Thursday, February 7, 2019

Less and less money is spend on investing in our economy, i.e. on making a living!

A recent article in the National Post splits up Canada’s ‘tax payers’ into those households making more and those making less than eighty thousand per year. This was proposed by another study of the Fraser Institute that calculated that such a household pays 4.6% of all personal taxes paid. One in every 5 households pay 70% of all federally and provincially expenses, while 2 in 5 households pay nothing.

According to the article, if you ad to that all tax free benefits such as Canada Child Benefit or the GST/HST tax credit then the '$80,000 or less' households break even and pay no taxes. This was based on an Ontario residence. Furthermore, tax credits from such matters as RRSP deductions or healthcare expenses are not included.

Households with a combined income of $45,300 and with three children nets from the government $14,758 per year. Not that living in such circumstances is very desirable, but this group of $45,300 income marks the bottom 20th percentile of house hold incomes – the middle of the 'below $80,000' household income group.

The issue is not that these people pay virtually no income taxes but rather that they make up 40% of Canada’s electorate and they will always vote for more government support. i.e. with their wallet. Remember, typically you form a majority government in Canada with 40% of the popular vote
Also, we seem to keep on voting for politicians that keep on adding more and more areas of government intervention and subsidies. The most blatant example are the goodies handed out during elections. Thus, it is nearly unavoidable that we have governments that spend more and tax more. 

This is basically Canada’s problem today. We demand governments take care of us more and more. No wonder government debt and taxes go up and we tend to become a more socialist country every year. That is where Margaret Thatcher's quote is so relevant because this system is in essence self-destructive.

“The problem with socialism is that you eventually run out of other people's money.”― Margaret Thatcher

Even the Scheer conservatives suffer from this social affliction, but the Liberals and NDP are the worst. In some ways, it doesn’t matter whether individuals or the government spend more and more on our lifestyle. What matters is that less and less money is spend on investing in our economy, i.e. making a living!

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