CANADA'S TAX SYSTEM FAVORS THE OLD OVER THE YOUNG
May 31, 2007
At every income level and under almost all economic circumstances, Canada's tax system favors the old over the young, says the Vancouver Sun.
- Net taxes -- federal, provincial and municipal -- for a senior couple in British Columbia (B.C.) with an income of $30,000 (about US $28,082.45) typically total just under $3,000 (about US $2,808.25 ) a year.
- Yet the average family of four trying to scrape by on the same income coughs up almost $1,000 (about US $936.08) more than that, plus the mandatory Employment Insurance (EI) and Canada Pension Plan (CPP) premiums imposed on every wage earner.
- Never mind that seniors have fewer expenses and are more apt to own a mortgage-free home (and, if they do, it doesn't affect their many tax breaks -- which range from extra grants to help pay property tax to extra income-tax deductions).
And this preferential treatment just keeps getting better. The last two budgets to affect B.C. seniors -- from Jim Flaherty in Ottawa and Carole Taylor in Victoria -- both sweeten the pot still more, says the Sun.
Flaherty was the biggest sugar-daddy:
- He passed income splitting for seniors -- a policy that won't affect all older citizens, but is a huge boon to couples who live largely on the pension income of just one partner.
- He also increased the age deduction -- a cash gift to anyone over 65 who pays income tax.
Taylor's generosity was more subtle:
- She reduced the age at which a homeowner can indefinitely defer property tax payments from 60 to 55.
- The deferred taxes must be paid when the home is sold, but the terms are fabulously favorable -- an interest rate two points below prime that isn't compounded like a normal mortgage.
Source: Don Cayo, "Canada's tax system favors the old over the young," Vancouver Sun, May 29, 2007.
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