Saturday, April 14, 2012

Some (more) suggestions on income taxes

Maybe it's me but the whole concept of "boutique" tax credits has become something of a joke.

Some items such as making public transit passes tax deductible makes sense as it puts transit users on the same level as those who drive for a living and can deduct those expenses.

However, the fitness and arts tax credits are pointless -- a seventy five dollar drop in taxes doesn't even begin to cover the true costs.   A budding athlete's parents, for instance, may spend ten thousand dollars per year -- but they still get a $75 break, not $1500.   And what is it with having an "education amount" and a "book amount" applied separately for tuition expenses -- shouldn't it be just one lump sum per month of school?

The "Canada employment amount"?   Just raise the personal exemption, jackasses!

The Working Income Supplement?   Nice idea, but again it would be better if the personal exemption was raised instead.

The Volunteer Firefighter Amount?   If they are putting their lives at risk like that, shouldn't they get a full write off for the stipends receive, as Canadian Forces and police officers deployed overseas do?   Not just 15%?

And so on.

On the other hand, there are necessary credits that don't go that far.  For example the disability tax credit -- certainly people who have issues impairing their ability to function "normally" should not have to as much tax.   It can reduce one's income tax to zero, but he or she can't claim the excess as a refund.

Another that should be fully refundable is adoption expenses (as it is in the States).   Instead, the maximum one can claim per child is $11,128.  The write off works out to just under $1670 -- or the amount that reduces income tax to zero, whichever is less.   Anything more, and adoptive parents are out of luck.   Parents should be rewarded for opening up their homes like that.   Money back could do a lot, whether it's home renovations or setting up a trust account for post-secondary education.

Child care expenses are subject to the non-refundable rule.   They shouldn't be.    Home care expenses also.   They should be fully refundable (to a limit, although not an unreasonable one).

And lastly, people should have a choice as to whether to have entitlements such as the GST, working income credit, and child tax credits can be applied against income taxes owing at tax time; or to have it deposited later in the year as a monthly stipend and on one day each month (rather than the confusing two or three right now).

With a bit of tinkering at the individual level, making it fairer for families; as well as getting rid of "corporate welfare" for the truly unnecessary items (for example, how much more write-offs do the tar sands need?) -- we can easily lob off two or three percentage points at each of the bottom three tiers -- in other words 12, 19 and 23%.  There might even be enough room to lower the top rate to 26 or 27% while still being revenue neutral.  And the proposed reductions in the corporate rates could be financed with revenues in the front end rather than being imperiled by rebates (um, "tax expenditures") from "number two."

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