The Politics of Deception: Harper vs. Trudeau, a Tax Plan Showdown!

Author’s note: If you followed a link directly to this post, don’t forget to check out the follow-up blog post on income splitting!

Due to popular demand (thanks to the 3.5 people who asked for a follow-up!)….I give you a Tax Plan Showdown: Harper’s UCCB increase vs. Trudeau’s reinvention of the way we receive child benefits.

I’ve actually gotten a lot of feedback from readers on my last post, the common theme being a demand for a more “real world” scenario as opposed to hypothetical situations and numbers. While the real world is all well and good, it’s not easy to lay out the tax accounting for all families in all of Canada at the same time while keeping people from drooling on their laptop keyboards due to excessive sleepiness (a typical symptom of reading about taxes).  So, I decided to make a pretty table (check out that font!):

TAX PLAN COMPARISON V2

** The above table includes the following federal government payments:
Harper plan: The newly increased UCCB (taxable payments) and the Canada Child Tax Benefit (CCTB) (non-taxable payments)
Trudeau plan: The proposed, enhanced CCTB (all non-taxable payments)

And another, even MORE fantastic table for those of you with kids between 6 and 17 years old:

TAX PLAN COMPARISON V3-olderkids

First, find your family income on the left side of the table. Then, check how many kids you have. Easiest way of doing this is by doing a head count or asking for a show of hands during breakfast. The table contains 3 sections (for 1 kid, 2 kids or 3 kids). If you have more than 3 kids, I’m not quite sure how you have time to read this blog post but thanks! (and good for you for making time to read my ramblings!)

The dollar values in the table show the approximate AFTER-TAX dollars (money in your pocket) from both the Trudeau tax plan and the Harper tax plan. Keep in mind, the info above is still based on a simple scenario that doesn’t take into account a lot of things that are likely to have an impact on your taxes (RRSPs, daycare costs, medical expenses, etc.) but it does reflect the reality of the 2 tax plans and the net effect on your wallet.

Now, the last thing I want is to go all partisan on you. This blog was never meant to be used for political means or to report anything but fact (while simultaneously separating out the fiction). However, I happen to have seen an advertisement this evening for the “increase in the UCCB” for which many of you will be getting cash beginning on July 20th. It says nothing about the fact that these payments are taxable nor does it mention the elimination of the “child tax credit” that I mentioned in my previous blog post. Yes, you will end up with more cash in your pocket with the increase in the UCCB. If you receive more money from the government in the form of increased child benefits, there are no scenarios in which you will end up poorer (even with the cancellation of the child credit). That being said, after a deep, cleansing breath and with every objective and unbiased bone in my body, I say this:

When a CEO who earns $5,000,000 per year and a family struggling along with $40,000 of income per year both collect the same $160/month per child (under 6) from the federal government in UCCB payments, we have a system that requires some adjustments. Especially when those reallocated dollars could be put to far better use in the hands of a family with very limited child care options. It was, after all the original purpose of the UCCB: to offer “choice in child care”, allowing Canadians to “choose the child care option that best suits their family”.

I’m not sure the above hypothetical family earning $40,000 per year is able to choose quite that freely under the current system. Just saying.

Sincerely,

The Funny Accountant

In case you missed it, here’s the audio from my appearance on CJAD, chatting with Dan Delmar about the UCCB increase and other family related tax stuff!

If you like what you read, please like my Facebook page and/or follow me on Twitter!  And, as always, if you have tax questions, need advice on your personal taxes, corporate taxes or anything else accounting or business related, please contact me (Mitch Kujavsky), AKA The Funny Accountant, either by phone at (514) 833-1158 or by e-mail at mitch@mkassociates.ca.

Also, for a witty and insightful read, check out the wifey’s blog. It’s funny and good.

47 thoughts on “The Politics of Deception: Harper vs. Trudeau, a Tax Plan Showdown!”

  1. I guess I better start doing my homework before the next election! Regardless, you have peaked my curiosity into the taxes, credits and benefits across all the provinces and territories. While working, Ontario rates were my focus, but seeing the differences shows where things are focused.

    Liked by 1 person

    1. Consideras well the partisan leaning of the author.JTs numbers are all made up based on a non existant plan, on non existant funds. Increasing taxes will mean the hypotheical savings will be wicked away back into the system. Pumping a unit of o neg while you are hemoraging out doesnt really solve the problem

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      1. Point well made. I will say this though – I had no partisan leanings until I analyzed the 3 tax plans and then experienced the massive marketing blitz of the Conservatives prior to the UCCB payout. I feel so blatantly manipulated by the whole thing, it left a very bitter aftertaste.

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      2. 100 % correct and for some reason he mentions that they did not mention the “new” UCCB is Taxable–how STUPDI is he–it has been TAXABLE since 2006 !!

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  2. Love your work, FunnyAccountant. That being said, it is not fair to compare CCB plans in a vacuum, one must consider other government tax and credit initiatives in the overall analysis. Also, the “Harper” column is actual, real dollars. The “Trudeau” column is hypothetical and campaign material. And, Trudeau hasn’t explained where he will get the money to pay for all of these rich benefits. Higher taxes? Likely.

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    1. First of all, thanks! Secondly, in order to reduce the risk of the post containing any blatantly partisan leanings (insert winky face here), I’ll admit I actually included the current CCTB as it was calculated in 2014 and not any potentially increased amount should the conservatives win another majority. The CCTB is bound to get at a minimum an inflationary bump (as it does every year) so the Harper column figures are likely slightly understated. And, yes, the Trudeau numbers are of course hypothetical until he forms a government, at which point I’m sure he’ll fulfill every one of his campaign promises to the dollar! (see above chart for reference) 🙂

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      1. Everyone always fulfills their campaign promises… exactly the way they make ’em. Oh yeah. 🙂 Personally, I hope Trudeau and the Liberals never have the chance to reneg on their ridiculous promises; I hope Canadians are smarter than to elect this kid and his pie-in-the-sky, context-free election propaganda.

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      3. Yes because we saw EVERY single promise from the “red book” implemented. Sorry have to go pay my GST that was being removed.

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    2. That was my question too. I’ve been posting link to other page in discussions on Facebook … but THIS just turned me right off.

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  6. I’m a bit unclear about the tables. Are these numbers increases over the current system? Is there a 3rd, missing column for “current system”? Why are the numbers different from those in your last post?

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    1. The number have been updated to reflect a more “real” scenario as the original post was for illustrative purposes. The “current” system is actually the Harper column as this is the child benefits system that is in effect until a change in government.

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    1. @WannaKnow
      I think you misunderstand that trick. You are only avoiding tax on the *interest*. The UCCB that you receive is still taxable.

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  9. I’d like to see a side by side comparison of all three parties, if and when that data is available. I’m leaning NDP but I’d like to see the numbers.

    Liked by 1 person

    1. What would you like to see in that side-by-side-by-side comparison (i.e. money leftover at the end of the year? Total after-tax benefits?) I’m willing and able to do it ASAP!

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    2. Also, I’m curious – if you’re leaning NDP, does the reason you are doing so have anything to do with their family/child benefits policies? If so, you should be aware that the NDP’s policies are actually very similar to the CPC where child benefits are concerned.

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      1. Well, sure, but of course they are also promising a universal child care program for $15 a day rolled out over 8 to 10 years. So, some sort of simple comparison should be possible.

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  10. No, the RESP is just a vehicle for savings. Doesn’t havr any effect on your taxes! Be very careful investing the whole amount into an RESP (or RRSP for that matter) because if you can’t afford the tax bill in April and you have to cash out an RESP or RRSP there are serious tax consequences! Just put some of the UCCB money aside and you’ll be good to go.

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  11. I wish I made $30,000 a year…. Your chart is missing those of us who are sitting below the poverty line. That all said thanks for this post. 🙂

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    1. I considered including those below tje poverty line but there are other issues to consider in that case, including welfare payments. But the $30k column applies to you as well

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  12. Two Questions:
    1) What would the Conservative break down be if they had not removed the “Child Tax Benefit”?

    2) What about the calculation if parents are making use of the “Child Care Expenses Deduction”?

    Thanks!

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    1. for some reason the increase in allowable child care expenses was NOT included and the removal of the Child Tax Credit is equal to $337.50 a year per child.

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  13. While the point does have merit, 5,000,000$ annual CEO’s getting the same as a family making 40,000. The question is, how much tax is that CEO paying – its a huge chunk compared to the 120 families making $40,000 and helps pay for a lot of this! Again, I see the point but its not quite that cut and dry…

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  14. Is there any way to determine how much of this UCCB bonanza one would need to donate to a political party to offset the tax liability? I think it would be wonderful to have a big wave of taxpayers use part of their windfall to support the party of their choice.

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  15. at “3.5 people” you lost me… I happen to have a degree in astrophysics, and I’ve never heard of 0.5 of a person asking for anything. Me thinks thou dost have your math wrong from the start…

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  16. Huge piece missing in your analysis is Trudeau promising to eliminate the income splitting for families with kids, which can amount to $2000 for some families…like mine. So you should update your tables to reflect that so you are comparing apples to apples.

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    1. I considered incorporating income splitting but it would have required an entire separate analysis since it would mean a couple earning money disproportionately. I guess the best way to do it would be just have the spouses’ incomes be far enough apart that they max out the family tax cut….

      Problem with that is that it happens rarely in real life. In fact, I have almost 200 personal tax clients and not one of them maxed out the family tax cut last year! Maybe that’s a bit of an oddity…or now that I think about it, maybe it’s the norm in Quebec because of our subsidized daycare system….

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      1. I did 1400 this year and I would say about 30% of the married with children managed to “max” out the benefit.

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  18. Please note that when you are stating that there are no scenarios when you could end up poorer upon receipt of the UCCB is wrong. This is still undecided and will depend on how provinces treat or include this amount in their income tested programs to deal with poverty such as income assistance, heating rebates… Already the premier in Nortwest Territories has modified the NWT Social Assistance Act and Income Assistance Regulations to protect its recipients. If the regulations had not been modified, there would have been no benefits to UCCB. For low income families, whether they end with money in their pocket will vary by provinces. A bit strange for a national policy which is supposed to deal with child poverty…Maybe you can be in fact too poor to not count and benefit from this program…I would suggest people read this report http://www.caledoninst.org/publications/pdf/589eng.pdf

    Liked by 1 person

  19. 1) I have 4 kids
    2) I’m a financial advisor so it’s my job to read stuff like this (or what value do I provide my clients) and so I MAKE the time to read it.
    3) I’m amazed at how many people don’t understand how RRSPs, TFSAs and RESPs work.
    4) The spin put on all this by the parties is dumbfounding. Isn’t it enough that it took the Cs 4 years to implement this wonderful bonus money for families that they promised in the last election? Just like income splitting for families. It would have been nice to see it happen 4 years ago instead of using it as a political tool for their campaign AGAIN.

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    1. 1) wow!
      2) good on you, we need more people like you advising those who either aren’t aware or just don’t want to be aware.
      3) I know! It blows my mind every time a tax client gives me their TFSA or RESP statement and asks me how much of a deduction they’re getting on their tax return. I want to take all Canadians by their shirt collars and yell the facts at them!
      4) what else is there to say or add? I’ll just ask that you share and re-share on all social media channels any posts (mine or otherwise) that you think will lead even one person to know more or question something. That being said, big income splitting post is finished and ready to go up tomorrow AM. STAY TUNED!

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  20. As a Canadian Volunteer Income Tax Preparer (CVITP) I would like to see your table extended down to zero income. 90% of the returns I prepare are for families with little or no income but require a return so they can get social assistance. Two cases that come to mind are: single parent with 4 children, 1 disabled no taxable income; single parent with 2 children no taxable income and rent in Toronto Housing greater than social assistance. (Toronto Housing rate is supposed to be geared to income?)

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  21. I dont think I would choose a government based on what they are willing to pay me for my children. I do this thing called WORK and support my family without relying on the government benefits, which we do not receive anyways!

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    1. Point taken. However, along the same line of thinking, would you not then need maternity leave benefits either? After all, you could save enough money so you could afford to take a period of time off work in order to raise the baby. I would also hope that at least part of everyone’s voting decision is how your hard-earned tax dollars are used by that government.

      You obviously work hard and are proud of that fact. Are you happy seeing part of the tax payments you make going to high-income earners in the form of “child benefit” payments they don’t need?

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