Fed Issue #23 - Federal Liberals eye tax on private health and dental plans, grabbing $2.9B

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Originally Posted by JBen

Lol, yep. :)

Personally, I suspect there will be more and more people going to more and more private clinics in years to come. Why should anyone who pays a lot in taxes already, have to pay for private procedures, or private plans, or procedures that are no longer covered under OHIP?

And its only going to get worse.

And that is one reason why I believe this is a good change to tax code. How its spent? Who knows. If a tax credit for those with private plans ( Think just the cost of prescription drugs these days and seniors)...........

Do agree that the working class is taking it on the chin. Now I hope this doesn't go downhill or off the rails but the second, third and 4th largest budget eaters?
Education
Salaries and overhead
Debt servicing.

I won't play a fiddle if those with gold plated pensions, gold-plated benefit plans and who make far more than the working stiffs have to start paying their own way for a change, and it gives those who are getting taxed to the teeth a $1,500/year tax credit. Maybe then, they might have $1,500 to put in an RSP or TFSA every year.

Will there be people who this means another $200-$300 ( Guesstimate assuming $100/month payroll deduction and 24% Fed income tax on $1,200 benefit) a year in taxes, who likewise are around or a little above the mean.
Yep. Atleast they have plans.

Many don't.
/looks at Alberta where unemployment is now 9%
/looks at Ontario, rural Ontario
And just regular people getting hammered.

As for the rest.
Well a politician did come along who said he'd save cost,eliminate waste . He got pummelled. And so has every other politicians since around the 80s who has said we can no longer afford to do everything, be everything, for everyone.

But healthcare is something I think we all can agree on everyone should have access to (many don't), and everyone can agree is something we value highly.

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Well said Jben
Very well said.

I get free coffee at work they going after that next

I wonder if Bill Morneau the Minister of Finance lists his chauffeur driven limo as a taxable benefit?

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Originally Posted by JBen

Read up on it. It is the right thing to do.
Providing the revenue actually goes towards (allows) for the offsetting tax credit.


The panel suggested the maximum tax credit would be $750 for a single person earning less than $44,000 or $1,500 for a family with income below $89,000.

This policy could be defended on the grounds that it would remove a distortion from the tax code that sees the relatively well-off (public servants and people who work for large companies) have their health and dental costs subsidized, while the four in 10 Canadians without workplace policies have to buy insurance from after-tax income.
http://news.nationalpost.com/full-co...y-down-deficit
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How often have we brought up that for the "average" person ( by definition those around the means). Who don't earn 70,000 as a single person, the mean is $70,000 duo.....don't have a Pension, can't save, are getting hammered. Working hard so others don't have to....
Or small business owners, or self employed....

4 in 10 Canadians have to get private insurance. That comes out of their after tax disposable income.
For people with companies and large plans its "gratis", where many other things be it a car/loan/mortgage/gym membership/life insurance it's a taxable benefit thats added to income for the calendar year.

So what they are talking about is taxing those plans (raising say 3billion) and then giving people who have to get their own plans a tax credit that might cost the Feds the same.

So take some person who earns say 80k, has a pension, has great benefits ( not taxed) and another person who earns say the same 80k, or a family, but has to pay for a private plan and pay for their own retirement..

Who needs it more?

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Every one of the private sector employee benefits plans are part of the employee's pay package which is already taxed at source. Any benefits over and above that always show up on their T4's. Nothing is "free". Claiming that the benefit plans is extra undeclared income is flat-out wrong and typical Liberal "spin". Small businesses that need to purchase group insurance over and above that already supplied through provincial medicare plans may declare their premiums as a tax deduction as may individuals who have out-of-pocket dental,drug and physiotherapy treatment not covered by an insurance benefit plan called non-refundable tax credits. For lower income folks,these non-refundables can mean they pay ZERO taxes when calculated against their bottom line. So,with a plan like the Liberals just proposed,who's getting bent over the desk,now? I'm not buying one bit of this Robin Hood "take from the rich,give to the poor" bull.

I suppose I could be mistaken.
I suppose the articles writer could be mistaken.
I suppose the National Post editors (hardly left wing media) could make a collosal reporting error like that.
I suppose anyone's pay stub that will read like this
Total income:$10.00
less taxable benefit: $1.00
total gross income : $9.00
Then your deductions such as EI, CPP, Fed inc tax, health/dental.
Could be wrong.

heck I even suppose CRA could be wrong,
http://www.cra-arc.gc.ca/tx/bsnss/tp.../prvt-eng.html

so yes Trimmer. Employer contributions are not taxed. So let's assume some well to do executive type with a caviar benefit plan where the employer pays a ton..maybe it's worth $5,000 a year. Or anyone else..no matter their lot in life (well off or with kick ask benefit plan, or both)

Thats $5,000 a year said well to do person "receives" tax free, over and above everything else.

Qualifying medical expenses.
yep, if a person incurs "out of pocket" medical expenses, they can be claimed towards a tax credit by anyone. Those out of pocket expenses include health plan premiums. So every year, everyone can count their health plan premiums towards that.

In order to receive anything back, first you have to exceed the threshold ( which is $2,000 give or take).
So unless you incur more than $2,000 in a calendar year, your getting squat. Most normal every day people won't exceed $2,000 in a calendar year. The typical health plan might cost someone with dependants $80-$100 a month. Executives, people with gold plated plans? I have zero doubt how much they are worth..........

Also know for a fact because our Company offered it, to anyone that could afford it. What was known as a type of "flex plan" through Great West Life. Anyone in our company could direct some (or all) of their bonuses (pre tax) towards extra coverage. Extra being more stuff not covered by the typical plan. I know the vast majority of employees scoffed when the Company announced it. While it sounded nice in theory, most real people had mortgages, kids, car loans, RSPs and TFSAs to fund first. I'm pretty sure a lot of the executives who would get 300k, 500k, a million or more in bonuses took advantage of it though. Just another way to shelter more money ( and I am all about legal tax avoidance) and if you could acquire some amazing extra health/dental coverage why not.

That the typical stiff could never get or afford.
See also why for the typical stiff without a Pension, RSPs aren't all that. Unless your in a higher tax bracket......they don't do anything.... So take two or 3 people. Both/all earn say $60,000.

A) No Pension, ok somewhat decent health plan. By the time life gets done with everything, not going to be a lot left for savings. And lets pray you don't get whacked by some nasty medical thing. Most real people can't afford critical illness insurance either.....which these days is becoming more and more necessary because less and less is being paid for, and people are surviving more and more. These days 95% of people survive heart attacks. Have fun paying the bills while your laid up for 4-6 months.

B) No Pension, no company benefits. By the time life and paying for their own beer budget health plan gets done with them...Even less for savings, and certainly critical illness insurance......

C) Great Pension. Eliminates the need to find pennies every year. The Mtg gets paid off a lot faster.
Great Benefit Plan. better coverage when life hits than A or B. And because the Co pays most of it, they have more of that 60-75k to do things with, like put into RSPs, TFSAs, RESPs or pay off car/boat loans, or buy some critical illness Insurance.

Person A or B?
Sucks to be you.

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But if for some reason, the typical working stiff runs into things or their children do. Yep, you can claim it on your tax return. You'll get if I recall correctly 12% back on the dollar.

So let's say, in some calendar year you wring up $10,000 in expenses. You'll get a credit for 12% on $8,000 of it. I could be off on the rates, it's been years since I had to know this stuff, and in fact rang up huge expenses in a calendar year myself. But that's the gist of it. And luckily for me, I was not the norm. Being "well off" ( I made good coin, better than the mean) I could "afford" to pay those out of pocket expenses.

The average person?

And for added measure Im going to give three real life examples of how the typical stiff, gets stiffed. We will call them persons A B and C.

A) Has a medical condition, someones child, the child of really just everyday people who get zero help from the government because they earn around the mean, but have a child who.....That means this person will never hold a job ( well never say never, but it highly likely) that either pays very well (lets call that more than $50k) or has great benefits. As such, whatever meagre savings they may ever accumulate (again, lets consider reality) well, being in the lowest tax brackets. "sheltering" $5,000 for them ( assuming they will ever have $5,000 to shelter) is not the same as a person who is in a higher tax bracket and when they can shelter $5,000 well they are in the higher tax brackets and as such........ This person will without a doubt always have to save for retirement somehow on their own, and b) very likely have to pay for their own benefits.

B) Has many medical conditions, can't work and relies on us and what little money her hubby makes to get by. She/they spend roughly $3,000 a month in prescription drugs alone. Do they have Pensions, or good benefit plans? Do resent them bringing their "income" to zero or near zero?
Hardly. I don't know the last time they went for a $100 dinner at some restaurant, or took a trip to Cuba, or A to Z.

C) A self employed father. He suffered an aneurysm. Was clinically dead in his drive way. Paramedics revived him. Being self employed, he has no Pension, and beer budget benefits. He is still in the hospital, and likely will be for months. He won't like many working stiffs have critical illness insurance and there is no way, no matter what he will be able to return to his old life, old job. Too long without oxygen to the brain, later more strokes while in the hospital. He is very likely going to remain in some kind of long term care facility the rest of his life. As I said, these days 95% of people survive heart attacks....Strokes, more.........Also in part why "healthcare" is becoming so expensive. Twenty-30 years ago a life insurance premium would have been paid out and while it very painful to the spouse, children, loved ones....Well they aren't crushed by the resulting "cost".

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No doubt, no argument. That for many who might see a further increase in taxes as a result, who likewise aren't all that "well off", they don't need this. Especially with so much already, be it Hydro, be it Carbon taxes, be it.....
But as I said, for the typical working stiff.............who is getting crushed but also has to somehow deal with reality ( retirement, mounting expenses, don't have benefits and have to pay for that as well).

If Im going to give someone a cup of coffee these days......
Ye, but for the god of god there go I

i'm going to read up on what's been posted later when I have a quiet minute, sure there'll gonna be some nuggets in there.
what surprises me a bit while glancing over the posts is the level of detail
isn't the bottom line that we pay increasingly more taxes (direct and indirect) and have less disposable income, which inevitably results in decent people having less opportunities to make good choices for them and their families?
so what is good tax code in light of that?
as it seems that equalizing is the concept some consider fair, why are we not talking about a simple flat tax rate - no exceptions for anyone on anything. it's fair, predictable and very cost effective

Good question Waftrudnir. I don't know if theres a satisfactory answer.
We used to talk about flat tax rates at work, and whether or not they might be the future. Can say by and large thoughts were mixed.

The world is not perfect, nor will it ever be. I am somewhat right of centre. I believe in social responsibilities, but fiscal things come first. Worded differently, theres a time and place for everything, but if we don't take care of the fiscal things first. Well you end up with Ontario, where now. All kinds of people are getting 'stiffed" so who do we try to "help". And the problems are so bad, and the debt so high we don't have the money to fix things. Want to fix just one thing in healthcare, say "wait times". Well that means more Nurses, more Doctors, more gurneys, more everything....And that means we need money to fix things.....

Raise taxes as this admin loves to do?
Rob Peter (Rural Ontario Hospitals) and pay Paul ( Big city Hospitals)?
Rob Peter B ( the MNR) and pay Paul (healthcare ministry)?
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Just mention the word "cutbacks" and the left and left side politicians blow gaskets. Want to reduce waste, not really "waste" but spending on some frivolous thing. I don't know, pick a ministry where 20 million is spent each year on something nice and useful but is it really needed?

Well not only will that result in reduced "service", it means layoffs for those in PS. It is utterly impossible to save even 3% without laying people off..
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Just ask
Mike Harris
Stephen Harper
or Tim Hudak
How that works.

Then to, there's always the chance despite the "right idea's and best intentions", the cutbacks are too heavy, or in the wrong area's.
Harris went too far with his cuts in healthcare. "brain drain" was real.
That led to Mcguinty. He promised the world to PS and well, the rest is history.....
There is no arguing that the Liberals have gone nuts first hiring tons and tons of PS, then showering them "love". There are reasons Don Drummond ripped them new ones in 2010...But some of that initial hiring/love was warranted, Harris......So as much as we rip McWynne for this that and the other. We can thank Harris for it.......But if we want to blame Harris, well he had to try and fix some things after Rae.

and on, and on, and on.Its been nothing but a freak show since Rae.

And all the while, the poor working stiffs aka the middle class, which includes people in PS ( hopefully the usual stuff can be avoided) are paying for it.Getting crushed, and rarely do they get a cup of coffee. Point here is.

No-one will argue the middle class is shrinking, that the gap between haves and have nots is increasing. That if you look at trends and stats, since around 70s.

The poor are still the poor, not much has changed.
The rich are still the rich, not much has changed.
The middle class is taking it on the chin.

Who is the middle class?
Well people can decide that for themselves.

I know when I started out I had coverage as part of my pay package and then I got married and got kids I kept jobs that had the best benefits alot longer due to that even if the job stunk. ( I have examples... but it is probably not a good idea to list them). This is clearly another example of robbing from the working to pay to the supporters and rich. Sort of like Justin's taking speaking money from charities.

But let's look at the facts, several credits that benefited kids... gone, TFSA... rolled back (studies showed it was families saving for University and people retiring with packages using it most) so retirees and middle class get hit again. We know that the Conservatives created about $30B in tax credits etc that let people keep money in their pockets while still managing to balance the budget so what is the Liberals intentions and overall plan....

Let me just use my first post again....

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Originally Posted by mosquito

Federal Liberals eye tax on private health and dental plans, a move that would take in about $2.9B
http://www.nationalpost.com/m/wp/new...-in-about-2-9b

The employee-sponsored health care tax exemption is being scrutinized as part of a sweeping review of 150 tax credits worth about $100 billion a year in foregone federal revenue.

** Translation - goal of taking $100 billion out of Canadians pockets

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