s locked up for 13 years, water boarded and mind fkd Harpo bowing to the religious freeks he likes trys to have him locked up till the end.
Religion = war and death.
On Nectonite religion is forbidden. And everyone gets along. And they wonder why anti-neocon sentament is in vouge
____________________________________________
His father Ahmed Said Khadr was an Egyptian citizen and terrorist who had ties to a number of militant and Mujahideen leaders in Afghanistan, including Osama bin Laden, founder of al-Qaeda. Omar has never renounced that what his father did was morally wrong or on the other hand that what he did was wrong. At 15 years old you sure as hell know what is right and wrong if you don’t then at 29 years of age you sure as hell have had enough time to reflect and at least say what I did was wrong. It took this long to get a comment out of his mouth yet renouncing terrorism. The whole family has lived of the avails of Canadian welfare system at various points while traveling back and forth between Pakistan, Afghanistan and Canada finding it convenient to return here to safe soil when the need called. At the same time while here the entire Khadr family has consistently decreed that Canada as a morally corrupted country. Ask U.S. Sergeant Christopher Speer’s family Tabitha Speer (widow) Taryn and Tanner Speer (children)what they think of not having him around to raise his family and live his life. Sorry dude I don’t trust this guy for a minute.
War sucks for any age!

#240 kilby on 05.08.15 at 11:55 am

Bit off subject but up until 2 years ago we were renting a new condo on the water in North Vancouver at the foot of Lonsdale. It was owned by three partners in China and managed by a local company that specializes in holdings of off shore here in Vancouver. We paid $1,600 a month rent, they paid around $550,000 for the place 4 years ago, I just got an e-mail from a real estate company featuring a condo for sale, same size, same building……$399,000 asking. Things are not rosy for all Vancouver real estate.

#241 Oeanside on 05.08.15 at 11:58 am

ete on 05.08.15 at 10:47 am
Screw all the cry babies here . Everyone should be thanking you Garth for an informative blog . Garth gives you sound financial education/advise free of charge. Garth opens up that secret door and lets you look inside. He practically let’s you sit inside and have a chat with him. Thanks Garth for such a great blog.

Stop! You aren’t going to help his ego one bit , great blog but take what you need from it, no need to follow like a religion.

#242 Pitchfork Pete on 05.08.15 at 12:14 pm

Glad to report that business is good.
Many angry people out there.
For those on this blog who wanna join Garth’s revolution:
I’ll give you 20% off slightly used pitchforks.
Just tell me Garth sent you.

#243 Nemesis on 05.08.15 at 12:19 pm

#WhatRalphSaid… #HistoryLessonsFromTheWayBackMachine… #AndPoliSci101… #”It’sAlwaysAboutWhoGetsWhat”,Or… #WhyYouDon’tMatter… #&BigMoney&DemocracyAreImmiscible…

[TheTyee] – Barrett and Notley Toppled Dynasties, but Will It End the Same?: Either way, a helluva ride awaits for Alberta’s new premier.

…”Calgary has gone from Cowtown to Maotown. As someone tweeted last night: snowballs in hell are alive and well.

Despite the passage of time, there are a number of interesting similarities between the stunning elections of Barrett and Notley, whose father Grant was head of the NDP in Alberta when his B.C. counterpart came to power. Both Barrett and Rachel Notley toppled political dynasties that seemed destined to last forever. W.A.C. Bennett had reigned over B.C. for two decades with barely a hiccup, and of course, Alberta’s Conservatives had been in power for a staggering 44 years, almost as long as the Vancouver Canucks have been without a Stanley Cup.”…

http://www.thetyee.ca/Opinion/2015/05/08/Barrett-and-Notley-Toppled-Dynasties/

[Salon] – Robert Reich: Nike is everything that’s wrong with the U.S. economy: The former secretary of labor on America’s stagnant wages and the multinational corporations exploiting them

…”Tomorrow President Obama will be giving a speech promoting the Trans-Pacific Partnership. Paradoxically, he’s chosen to give it at Nike headquarters in Oregon.

Nike isn’t the solution to the problem of stagnant wages in America. Nike is the problem.

It’s true that over the past two years Nike has added 2,000 good-paying professional jobs at its Oregon headquarters, fulfilling the requirements of a controversial tax break it wrangled from the state legislature. That’s good for Nike’s new design, research and marketing employees.

But Nike’s U.S. workers make only a tiny percent of Nike’s products.

In fact, Americans made only 1 percent of the products that generated Nike’s $27.8 billion revenue last year. And Nike is moving ever more of its production abroad. Last year, a third of Nike’s remaining 13,922 American production workers were laid off.

Most of Nike’s products are made by 990,000 workers in low-wage countries whose abysmal working conditions have made Nike a symbol of global sweatshop labor.

As wages have risen in China, Nike has switched most of its production to Vietnam where wages are less than 60 cents are hour. Almost 340,000 workers cut and assemble Nike products there.

In other words, Nike is a global corporation with no particular loyalty or connection to the United States. Its loyalty is to its global shareholders.”…

http://www.salon.com/2015/05/08/robert_reich_nike_is_everything_thats_wrong_with_the_u_s_economy_partner/

[TomDispatch] – Tomgram: Nomi Prins, Hillary, Bill, and the Big Six Banks

The Clintons and Their Banker Friends – The Wall Street Connection (1992 to 2016) By Nomi Prins [… adapted and updated by Nomi Prins from chapters 18 and 19 of her book All the Presidents’ Bankers: The Hidden Alliances that Drive American Power]

http://www.tomdispatch.com/post/175993/tomgram%3A_nomi_prins%2C_hillary%2C_bill%2C_and_the_big_six_banks/#more

#244 Pontius Pilatus on 05.08.15 at 12:20 pm

Let them eat pie charts!

#245 Vamanos Pest on 05.08.15 at 12:22 pm

A pervasive fallacy in the arguments of many (most) above:

Are you arguing for “fairness” or are you arguing for the best outcome for the most people? These are absolutely not the same thing.

In fact, much of the conflict above is a result that those that would tend to agree with Garth’s argument are arguing for the greatest good for the most people, while those that would tend to disagree are arguing for fairness, or more accurately, equality (or at least a reduction in disparity).

To increase taxes on investment, corporations, dividends, income, and royalties on resource extraction will make any jurisdiction less competitive. As a result, that jurisdiction will lose investment, and therefore jobs and growth. And when jobs are lost, the 1% guys at the top aren’t the ones hurt, or at least not hurt the most. (Note, i’m not necessarily talking about Alberta and the NDP. This is an undeniable economic phenomenon, whether it’s Russia, Saudi Arabia, Texas, or, yes, Alberta).

So while I’ll admit to oversimplification for the sake of brevity, it’s easy to see how attempting to restore “fairness” in revenues would not equate to making things better for the 99%.

It’s a common phenomenon in human psychology to confuse “quality” and “equality”. It’s not what we get that we focus on, it’s what we get compared to our neighbour.

BTW-can we stop talking about the 1% like they are some sort of super rich private jet owning yacht partying playboys? The statistical facts are that we are talking about people who make over 200k. They own the same number of private jets, yachts and Bentleys that the rest of us do. (ZERO). If we want to talk about the super rich, then fine. But let’s lose the misnomer and call them the 0.001%.

#246 CalgaryRocks on 05.08.15 at 12:25 pm

Apparently the middle class is doing so poorly under Stephen Harper that young couples are reduced to begging door to door for the ‘chance’ of buying a 1M$ starter house in TO.

Poor, poor middle class.

http://www.thestar.com/business/2015/05/06/couple-goes-door-to-door-in-their-desperation-to-find-a-house.html

#247 Victor V on 05.08.15 at 12:46 pm

http://www.theglobeandmail.com/report-on-business/cmhcs-tighter-mortgage-rules-succeed-in-reducing-exposure/article24316220/

Ottawa’s attempts to play a smaller role in Canada’s housing market are having a noticeable impact, as the federal housing agency reported the total value of its mortgage insurance continued to shrink in 2014 driven by a series of measures to tighten mortgage rules.

The total value of Canada Mortgage and Housing Agency’s mortgage insurance fell $14-billion in 2014 to $543-billion, the housing agency said in its annual report. It expects insurance to decline another $10-billion in 2015 as borrowers repay their loans faster than CMHC writes new premiums. The federal government has capped CMHC’s insurance at $600-billion.

#248 victoria on 05.08.15 at 12:53 pm

RE:These days the one per cent account for just over 22% of all the tax, while the other 99% pay 78%.

You go from income tax to this statement, which spins it into a claim that the 1% pay 22% of all the tax revenue. So can you back this up? Because there is much more to the taxes I pay than my income tax. Also this is just federal tax and revenue. I pay PST, I pay property tax, I pay gasoline, booze, cigarette tax. I pay for my drivers licence, my health premium. I pay for my dog licence, I pay UI CPP. I pay other… they all add up to gov’t revenue. I doubt that the 1% given all of this come even close to paying 22% of govt revenue. So please either spin some more of your web for my knowledge or clarify your statement.

The reference was clearly to taxation on income, not consumption. — Garth

#249 -=jwk=- on 05.08.15 at 12:57 pm

Show that revenue chart from 30 yrs ago – back then corporations paid far more of the total tax…and somehow survived and made money and created jobs. 30 yrs from now, the cycle will be complete – corporate taxes will be at zero and personal will be ~ 75% of all revenues.

#250 Keith on 05.08.15 at 1:03 pm

Let’s look at what percentage of the nation’s wealth the 1% control today vs. 30 years ago.

There’s a reason taxes are going up on the rich.

All that said, the muggles are still very much ignorant to basic economics….

#251 Ralph Cramdown on 05.08.15 at 1:09 pm

#246 Vamanos Pest — “To increase taxes on investment, corporations, dividends, income, and royalties on resource extraction will make any jurisdiction less competitive. As a result, that jurisdiction will lose investment, and therefore jobs and growth.”

That’s true, but how competitive do you want to be?

Competitiveness comes in the form of workforce qualifications, rule of law, costs of doing business and regulatory buden, proximity to civilization (first world capitals, money centers, etc.), and a whole host of other things in addition to tax rates.

I’d argue that before the oil bust, Alberta was TOO competitive. Royalty and tax rates were too low, and as a result, wages and asset prices spiralled out of control. Working- and middle class people spent like it would never end. We here in the east read crazy stories like large enterprises leaning on their suppliers for 25% cost reductions. What kind of bozos let their suppliers earn such a fat margin that they could possibly say yes to such a request, as indeed some of them did. And of Calgary energy company workers getting every second Friday off year round. Who gives private sector workers an extra five weeks of vacation a year and mocks the rest of the country and the public sector as not being hard working? Nuts.

Obviously, lowering taxes and regulations and giving away your natural resources for nearly free will make you super-competitive, and probably create lots and lots of jobs (for a while). But do you really want that? It’s just enabling the ownership class to loot your jurisdiction, while generously tipping the workers for a while.

I predict that Alberta’s new government may well discover a lot more looting than we’ve heard about to date.

#252 Retired Boomer - WI on 05.08.15 at 1:13 pm

Let us think about the respective countries if we had NO minimum wage. WHAT are your hours worth in the marketplace? $3 how about $4 maybe $8 perhaps $11

No, you would have been earning that without the government “telling” an employer what your unskilled butt is “worth.”

That said, as we agree on a minimum wage, we need to ensure imports to our respective countries are levied a tariff to ensure the price on arrival equals the “minimum wage” equivalent of said country. Add in minimum health & safety and environmental standards, and if your silly ass country can’t meet, or exceed the standards of the importing country your crap doesn’t get in -at any price.

Yeah, that will close down more than a few sweat shops and maybe save a few fish & foul. Maybe you won’t be able to buy some things, too bad.

Every trade agreement I’ve seen has never benefited the lower percentiles.

We do have a tendency to ask, and expect ‘too much’ of our government. See the idiocy of the above, although it may sound utopian it is not. Perhaps being told you will get less, and perhaps pay less as a result wouldn’t be a terrible ideal.

#253 chapter 9 on 05.08.15 at 1:19 pm

What influences investment and job creation? In Alberta we are oil and gas. So let’s take a reveiw at what investors look at!
-personal tax,corporate tax,payroll tax,capital tax,complexity of tax compliance,licences, lease payments, royalties,production taxes,gross revenue charges,land leases,environmental regulations,labor regulations,labor militancy,work disruptions/strikes,legal system is it fair and transparent,political stability,quality of infrastructure,regulations that are duplicated between federal and provincial governments and inconsistencies, availability of skilled work force,unresolved land claims, access to power,uncertainty of protected areas.

Food for thought!!

#254 Keith in Calgary on 05.08.15 at 1:24 pm

That pie graph convinced me again that I made the right call voting NDP.

And for perspective, I’ve run my own business with multi-million dollar annual revenues, and a 2% hike in the corporate tax rate wouldn’t have made me blink, let alone go broke, or lay people off, cut salaries, etc. I’ve also managed many where the same statements would apply. Alberta will still have the lowest corporate tax rate in Canada, even after the tax increase.

All the conservatives have done to us is lie for 40 +/- years, and empty our pockets (Ralph Klein excepted, for he sent me a cheque back in 2005)……….

The oil is here, in the ground, it’s not going anywhere, and if they want their cut of that pie it’ll be a very small price to pay, versus the losses they’d take by closing up shop.

Lot’s of hot air out here in Cowtown this week……..

#255 prairieboy43 on 05.08.15 at 1:25 pm

@ #247 CalgaryRocks. Crazy!!

#256 Trading Naked on 05.08.15 at 1:31 pm

The Margin Police at my brokerage, under command of their credit/risk department handlers, are swinging their clubs in ways I certainly didn’t see last year. We know margin debt is high but it looks like either something is afoot, or they’re actually enforcing their own rules!

#257 Mark on 05.08.15 at 1:35 pm

“And of Calgary energy company workers getting every second Friday off year round. “

You are aware that the quid pro quo of Calgary energy workers getting every second Friday off is that they’re basically on-call 24/7 without extra payment, not paid for off-hours travel time spent in airports or on the road, and that there’s a strong expectation that the job won’t be a 9-5 job either.

If there’s a real deadline to meet, trust me, there’s no Friday’s being taken off. Actually for O&G workers who are ‘knowledge workers’ (ie: engineers, etc.), there likely isn’t any difference whatsoever in productivity between being in the office all the time, and being elsewhere. Chaining these types of workers to offices and counting their hours is rather counter-productive.

#258 Lead Paint on 05.08.15 at 1:36 pm

#17 Look in the mirror – So you call Garth an ‘a$$***’ because you don’t share his opinions, and then accuse him of being bitter. Talk about the pot calling the kettle black!

If you read Garth’s posts on the important things in life (it’s not owning a house), his appreciation for living in Canada and the great thing this country offers to so many, the importance of enjoying your youth and aging with security, you would realize he is not a bitter person.

You on the other hand… I’m sure the rest of your accusations are as well thought out. Thinking objectively is hard, but it does pay dividends down the road!

#259 TorontoBull on 05.08.15 at 1:40 pm

Now tell me where the debt-fueled middle-class house fetish fits in. — Garth
the middle class shrinkage is a developed world phenomenon. It is happening in countries without housing bubble too, so stop blaming it on housing.
but when all is said and done income redistribution will raise aggregate demand and might lift economic growth. Lower taxes didn’t…

#260 Ralph Cramdown on 05.08.15 at 1:51 pm

And what is with this BIZARRE theory that capital is scarce and that it needs to be pandered to, lest it run off to more hospitable climes?

People are lending their capital to Germany and Switzerland against the promise that they’ll get most of it back, and no more. Every country in the world with a low-grade gold deposit or marginal oilfield, and a tin-pot dictator who’s willing to let it go against a fat upfront bribe, a 50% royalty and a monthly sodomization of 5% of the field workers chosen at random, has multiple executives willing to start drilling. Capital is not in short supply right now.

#261 Oot der Hoos on 05.08.15 at 1:52 pm

I agree with #246 oversimplified brevity. That is partly why I am conservative and not Liberal-communal in my thinking.

When I wrote #197 I had no idea #103 was talking about Khadr because I never think of real koran sharia law muslims as religious. It is a political movement. I never think of Liberal/NDP communist ideas as religious either, thus my athiest Mao reference, where not-religious, athiest tyranny = beatings, murder, theft and nobody gets along.

Thanks HolyCrap #240 for explaining 103.

#262 jim bob on 05.08.15 at 2:01 pm

Wait a cotton pic in minute.

Corperations and richy peeps have off shoard thaer wealth.

When gubermint says tax the rich it just means take from upper midd class and give to lower or poverty level people.

#263 Nemesis on 05.08.15 at 2:04 pm

#PluckyComicRelief… #ForInfidels&… #RunningDogs…

[HeraldSun] – ISIS adds wearing Nike to list of banned practices

…”The clothing ban was made clear in flyers widely distributed in Raqqa last week which stated “O youth, beware of foreign words and symbols of infidels on our clothes”….

http://m.heraldsun.com.au/news/isis-adds-wearing-nike-to-list-of-banned-practices/story-fni0fiyv-1227324524169

#264 Yogi Bear on 05.08.15 at 2:05 pm

#193 George S on 05.08.15 at 7:56 am
#44 Yogi: The reduced rate of withholding tax doesn’t mean that you pay less tax in the end, just that you don’t have to make as large of a down payment on the tax that you eventually owe.

Once you are no longer a resident of Canada, the withholding tax is your final tax bill.

http://www.cra-arc.gc.ca/tx/nnrsdnts/ndvdls/nnrs-eng.html

– The Part XIII tax deducted is your final tax obligation to Canada on this income (if the correct amount is deducted).
– The usual Part XIII tax rate is 25% (unless a tax treaty between Canada and your home country reduces the rate).

#265 opuscat on 05.08.15 at 2:17 pm

I read this blog with zeal every week and have learned many lessons. It can’t be a hit every day but wow, was this particle entry funded by the Koch brothers? Even my 1%’er friends that I know recognize the current situation is unsustainable. One even made the comment over a beer that we have to do something to prevent them from coming after us … and soon.

#266 [email protected] on 05.08.15 at 2:31 pm

Sigh. And where is the guy running the corner pizza joint going to get the money to pay six people making $15 an hour? Oh wait. He won’t. There’ll be three people making $15 and three at home on the dole. Socialist paradise. — Garth

—————
How come Australia can do it ? Theirs is 16 dollars I believe , I think they still have pizza shops too

#267 I don't know it all on 05.08.15 at 2:37 pm

Hey Garth, while you are right about Iain throwing rhetoric you way, even though your jab at his pension is rhetoric as well.

Also, your tax analysis of the 1% is disingenuous and contradicts points you have made in prior blogs.

You stated in a prior blog that 1%rs derive a great deal of wealth from capital gains, on which they are only taxed on 50%, where as their actual employment income plays a far smaller role than you imply today in your post.

Second, the increase in 1%er tax burden probably has a lot more to do with the fact that they, by far, saw the largest increase in real income over the last 30 years. You have stated repeatedly in blogs that wages in Canada have stayed stagnant for the majority of Canadians, and you have used this argument to right
ly criticize the current housing frenzy.

I still love the blog and will continue to enjoy your musings.

#268 Ralph Cramdown on 05.08.15 at 2:58 pm

#258 Mark — “You are aware that the quid pro quo of Calgary energy workers getting every second Friday off is that they’re basically on-call 24/7 without extra payment, not paid for off-hours travel time spent in airports or on the road, and that there’s a strong expectation that the job won’t be a 9-5 job either.”

Nope, wasn’t aware — I only know what I read in the comments section here. But it doesn’t sound too different from other hard charging cities like Toronto or New York, where many people are on call and nobody gets ahead working only 9-5. Do they get every second Friday off in Houston?

#269 Ralph Cramdown on 05.08.15 at 3:00 pm

#258 Mark

I forgot to mention — I liked your comment about CP Rail formerly being run for the benefit of labour and management, to the detriment of shareholders and customers. The same example popped into my head earlier when I read somebody commenting about the wonderful efficiency of corporations.

#270 Smoking Man on 05.08.15 at 3:06 pm

#240 Holy Crap Wheres The Tylenol on 05.08.15 at 11:46 am
#103 Smoking Man on 05.07.15 at 8:56 pm
So a 15 year old kid, driven to madness by a phyco religious freek father. He’s in a war, he’s shot, lobs a grenade at the people shooting at him.
A soldier dies. Oh yes a medic I’m sorry.
He’s locked up for 13 years, water boarded and mind fkd Harpo bowing to the religious freeks he likes trys to have him locked up till the end.
Religion = war and death.
On Nectonite religion is forbidden. And everyone gets along. And they wonder why anti-neocon sentament is in vouge
____________________________________________
His father Ahmed Said Khadr was an Egyptian citizen and terrorist who had ties to a number of militant and Mujahideen leaders in Afghanistan, including Osama bin Laden, founder of al-Qaeda. Omar has never renounced that what his father did was morally wrong or on the other hand that what he did was wrong. At 15 years old you sure as hell know what is right and wrong if you don’t then at 29 years of age you sure as hell have had enough time to reflect and at least say what I did was wrong. It took this long to get a comment out of his mouth yet renouncing terrorism. The whole family has lived of the avails of Canadian welfare system at various points while traveling back and forth between Pakistan, Afghanistan and Canada finding it convenient to return here to safe soil when the need called. At the same time while here the entire Khadr family has consistently decreed that Canada as a morally corrupted country. Ask U.S. Sergeant Christopher Speer’s family Tabitha Speer (widow) Taryn and Tanner Speer (children)what they think of not having him around to raise his family and live his life. Sorry dude I don’t trust this guy for a minute.
War sucks for any age!
………

Let’s see, why where those young Ametican, sons and daughter’s in Afgsnistan , oh yes , 911.

See I would be cool about it , But Building 7 fks with my mind.

There are real evil bugger’s running the show behind the curtain’s in the Good Old USA.

And you know it.. And because the depravity of this pure evil , I’m not going to talk about it anymore.

Especially with bill C51

#271 Shawn on 05.08.15 at 3:11 pm

Awash in capital and Savings?

Ralph Cramdown said:

Capital is not in short supply right now.

******************************************
I agree. If capital were in short supply interest rates would not be so low. The central banks could not force them this low if there was a great demand for capital.

It was mentioned that Alberta needs to attract capital now. For what? We have probably over-invested in oil sands, office space and retail space. Possibly in single family houses as well.

So, just what capital would we like businesses to invest here? What would they build.

#272 Timing is Everything on 05.08.15 at 3:12 pm

-So, why engage in this spin?-

Hey. Hey. Hey! This is the ‘No Spin Zone’. There’s pie charts and everything! C’mon now.

( ‾ʖ̫‾)

#273 herb on 05.08.15 at 3:21 pm

> Corporations are collections of people in a common enterprise, and apart from government, they create all of the jobs.

I’d like to pick apart this statement. Garth, you imply (or I’m reading into it) that you are talking about large corporations as providing the vast majority of non-public jobs, when in fact it’s small businesses that are creating the majority.

From Industry Canada (https://www.ic.gc.ca/eic/site/061.nsf/eng/02806.html), we know that “small businesses account for more than 98 percent of all firms in Canada and proportionally play a large role in net job creation, creating 77.7 percent of all private jobs from 2002 to 2012.” Industry Canada defines a small business as being 99 or fewer employees. Now probably some of those small businesses are incorporated, but I’m assuming many of them are owned by individuals or partnerships.

From StatsCan (http://www.statcan.gc.ca/pub/11f0027m/2011069/part-partie1-eng.htm#h2_6) we know that large businesses only account for 46% of GDP, “less than half of overall labour income and indirect taxes less subsidies” but that they accounted for the majority of “operating surplus” (profit?) and “supplementary labour income”. I take that as meaning that the wages are higher in large businesses but that small businesses create many more jobs.

So while, this doesn’t negate Garth’s main point about raising taxes and job creation, it appears that raising corporate taxes for the large firms will have less effect on job creation than raising taxes for small businesses.

My reference was to corporations, of which small business is a large component. Save your breath. — Garth

#274 "job creation" nonsense on 05.08.15 at 3:40 pm

Corporations are collections of people in a common enterprise, and apart from government, they create all of the jobs.

======

Stop the “job creation” nonsense.

Individuals, companies, organisations, governments purchase labor as they need it – the same way as they buy anything else needed for their existence, operation.

Many services, previously done by humans are fully automated today.

When these exact same services are purchased, what are you “creating”?

#275 Holy Crap Wheres The Tylenol on 05.08.15 at 4:17 pm

#270 Smoking Man on 05.08.15 at 3:06 pm

Sorry dude I don’t trust this guy for a minute.
War sucks for any age!
…………………………………………………..
Let’s see, why where those young Ametican, sons and daughter’s in Afgsnistan , oh yes , 911.
See I would be cool about it , But Building 7 fks with my mind.
There are real evil bugger’s running the show behind the curtain’s in the Good Old USA.
And you know it.. And because the depravity of this pure evil , I’m not going to talk about it anymore.
Especially with bill C51
___________________________________________
Don’t pull the building seven crap now. Is that all you got? I really don’t give a hoot what you say about how the battle started, USA, inside job, commies, men in black jihadist, AL-Qaeda. Just deal with it Man it started and our guys were sent in to take care of it! It’s always evil men that start wars so again nothing new there. This guy (Khadar) was bad, so don’t try and sugar coat it out by deflecting back to some alternative root cause in an alternate universe. Bad is bad. This kind of shit is where I draw the line! I’ve been there as one of the guys that’s had to deal with other guys shit in the field. A word of advice if you’re in the USA keep you feelings about this Khadar dude to yourself.

#276 onpar on 05.08.15 at 4:24 pm

Garth,
This entire post is meaningless because you did not acknowledge the HUGE gap that has settled in between 1% and 99% over the past 20 years. And you know it.
I’m a big fan, but you can’t expect me to believe there is no issue with low corporate taxation, sheltered billions offshore in corporate cash, and an inexcusable gap between CEOs and front-line employees.
For shame.

#277 800 rmk on 05.08.15 at 4:29 pm

Keep up the good fight Garth. They need to teach economics in high school so people will know where their paycheque comes from.

Just in Edmonton right now for the weekend. $100 s of millions in freeway projects going on. Who do people think payed for this? In a round about way it was the oil industry. Not socialist hopes and dreams.

In case you people out there are all too stupid to figure it out, the natural resource economy is the back bone of the Canadian economy . Hurt that and U will see where your standard of living goes.

#278 Vamanos Pest on 05.08.15 at 4:42 pm

#252 Ralph Cramdown

I’m trying to stay out of an Alberta specific discussion. I was simply trying to show the different conclusions one would reach depending on whether being “better off” or being “equal” was more important to them. That the economics of it are pretty plain to see, but the argument is in fact one of values, not economics.

I’d agree with you that most any jurisdiction would have inherent advantages and disadvantages vis-a-vis competitiveness, including Alberta.

My thoughts on Alberta specifically are that they had an election 3 days ago. If one is really arguing that the policies of the newly elected government are destructive and unacceptable, that is not an argument against left wing policies, it’s an argument against democracy. (Or, at least an argument against plurality in deciding multi-party elections, in that 60% of Albertans voted AGAINST the NDP.)

#279 rosie "moving forward" in the knowledge that, "this won't end well" on 05.08.15 at 4:50 pm

The future looks rosy, moving forward, at least that’s what most think.

http://www.theglobeandmail.com/globe-investor/personal-finance/household-finances/canadian-households-now-owe-a-record-18-trillion-and-more-debt-statistics/article24322565/

#280 What Corporations? on 05.08.15 at 4:52 pm

What Iain and his ilk won’t admit to is that it is the civil service that form the 1% in Canada…not some nebulous ‘corporations’ that don’t exist in Canada. Where are the head offices…the sprawling factories where back lots teeming with expensive auto’s? The truth is that the ‘high income earners’ in Canada are all elitist unionized civil servants….so say the statistics…so says the ‘Sunshine List’. You can argue with the facts…but the facts can’t be ignored.

As they say in Texas..”You can put your boots in the oven, but you can’t call ’em biscuits”.

It is a fact that Canada’s civil service are the vast majority of earners over $100,000 p/a .

#281 jess on 05.08.15 at 5:01 pm

Total number of gas stations in the US 121,446
Percent of gasoline stations with convenience stores 82.2 %
Average annual sales $249 Billion
Annual payroll $13 Billion
Total number of paid employees 926,792
http://www.statisticbrain.com/gas-station-statistics/

and excluding 2 states they are self serve.
============

in the thousands 194.4 (projection number )
http://www.bls.gov/iag/tgs/iag211.htm#iag211emp1.f.P
http://www.bls.gov/iag/tgs/iag211.htm#workforce
32,930 occuptional jobs

#282 saskatoon on 05.08.15 at 5:03 pm

to all left-wing wackjobs:

corporations are state-created entities.

if you don’t like corporations (and their “greed”)…

BLAME THE GOVERNMENT.

#283 Armando on 05.08.15 at 5:09 pm

Nice to see Garth stand-up for us BORW Guys! Yes, we could be like Iain and others who think that living off government handouts is the height of morality and correctness, but we can’t can all be perfect can we? Besides SOMEONE has to work and pay the taxes so that the freeloaders can get their ethically pure money, right? So I say: Give us BORW Guys some slack! We are people too, even if we aren’t parasites….

#284 Linda on 05.08.15 at 5:13 pm

#153 Bottoms Up – I’m not saying corporations or the wealthy should not pay taxes, nor am I advocating them over a healthy middle class. However, there are those whose reaction to anyone having something ‘they’ don’t have but feel ‘they’ deserve is to take it away from those who have, because hey, otherwise it isn’t fair. I agree we should have a healthy middle class & in utopia, we’d have a healthy, well off middle class & then we’d have the rich/uber-rich. But this notion that the 1% are somehow responsible for all the troubles of the world & should be destroyed doesn’t mean that you will suddenly have all the wealth you took from others. Or if you do, guess what? Now YOU are the evil 1% who should be destroyed.

Some reference to the French Revolution in other posts here. Fact: Once the revolutionary people had toppled the unjust regime & chopped off a whole bunch of heads (many for the crime of merely belonging to the aristocracy) the new ones in power became the next targets for being beheaded in turn, as they were now perceived to be the ‘haves’. Plus hey, any power vacuum will see someone take power & fighting over who is going to be the alpha power is never pretty. In our current day society depending on where you are the most that happens is you take your marbles & walk away in a sulk; in more volatile countries you may find yourself along with friends & family behind bars at best & being tortured/put to death if things really aren’t going your way.

#285 Shawn on 05.08.15 at 5:18 pm

Shares rose today…

People made money (their wealth increased)

We have been discussing corporate taxes.

There would be nothing to discuss if corporations were not often money making operations.

In fact, corporations do make money.

It should be no surprise that owners of corporations (share “holders”) tend to make money over time. Not every day nor every month or year, but generally over time they make money.

Despite recessions, manipulations, bubbles, frauds, greedy managers, FED interference, pests and locusts, share owners do tend to make money over the years.

Those with money to invest should be sure to include exposure to equities in the mix.

#286 Want to get rich???? on 05.08.15 at 5:28 pm

Just buy the goddamn SFH in Vancouver and relax for a couple of years, you’ll be a millionaire !!!!!!!

#287 SWL1976 on 05.08.15 at 5:58 pm

#275 Holy Crap Wheres The Tylenol

Don’t pull the building seven crap now. Is that all you got? I really don’t give a hoot what you say about how the battle started

—————————-

You should care how the battle started. Because, until the root cause of the problem is addressed many more people are going to lose their lives. Both foreign and American

#288 The American on 05.08.15 at 6:05 pm

AT #195 Richardo: The answer is simple. Stop patrolling them if you believe you’re being doubly taxed.

#289 jess on 05.08.15 at 6:06 pm

..”permanent webpage entitled The Finance Curse explaining how countries with oversized financial sectors suffer a range of harms that are rather similar to a so-called Resource Curse that afflict resource-rich countries, and for a wide range of similar reasons.

The Economist has recently written a long article entitled What’s Wrong with Finance?
As they note:

“These objections [to the idea that more finance is always good for your economy] are not the same as the argument, familiar from the crisis, that individual banks are too big to fail (or TBTF). This approach is more akin to the idea of the “resource curse” that economies with an excessive exposure to a commodity, such as oil, may become imbalanced. Just as the easy money from drilling for oil may make an economy slow to develop alternative business sectors, the easy money from trading in assets, and lending against property, may distort a developed economy.”… read more @

http://www.taxjustice.net/2015/05/08/the-economist-has-noticed-the-finance-curse/

#290 Nemesis on 05.08.15 at 6:15 pm

“It is a fact that Canada’s civil service are the vast majority of earners over $100,000 p/a.” – WhatCorporations

#NiceTry… #ButActually…

http://www.jobbank.gc.ca/job_search_results.do?fsrc=4&wid=bf&sort=D

#291 [email protected] on 05.08.15 at 6:29 pm

#286 Want to get rich???? on 05.08.15 at 5:28 pm
Just buy the goddamn SFH in Vancouver and relax for a couple of years, you’ll be a millionaire !!!!!!!

———–
Preach brother preach!

#292 Silver Bull on 05.08.15 at 6:49 pm

#146 devore
JPM is a bullion bank that up to this year has dealt in PAPER bullion NOT physical bullion. They took over Lehmans PM’s short positions(ro avoid collapse in 2008) and are the largest net short PAPER PM’s in history. They are massively shorting and re-hypothicating 100-1 paper vs Physical. They are relentlessly pounding the paper price lower while accumulating PHYSICAL. They are doing this because there is a banking/bond bubble melt down around the corner and as Allen Greenspan said- TETT: Do you think that gold is currently a good investment?GREENSPAN: “Yes… Remember what we’re looking at. Gold(and SILVER) is a currency. It is still, by all evidence, a premier currency. No fiat currency, including the dollar, can match it.” You need to put some more money into your TFSA so it can be confiscated- Go Girl! ALL that BS- worthless -paper -counter party risk- fiat will be coming to the PM investors. ALL OF IT. You and Garth were made for eachother.

#293 Karma on 05.08.15 at 6:59 pm

After reading most of the comments from Thursday, I never thought that there would be so many bleeding heart blog dogs… So much complaining about the 1% not paying their fair share, or that the 1%’s income has grown faster than their tax burden…

All this complaining sounds awfully self-righteous…

#294 Everyone's an economist! on 05.08.15 at 7:02 pm

“Sigh. And where is the guy running the corner pizza joint going to get the money to pay six people making $15 an hour? Oh wait. He won’t. There’ll be three people making $15 and three at home on the dole. Socialist paradise. — Garth”

Bullshit. Sounds like he had 6 employees when he only needed 3. Bad management, malinvestment of capital, etc. If he needs 6 to run his business, he will keep 6 and adjust pricing. He’s not running 6 instead of 3 just out of altruism, be honest Garth!!! While it’s true that depending on elasticity of demand you may not be able to pass on the full cost of higher employee pay, that only means either PROFIT takes a hit, or the business downsizes to something more reasonable given the market. Neither of these two things means the sky is falling, and from society’s point of view may very much be preferable to accept these consequences in exchange for a few people going from abject poverty to somewhat less crushing poverty.

Hey Garth, I don’t know if you’re religious or not. But you certainly think you have a God-given right to make money no matter what. Is that so? Is that our most sacred right, that of being greedy and never being happy with what we’ve got? Cause you sure rail a lot on average folks for not being happy in rental slums and wanting a nice home. It would be a shame if you applied an opposite standard to yourself and others like you, even if in a slightly different context (money instead of houses).

I would suggest that if the worship of houses is unhealthy, then the worship of money even moreso. At least you can live in houses, but you can’t eat money.

#295 Willy H on 05.08.15 at 7:07 pm

Would very much like to see some comparative graphs. My gut tells me that the corporate pie has been shrinking.

The Con’s carelessly shrunk the GST pie between 2006-2009 and they have been desperately trying to find ways to re-coup the billions in lost inflows to balance the books.* They stimulated an economy with tese cuts that did not require stimulation in 2006-2007.

Where I work the effects of the decrease in corporate taxes has gone solely to executive management. We spun off 1/2 our firm in and IPO with new management. The remainder of the firm (listed on the TSE) at 1/2 it former size proceeded to hire more senior executives and salaries, bonuses and stock options are at an all time high. Job growth within the firm has been tepid.

*tariffs are increasing by 3% on goods from China thanks to the 2014 Budget Omnibus Bill – Flaherty’s last hurrah! A hidden tax.

#296 Daisy Mae on 05.08.15 at 7:34 pm

#159 Not1st: “NDP grinds economies to a standstill. And sure its easy to hate the rich, but you will hate them a lot more if they take their money out and go elsewhere with it.”

*****************

Happened in BC — business left BC in droves during the NDP reign of terror.

#297 Daisy Mae on 05.08.15 at 7:38 pm

#164: “Garth: don’t let the bastards get you down.”

*********************

Actually, I think the ‘bastards’ fire him up. Idiot posts get him down. ;-)

#298 Victoria Real Estate Update on 05.09.15 at 2:00 am

More…

. Average Single Family Home Price. .
. . . . (January through April). . . . . .
. . . . . . Greater Victoria. . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . .
620 K. . . . * . . . . . . . . . . . . . . . .
619 K. . . . . . . . . . . . . . . . . . . . .
618 K. . . . . . . . . . . . . . . . . . . . .
617 K. . . . . . . . . . . . . . . . . . . . .
616 K . . . . . . . . . . . . . . . *. . . . .
———————————————————-
. . . . . . . April. . . . . . . . April. . . .
. . . . . . .2014. . . . . . . . 2015. . . .

#299 Arch Douche on 05.09.15 at 2:54 am

#203

“First, your accountant (by law) works for the CRA, not you. A fee-based advisor acts in a fiduciary capacity, and is not obligated to disclose all information to the CRA, as is your accountant. Basic knowledge you should have. Second, all corporate revenue is taxed at the corp level, then again in your hands as dividends. The sum total of tax paid ends up being equal. Third, your corp cannot shelter wealth at the low small business rate when you retire, as it will surely be reclassified as a passive corporation and the tax rate will rise to the maximum. You need better professional advice. — Garth”
——————————————————–

I’ll second that. That’s a recipe to pay higher rate Part 4 tax even before you retire. The idea that accountants work for the CRA – that’s an overstatement.

To me the fundamental issue with taxation that must be determined first is whether one is looking for the positive or the normative solution. Garth is primarily focused on the question as to whether increasing corporate tax rates is a good idea from a positive perspective (ie is it efficient economically?), whereas others are looking from the normative perspective (ie is this right morally?). They are 2 separate questions, and are not mutually exclusive.

The utilitarianism expounded above as the moral “solution” to inequality is misguided IMO. The same ideological basis that targets the 1% (most of whom aren’t that wealthy on a relative basis) for wealth redistribution also denied First Nations the rights to their lands and wiped out minorities in Germany during WW2. The easiest for the most is not necessarily right or just.

#300 Raymond Lutz on 05.09.15 at 8:53 am

Dear BORW guys, you’re not mad, you’re scared. And you should: as Nick Hanauer writes “The pitchforks are coming”. Yes, this guy is a real business man and he DID make payrolls (as Garth naivelly suggests is a prerequisite to form any valid opinion). He’s not a pinko hippy neither a commi teacher, he’s a real 1%er, flying in his private jet… the whole enchilada and he has this to say to your rulers: “The Pitchforks Are Coming… For you Plutocrats”

#301 Marketmaster on 05.10.15 at 1:21 am

Remember when Walmart increased wages in USA ?
Stock prices went down one percent the next day.

#302 Marco on 05.10.15 at 8:55 am

I can’ t understand why people think reduced taxes for small business is going to directly translate into more jobs. In some cases, maybe it will. In most cases, it just means that the owners margins increase without having to do anything at all.

Haven’t owned a small biz, have you? — Garth

#303 landlessinva on 05.10.15 at 9:56 am

Sorry, Garth, but beg to disagree with you. Large corporations pay very few taxes. They have the clout and money to make sure the loopholes exist to get out of paying taxes. Corporations ARE the 1%.

According to Business Insider, McDonald’s and Starbucks’ CEOs make more than $9200 per hour, which is more than 1000 times that of their front-line cashiers, cooks, and cleaning staff. According to Business Insider, effective December 10, 2013, McDonald’s CEO made $9247.00/hour while paying its staff an average hourly wage of $7.73. Starbucks’ CEO made $9637.00/hour while paying company workers an average hourly wage of $8.79. Starbucks seems to justify it low wages by citing its benefits packages but as one employee once told me, “Benefits don’t pay the rent.”

#304 lee bow on 05.10.15 at 7:35 pm

Garth, one of the ways is capital investments + asset borrowing/lending between spouses. I don’t know at what income intervals it makes sense with the new 50,000 transfer ability.