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Government hates single income families (Part II)

While these numbers are not up to date, they still are useful to illustrate how the tax system didn’t and still does not support the single income family.

Let’s start with some assumptions so that we can compare “apples to apples” as best as possible (yes I know I will miss some things, but let’s just start on a relatively level playing field).

  1. Let’s assume that the “family” income is around $100,000 (Cdn) a year (yes that is a lot of money)
  2. Assume that the family does NOT save any money in RRSP’s (that’s a safe call, since most of us don’t)
  3. Won’t make any comments about dependants and such, since they have no effect on the actual tax paid (only whether you receive Family Allowance Child Tax Credit cheques)
  4. No union dues, carrying fees, medical costs, or such that would in some way affect (effect?) the final income numbers
  5. Everyone pays the maximum CPP and EI payments for the year (which is a penalty the duel income family must take).
  6. No I won’t talk about GST and PST or Tax Credits for these (I’d swear too much and get thrown off my host site most likely if I did).
  7. Thse folks live in ONTARIO (the good) just for discussion sake.
  8. All of these numbers are straight out of QUICKTAX (but you could easily figure it out using a tax form as well).

So keeping this in mind let us start with our number crunching.

Single Income “Family” (Two Spouses and some kids, but only 1 spouse earns a pay cheque)

Tax payable for Spouse who is “bread winner” in family:

Tax Line descriptionLine#Amount
Employment income (box 14 on all T4
Slips)
101
$100,000
Total Net Income236
$100,000
Total Taxable Income260
$100,000
Net Federal Tax420
$18313
Provincial or Territorial Tax428
$9,905
Total Tax Payable485
$28218

Tax payable for Spouse who stays at home is effectively ZERO.

Thus for a single income family an approximate tax level
would be: $28218.62

or about 28%

Tomorrow (or maybe Monday) how much does a dual income family pay with a family income of $100,000?

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Canadian Government Hates Single Income Families

I wrote this a long time ago, but I still agree that the single income family cannot compete financially with dual income families. The title is a little inflammatory but isn’t wrong, the Canadian Government Hates Single Income families (at least their policies do).

This is my assertion, and over the next few days and posts I will put forward data that will show that through the Canadian tax system, the government is saying, “The traditional family is dead” (or maybe the “traditional family” is defined differently?)

Now before I put forward my case let me also make the following statement:

  • When I am saying single income families, this is not some nutty tirade about women in the workplace, that is why I am saying single income family (where 1 spouse stays at home with the kids, and one goes to work).
  • This is not a tirade against any tax breaks or government funding that a single PARENT family might receive (I have way too much respect for the single PARENT families out there and the amount of work they have to do).
  • This IS a tirade that I have been making for years, about how, because my wife stays at home to take care of the kids (her choice), I get penalized by the tax system.

Stay tuned over the next few days I will post my data (which is not anything earth shattering, in fact it is just me fooling around with Quicktax) and you can see how much more we single income families are penalized.

What Can You Do ?

If you feel that you agree with this, maybe you could pass it on to your member of parliament too? I have been sending this basic tirade every year, and chew the ear off any candidate that appears at my door about this as well (they don’t come by much any more, I must be on some “Crazed Loon with Big Dog” list).

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Clarification with a Dickens Quote

As a further clarification on my rant about income must be greater than expenditures I was sent the following excellent quote from one of my “readers” about Dickens debt views:

Annual income twenty pounds, annual expenditure nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pound ought and six, result misery.
Charles Dickens, David Copperfield, 1849

Even in the times of Dickens, was that simple rule known, wow!

Thank you kind reader.

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Give!

One of the few spending things I do, which I don’t grouse about (and actually get upset when I don’t spend enough) is giving to my Church. No I don’t tithe (for those that don’t know tithing is giving 10% of your salary to the Church), but I do give as much as I can. Why? I can see my money at work in the Parrish which makes me feel good. A side benefit of this, is I get tax money back as well (so there is a long theological argument that can be had about giving and not getting a receipt, but I’ll save that for any religious blogs I might start-up). This year most of my tax refund was due to the givings to the church, which is nice to get back.

Charity is a Good Thing

Very True

You don’t go to church? OK, that’s cool, but is there an organization in your area which could use your money (not just the United Way)? There are a lot of charitable organizations in the Ottawa area that could use your money, and put it to very good use (and you still get to write that money off too, so you get to enjoy it a little bit too). When I first started working in Ottawa my office was across the street from the Shepherds of Good Hope, and it humbles you to be making a good salary and to see the homeless just across the street.

Look around, it’s something you can do for your community, and it helps out your finances as well (but remember to give as much as you CAN don’t put yourself into a financial bind, either).

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Cancel those old credit cards!

So here is a good example of why you should cancel credit cards that you no longer use (or even those that you shouldn’t continue using).

About a month ago I got my monthly CIBC Visa statement. Now, I stopped using this card about a year ago, in favor of a President’s Choice Mastercard (which gives me grocery points). I opened the statement assuming my normal 50 cent credit balance (I like pissing off these folks by overpaying by less than a dollar, and thus their systems then send me monthly statements, costing them money), but NO, I owed $60!

I asked my wife, why did we have a charge on the Visa card for pictures from a company in Calgary? My wife remembered that we had ordered pictures from this company last year (at this time) for our daughter’s band. I went and checked my records and YES they had charged us LAST YEAR and I had paid LAST YEAR. Here is the $60 question, why were they charging me again THIS YEAR?

I phoned up the CIBC Visa “help” line.  The young lady was very helpful and says I had to put a “trace” on this charge to get it removed. The solution proposed was that I should pay the bill and when the charge was reversed I would have a $60 credit. I pointed out that I didn’t use this card any more, thus having a $60 credit does me no good.

The Moral of this Essay?

  1. If I had CANCEL‘ed this card, this would NOT have happened in the first place!
  2. Always check your credit card statements. I find at least 1 or 2 spurious charges on my cards every year.
  3. With all of the personal information theft going on having the minimum “points of attack” (i.e. credit cards) minimizes your possible damage in this kind of incident.

Keep this one in mind, and maybe figure out just how many credit cards you have sitting around gathering dust. It is NOT an easy task to CANCEL credit cards, but if you miss out on 1 of these possible incidents, it is worthwhile.

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