Informed Digest: Taxes—Cuts & Giveaways, Laws & Loopholes

Keeping up & in the know…

Canadians for Tax Fairness: Tightening Up Canada’s Tax Law

“NDP National Revenue Critic Murray Rankin has proposed new legislation that would make it easier for government and the courts to crack down on those who are playing the system.

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Rankin’s bill focuses on proving ‘economic substance.’ That means corporations must be able to prove that a transaction has economic purpose aside from reducing the amount of tax owed.

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What’s on the books can make or break a court case when the government goes after tax cheats. It is a multi-billion dollar problem for which the rest of us pay.”

Behind the Numbers: Who Really Benefits from Canada’s Tax Giveaways?

“Although some on the right of the political spectrum might think $43.4 billion in annual tax cuts is something to be celebrated, the end result has been missed opportunities and undermined government capacity.

Additionally, consider the fact these tax cuts were all either implemented or allowed to continue during the period of deficits in recent years—the fact that the government has given away such a large amount in tax cuts while running deficits balances, undermines this government’s supposed ‘financial responsibility’ credentials.

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The lower and middle class did slightly better than others relative to their lower levels of income, however in raw terms, the greatest beneficiaries were those in the upper income ranges.”

-Kayle Hatt

Huffington Post: Stock Options—The Billion Dollar Tax Loophole

“This loophole has a $1 billion annual price tag for the rest of us.

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Canada’s wealthiest CEOs don’t have to pay tax on 50 percent of income received from cashing in company stock that they have received as part of their compensation. It is not uncommon for payouts to be in the millions of dollars. It is a deal that screams double standard.

Not surprisingly, it is a popular practice in Canada’s top publicly traded companies. Nearly a quarter of executive compensation is tied to some kind of stock option deal.

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Corporations like justify stock options by saying it encourages directors, officers and consultants to make decisions that will drive up the company’s stock performance. Indeed shareholders do benefit—at the expense of the taxpaying public.

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These companies and their senior executives profit from the infrastructure, legal, health and education systems for which the rest of us pay. Yet for decades, the Canadian tax system has careened towards ‘the more you have the less you should pay’—sometimes with a shrug, sometimes with a wink. It shouldn’t be a surprise that the list of those who benefit from the stock option deduction include former prime ministers and even sitting members of the Senate of Canada.”

-Dennis Howlett

Canadian Centre for Policy Alternatives: Hennessy’s Index—Tax Cuts 101

“29%: Top federal personal income tax rate for anyone earning from $136,270 to you name it. In 1981, the rate for anyone earning $119,000 or more (1981 dollars) was 43 percent.

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29.1%: Canada’s federal corporate income tax rate in 2000. By 2011 that tax rate had been cut in half, to 15 percent.

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5 times more: Every dollar spent on public services or invested in public infrastructure generates an average of five times more jobs and immediate economic activity as a dollar lost to corporate tax cuts.

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$1 billion: Estimated average new revenue that would go into federal fiscal coffers if the corporate income tax rate on the oil, gas and minerals sector was restored to the 2002 rate of 28 percent.

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$280 billion: Estimated public revenue lost worldwide from the $20 to $30 trillion in cash sheltered through tax avoidance (popularly known as tax havens). Canada loses up to $10 billion a year on this gaping loophole.”

-Trish Hennessy

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