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Taxes and Families in Canada and Elsewhere


Canada's federal debt over time, 1956 - 2000
Data source

The gradual decrease of "Canada's national debt" is a hoax based on an illusion created in the alleged size of the direct federal debt, but it has little to no correlation to the truth, the whole truth and nothing but the truth.
   It took the media quite a few years before they came off the topic that the federal government wanted them to concentrate on, the annual budget deficit.  In about 1991 the media began to become concerned about the accumulated budget deficit, a.k.a, the total direct debt.
   It is therefore welcome news to the federal government that the media still have not quite caught on to the game the federal government is playing.  That is that in addition to direct federal debt, the taxpayers have to pay as well for unfunded liabilities, such as funds that we should all expect to be in government programs to secure for instance the CPP (Canada Pension Plan), OAS (Old Age Security), Health Care and E.I. (Employment Insurance), so as to secure any claims that are being or will be made against those social safety nets.
   Of course, those funds don't exist, and if they do, they are called "surpluses" that are then promptly applied to reduce the direct debt, in a shell game by which the total federal debt is not reduced at all.  For every dollar transferred from "surpluses" in various government programs to reduce the direct debt, the unfunded liabilities in the government programs they are robbed from increase by one dollar.   Claims made against the government programs are then not paid out of incomes derived from assets securing the government programs, but through increased taxation in the form of escalating payroll deductions for CPP, OAS, Health Care, E.I., etc., and last, but not least, through increasing direct taxation in the form of GST, sales- and income taxes, and ever new and mounting service fees.

According to the Fraser Institute, in 1999 the total federal liabilities were not $565 billion as one might be inclined to assume from the data contained in the graph shown above, but rather a whopping $1.7 trillion — including the 565 billion of direct debts shown above.  

Living on credit and the earnings of future generations is a Canadian national pastime that extends to all levels of governments.  Taking into account the direct debts and unfunded liabilities of all levels of government in Canada, the Canadian national total debt amounts to $3.5 trillion, or about $116,000 for every man, woman and child living in Canada.

Another major source of pressure on the natural family is taxation policy, which increasingly penalizes intact families in the [] pursuit of [alleged] "fairness" for singles.  Canadians, like Britons, are familiar with the absence of a family-income concept in the federal income tax, the conversion of tax deductions into tax credits, the removal of tax exemptions for children in favour of means-tested direct payments, and many other features of the tax code, all of which have made life harder for the traditional (and still by far the most common) form of the family, in which the father is the main breadwinner.

Tom Flanagan Ph.D.
in his book review of Patricia Morgan's Farewell to the Family

Index:

For ordering contact the C.D. Howe Institute, e-mail: cdhowe@cdhowe.org, web site: http://www.cdhowe.org

    Tax Revolt — A special report by The National Post

    Revenue Canada punishes a family — The taxman hits back

Canada's revenue agency broadens its attack on complainant's family.  (He dared to publicize the fact that his wife committed suicide over demand from Revenue Canada for $27,170 in back taxes.)  Now it appears that his children are being subjected to tax audits, and family members are being questioned about the state of his former marriage. (Full Story)

[US] Marriage Tax Penalty Calculator


Subject:  RE: Family Income After Tax Definitions (fwd)
Date:          Thu, 25 Jun 1998 11:42:44 -0400 (EDT)
From:         David Osterman <david@isgtec.com>
To:         

I thought you might be interested in StatCan's definition of family, and its handling of support monies.

It appears that an "economic family" consists of 2 or more people who live in the same residence and are related by blood or marriage (including common/law).  However, the treatment of children in separated/divorced situations is strange.  They wish to include the children with only ONE household.  Even when this is not the reality that the children face, or, when it is irrelevant to the survey itself (I see no valid reason as to why a household having 1.3 members while another has 1.7 is any more unreasonable than forcing it to be 1 and 2).

Support monies appear to be counted twice.  They are included in the income of the earner (payer) and the income of the receiver.  This inflates the disposable incomes of earners, and, for cases of blended families (a rapidly increasing group), seriously overestimates their disposable incomes.  (I'm assuming that the majority of blended families are a marriage of NCP [non-custodial parents] and CP [custodial parents], resulting in the inclusion of CS [child support] for the CP's children but not the loss of CS from the NCP paying out).

The payroll taxes of E.I. [Employment Insurance] and CPP [Canada Pension Plan] are not counted as taxes.  This tends to inflate the apparent disposable income or earners.

Various forms of "in-kind" income are excluded as well.  Subsidized housing in Toronto can relect a substantial asset (e.g., paying $190 a month for housing that is worth $950).

I'm trying to gauge the effects of this policy.  The first is, that all non-remarried NCPs are not considered part of a "family".  Since this particular study was only interested in "families", the removal of NCPs from the study removes a large number of people who truly believe they are part of a family (or at least one of those "new forms" of family). This removal means that NCP families are not studied at all, and hence the very large tax+support components of their expenses are not brought to public attention.

By not treating support as a form of government transfer, the reality of support paying families/individuals is not recognized.

--------------- the following is my correspondence with StatCan ------

Infostats Internet Mail writes:
> From infostats@statcan.ca Wed Jun 24 16:22:50 1998
> Message-Id: <199806241936.PAA18754@smtpsha.statcan.ca>
> Date: Wed, 24 Jun 1998 16:45:00 -0400
> From: Infostats Internet Mail <infostats@statcan.ca>
> Subject: RE: FAmily Income After Tax Definitions
> To: david <david@isgtec.com>
> Cc: "Bishop, Kevin"
<NETWORKA/SMTP2/BISHKEV@regops.msmail.statcan.ca.statcan.ca>
> X-Mailer: Worldtalk (NetConnex V4.00a)/MIME

--- start of message 1 --------

The 1996 statistics in the Daily release come from the 1997 Survey of Consumer Finances (SCF), a supplement to the monthly Labour Force Survey (SCF) in April 1997, covering the reference year 1996. The demographic and labour variables on the SCF dataset are taken directly from LFS, as coded by the LFS interviewers following LFS rules. At the time of interview, all regular members of the household are listed and coded into "economic family units" (related by blood, marriage or adoption), along with their relationships to a common reference person.

Questions 1, 2 and 6:

A key point for LFS is that individuals must be listed as members of one household only. This is to avoid double counting, since the secondary residence could be, theoretically, in the LFS as well. Where individuals have more than one residence (including the examples that you describe, where children live part-time with both parents), the interviewers are instructed to determine, by probing with the respondent, where the person's primary residence is located (based on where the majority of time is spent). If the sampled household is the primary residence, the interviewer will list him/her as a member of that household. If  the respondent cannot choose, based on time, where the primary residence is located for children in joint residency situations (because equal time is spent at the two residences), then legal custody and support would be considered to make the determination. If the respondent still cannot choose, then residency at the time of the survey will be used to determine the household to which they belong. In summary, the interviewer along with the respondent decides whether or not an individual should be listed as a household member. When a child is listed in a household with one parent, there is the possibility that the other parent's household could also be included in the LFS sample. In this case, the interviewer would code the other parent's family structure according to whom he/she lives with (excluding, of course, the child already counted as a resident of the first household). If the second parent lives with nobody else, they will be coded as an unattached individual. If the second parent's household is not in the sample, it is not an issue.

Questions 3 and 4:

Each individual 15 years of age or over is asked to complete an income questionnaire, providing 1996 calendar year total  income receipts, by detailed sources of income. Income tax payable on 1996 income is also asked. Family income is derived by summing income from all individuals belonging to a particular family.

Child support and spousal support are counted as pre-transfer, pre-tax income by the person receiving the payment. The individual who is responsible for paying income tax on the source reports the tax as part of their "income tax payable", on their questionnaire.

"Transfer payments" consist of just those sources of cash income (i.e. - excluding income-in-kind such as subsidized rent, dental care, clothing/furnishings, etc.) from various levels of government. Transfers of money from persons outside the family are included as "income before transfers", not "transfer payments".

Question 5:

Only income tax is subtracted from "total income" (i.e., "pre-transfer income" plus "transfer income"). Payroll taxes such as E.I. premiums and CPP/QPP premiums are not considered, nor are payments of child or spousal support deducted. The "Note to users" in the Daily points out that family "income after tax" should not be considered a reflection of the net impact of government, since cash transfer payments and income tax only represent from one-quarter to one-third of total government expenditures and receipts. Benefits to families from areas such as health care, education, law enforcement/courts, etc.are excluded from the analysis, as are other direct and indirect taxes such as provincial sales taxes, the GST, consumption taxes (e.g. on alcohol, tobacco, gasoline), user fees and customs/excise taxes.

I hope that this answers your questions to your satisfaction.

-------- end of message 1 ---------------

MSMailbox.infostats@regops.msmail.ca wrote:

> Your inquiry has been forwarded to the section responsible for the
> information for follow up.
>  --------------------
From: Infostats Internet Mail
To: david
Cc: Bishop, Kevin
Subject: RE: FAmily Income After Tax Definitions
Date: Wednesday, June 24, 1998 6:22AM
Priority: High

Your inquiry has been forwarded to the section responsible for the information for follow up.

 ----------
From: david
To: 1. Ask Question
Subject: FAmily Income After Tax Definitions
Date: Tuesday, June 23, 1998 3:30PM

The following was committed to the English WWW Information Request form:

From: David Osterman <david@isgtec.com>
Using: Mozilla/4.05 [en] (X11; I; HP-UX A.09.05 9000/710)
 --

I have some questions on the definition of families as used in the recent report released in The Daily, Monday, June 22, 1998, [whose title is] "family income after tax".

1) I know of several couples who are separated where the children reside half time at each of their parent's homes.  One example: the 3 children spend 4 days with one parent, then the next four days with the other. The children have rooms etc. at each home.  (Neither parent is living with another adult.)

   Are these two families, or one (with an unattached individual)?  Do any of the following affect the definition of a family in the above example:

   a) One parent is paying child support to the other.
   b) One parent is legally the custodial parent.
   c) Both parents legally have joint physical custody of the children.
   d) One parent receives the Child Tax Benefit
   e) Only one parent works.

   [Note: The US Census Bureau's 1997 Current Population Survey indicated that 21.2% of divorced single parent families are headed by fathers.
   Apparently, Census does not record numbers for joint physical custody. In cases where children live with one parent a majority of the time, they are counted with that parent.  But many children in shared parenting live equal amounts of time with each parent.  The Census Bureau counts half of these children as "living with father" and half as "living with mother."
   This may account for the difference between this 21.2% figure with other US figures that show that only 9% of divorced fathers have custody.]

2) There are many single parents who have their children less than half time but often enough to have established a home for their children, including a fully furnished room etc. At what point would these parents be classified as single parents for the purposes of this survey (i.e. when would they be classified as part of a family).

   a) having the children at least 10% of the time.
   b) having n children y% of the time where n * y > 1
      (e.g., 3 children for more than 33.4% of the time)
   c) having n children y% of the time where n * y > 0.5
   d) only if they have legal custody  (but I am aware of some
      divorced situations where the legal custodial parent (who receives
      child support) has the children less than 10% of the time.)

3) In this survey, is child support included in pre-tax income or as a transfer payment?  Or does this depend on the tax treatment of the child support?  Or, is it ignored.

4) Is spousal support treated as pre-tax income, a transfer payment or ignored?

5) The Daily appears to suggest that only "income tax" is subtracted prior to determining "family income after tax".  What about the following:

   a) E.I. premiums
   b) CPP premiums
   c) child support payable to another family
   d) spousal support payable to another family

[My note: the following should be added to that list --WHS]

   e) Health Care payments (80% of health care costs are provided out of tax revenues)
   f) Fees for government services which were formerly provided for "free" (out of tax revenues)
   g) GST payments made by end-users
   h) Interest payments on loans and home mortgages (They are taxed as income of the lenders, they should therefore be allowable deductions from the income of the borrowers.  Up to $6,000/year can be claimed as deductions by an individual in the US for interest payments on a home mortgage.  Similar rules are in effect in Germany).
   i) Vehicle expenses for vehicles used in driving to work  (Those are allowable deductions in one way or another in the US and in Germany.  In Germany a fixed cost per kilometer -- graduated according to type of vehicle (e.g.: moped, motorbike, car) -- can be claimed).
   j) Taxes that were to be eliminated when the GST was introduced but are still being levied
   k) Taxes on consumer goods, an average of about 40% included in the prices charged to consumers.
   l) Property taxes

6) In the case of a divorced couple, neither of whom are living with any other adults, and one parent works and pays support, while the other's sole income is the support paid (plus some government transfers such as the Child Tax Benefit, but not any form of welfare),  which parent is considered to be the economic family, and which is not.

Thank you for your time and effort in responding to my inquiry.

David Osterman


The Fraser Institute estimates that average taxes deducted from income earners are in the order of 57% of pre-tax income.  It must be considered that the level of taxation for divorced families with children is far higher than the average of 57% when all hidden taxes are taken into account.

Is it any wonder that for the income earners of divorced families (mostly fathers), who by necessity must devote a far larger than average portion of disposable incomes to supporting two separate households, there is so much month left at the end of the money?


2004 02 11

Canada: Auditor General's report reveals massive fiscal irregularities

Hundreds of millions go to friends of the Liberal Party, for no discernible reasons and for no perceptible value received in return.

Liberal campaign poster -- 2004 federal electionsAnd here is a photo of the man that paid for it all, with your money!




Can you vote for the party of the man that cut the cheques for all that, Team Martin?

Can you afford it?  Who can?

Ted Byfield's commentary on Canadian Taxes in the May 11, 1998 issue of the Alberta Report:

Canada is now the world's top nation — when it comes to paying taxes, that is

By Ted Byfield

Like most Canadians, I have been willing to credit Finance Minister Paul Martin with doing a pretty fair job of cleaning up the Ottawa fiscal mess. Also like most Canadians, I was only vaguely aware of how he had done it. Having heard all the yowling from such federal agencies as the Canadian Broadcasting Corporation, I concluded he must have got most of it on the spending side.  Again like most Canadians, I was wrong.     He did it on the tax side, the consequences of which Reform MP Ted White made known to his North Vancouver constituents last week.  He sent them a bulletin, a copy of which was passed on to me, and now I'm passing it on to you.  It is recitation of facts, every one of them shocking.  They are:

  • That Canada has the highest tax burden of all the G-7 countries, the other six being the United States, Britain, Japan, Germany, France and Italy. Notice the presence of Italy.  I've always thought the Italian tax burden to be horrendous.  So no doubt it is, but ours is worse.
  • Our total tax burden is 28% higher than the G-7 average and 48% higher -- that's half as much again -- as the U.S. rate.  Income tax in Canada is 56% higher than the G-7 average, and our corporate taxes 9% higher.
  • Our property taxes are higher than any of the 29 countries in the OECD (the Organization for Economic Cooperation and Development).
  • A family of four in the U.S. can earn up to $24,675 without paying any tax on it.  If they have a home mortgage, their non-taxable total can rise to $30,000 since mortgage interest is deductible.  In Canada, income becomes taxable at about half of that -- $12,836 (just under $250 a week).  Mortgage interest is not deductible.
  • In 1993, when the Liberals again took office, tax revenues totalled $116.5 billion, or approximately $8,951 per working Canadian.  This year the government will collect $160 billion or $11,335 per working Canadian, an increase of 26% in five years.  In this five-year period income tax revenues alone are up 37%, chiefly because inflation lifts salaries, putting everybody in higher tax brackets.  The government used to compensate by indexing tax brackets for inflation; when they stopped, billions upon billions more poured into Ottawa.
  • The overall result, according to StatCan figures, is that any improved family earnings accrue largely to the government.  Between 1989 and 1995, the real after-tax income of the average Canadian family fell by $3,461 -- from $41,084 to $37,623.
  • This is a continuing process.  In 1977, in the midst of the Trudeau years, the government collected $7,044 from every working Canadian.  By 1986, two years into Mulroney, the take was $14,593.  By 1996, after three years of Martin, it reached $22,792.
  • Furthermore, Canada Pension Plan contributions will rise precipitously over the next few years, adding between $690 to $1,380 to the average tax bill.

Of course, Ottawa would be quick to remind us that these taxes cover medical care which is privately funded in the U.S. But in B.C., replies Mr. White, people contribute $7.2 billion in premiums to B.C. medicare, plus billions more through their federal taxes.  The Fraser Institute estimates the average B.C. family pays $3,500 in taxes for medical services.  In neighbouring Washington State a family of four would pay Cdn$6,570 for similar coverage -- but it would also be paying about $12,000 less in taxes.
    Michael Campbell writes in a Vancouver Sun column that a B.C. couple with no children will pay $28,461 in taxes on an income of $57,949.  In other words, the government gets one dollar of every two, plus employment insurance and CPP [Canada Pension Plan] contributions.  Since 1990, he says, average after-tax income has fallen by 8% in B.C.
    Things could be far worse, however.  Take the case described by Mark MacKinnion in the Edmonton Journal.  Back in 1994, some 40 Alberta oil workers were offered a bonanza job working for a company called Well Tech Inc. in Siberia.  It would mean spending many months away from their families, but the pay was great.  One man was to make $74,000 in 1994 alone, plus another $92,000 in 1995.  Best of all, taxes would be only $12,000 because people working overseas for Canadian companies get massive tax concessions.  In both years Revenue Canada approved their returns.
    These men have now received reassessment notices, because Revenue Canada has decided Well Tech didn't meet the ownership qualifications that made it a Canadian company.  The man who earned the $74,000 and $92,000 has been told he owes the government $33,000 in taxes plus $8,000 in interest.  Most of the men can't possibly produce these sums and fear they may have to go through bankruptcy.
    I really do wonder if such rigours would be applied in Quebec.  I have no actual grounds for the suspicion that they would not, but the suspicion persists nevertheless.  And it is much broader than the mere notion that Ottawa has one set of rules for Quebec and another for the rest of the country.  One increasingly gains the impression that government in Canada has become a process of manipulation in which a self-appointed "knowledge class" (as some perceptive wit has dubbed them) dupes, deceives and bilks us in order to fulfill its vision of an ideal society about which it is never altogether honest, and the ultimate cost of which it has no idea whatever. Quebec gains preference because it constantly threatens to depart the country, and thereby thwart the fulfillment of the vision.
    That vision, as we see it manifesting itself in assorted Supreme Court decisions and through other non-elective manipulations, many of us (probably most of us) find far from attractive.  In fact it becomes ever more hideous, to the point where you find yourself wondering whether tax evasion might not be a civic duty.  Anything to keep money out of the hands of these people.
    There's something else.  Surely in view of the emerging facts, the federal government in Canada should be getting smaller, not larger, and federal taxes going down, not up.  The essential federal functions envisioned in the constitution can be reduced to three categories: national defense, control of money, and international relations.  All Ottawa's other activities, in the fields of health and welfare for instance, it has acquired by blackmailing its way into provincial jurisdictions-that is, by loudly offering federal subsidies within these areas in exchange for federal control of them.  Any province that opted out lost the advantage of the federal subsidy while paying the cost of it.  Other things, like postal service and air traffic control, are already being handed off to the private sector.
    Of the three specifically federal duties, two have virtually disappeared.  Our national defense is provided by the Americans and our armed forces are being reduced to the status of a police force.  Our fiscal policies are increasingly determined by world conditions over which we have no control anyway.
    In short, we are paying more and more for what ought to be less and less.  But do pay the taxes anyway.  They become quite unpleasant if you don't, especially outside Quebec.

— Ted Byfield
Alberta Report, May 11, 1998, page 44


In another article (Saving for the next election, page 8) the Alberta Report exposes Ottawa's fudging of the books to hide huge new revenues and spending.  The situation is so bad that the Canadian Auditor General refuses to give the creative accounting of the federal government a clean bill of health.  The article states:

". . .  Canada's auditor general, Denis Desautels, has attacked the government's accounting practices, accusing it of misleading Canadians about the state of the nation's finances.  He refuses to declare the 1997-98 books "clean" and warns that the country's fiscal credibility could suffer from such tricks.  . . ."

The Alberta Report publishes an on-line edition on the Net at http://albertareport.com


Dear Friend,

The issues discussed in the article by Ted Byfield don't deal directly with issues of father's or family rights, but certainly, they do affect the lives of all Canadian families.  Although Ted Byfield of the Alberta Report doesn't mention it specifically, extra tax revenues are now being collected in Canada from non-custodial fathers through the onerous provisions made to the Canadian Income Tax Act that were implemented in connection with the passing of Bill C-41 last year (1997).  The Income Tax Act changes involve amongst other things provisions that child support payments can't be used by non-custodial fathers as a deduction from their taxable income anymore.  Estimates of the extra annual tax revenue generated thereby range from Cdn$500 million to Cdn$1 billion.  That is money that is being taken out of the mouths of the children of divorced or separated families.

The issues of onerous taxation discussed in Ted Byfield's article affect all Canadian families.  Inflation is still with us, although not to as large an extent as used to be customary.  In addition to the reduction of family income through manipulation of the tax system by the federal government it must be considered that the purchasing power of the Canadian dollar is dropping constantly.  The quality of life for all Canadian families suffers as a result of federal policies.

Please, if you are involved in international discussion lists dealing with such issues, or if you know of anyone who is, pass on the forwarded article.  To expose these issues to the light of international publicity can only help our Canadian families who are being financially bled dry.

Your consideration and help would be much appreciated.

Sincerely,

Walter H. Schneider

PS. See also the following.  It explains why we have inflation and a government that helps the banks to fleece all of us.  It contains also a considerable number of names of well-known and well-respected people and economists who essentially agree with the author of the relatively short essay.  Mind, you, the author underestimated Canada's total national debt, for the very same reason that the media follow the very same habit (as explained above).

Billions for the Bankers

Debts For The People

In his essay, "Billions for the Bankers--Debts for the People: An indictment of the Federal Reserve System," the late  Pastor Sheldon Emry [off-site] examines the corruption at the core of the American monetary system.
This essay examines Stop Welfare for Politiciansthe corruption at the core of the Canadian monetary system. It suggests that Canadians lost control of their money supply in much the same way as the Americans did. How can we get it back?
 
Full Story (off-site)

See also

Trashing the US Tax Code - for the sake of the family

Feminism For Male College Students A Short Guide to the Truth, by Angry Harry (Off-Site)

__________
Updates:
1999 08 08
2000 05 27 (to insert links to Revenue Canada's persecution of a family)
2000 12 04 (to insert link to US Marriage Tax Penalty Calculator)
2001 01 30 (format changes)
2001 03 15 (added link to US family tax plan)
2001 10 30 (added introduction)
2003 04 02 (added link to Family-friendly Tax Credits)
2003 08 03 (added reference to Billions for the Bankers – Debts for the People)
2004 02 11 (added reference to Auditor-General's Nov. 2003 report)
2004 04 05 (added reference to Liberals' elections lawn sign)
2006 03 04 (added link to Feminism for Male College Students)