Senior hit the hardest by tax grabSeniors hit the hardest by tax grab
Garth Turner speaks in St. Thomas
Friday June 01, 2007
By Kyle Rea
Times-Journal Staff
Seniors are those most affected by a recent federal government decision to tax income trusts.
That’s according to Garth Turner, Liberal MP for Halton, Ont., and member of the federal finance committee.
He came to the St. Thomas Seniors Centre on Wednesday where he attacked the decision, taken this past fall, to tax trusts. He estimates it cost Canadians $35 billion.
“Most of income trust investors are seniors (and) if you’re an income trust investor, you lost money,” he told a group of about 30 people who gathered to hear his presentation.
“If you’re going to attack any group of people, don’t do it to seniors ... . You have a right to be angry,” he said. “This was a very unfair thing to do to the people of Canada. They (Conservatives) could have backed up (after taxing trusts) and taken a hit. Instead, they’re moving ahead and hoping you’ll forget about it.”
He noted the income-trust industry needed to be addressed, but people didn’t have to get hurt in the process.
A long-time financial expert and critic of taxing income trusts, Turner is well-known as a “maverick” MP, a term he used last night.
Turner was a Conservative MP until being ousted by the party last fall.
He described what happened to the assembled group.
“I’ve been a Progressive Conservative all my life,” he said, but when he ran for election as a Conservative in 2005-2006, he didn’t like Conservative social policies. “I didn’t hit it off well with Mr. Harper.”
“I got into this to do the right thing,” he said. “We are seeing the death of representative democracy in this country. This wasn’t why I went to Ottawa, to be a trained seal.”
Why the Conservatives want to kill the Income Trust sector?
For you trained seals, here is the math.
If you receive $100 of dividend in 2006 you were grossed up to $145.
The Feds gave you a 18% dividend tax credit and the Prov. (AB) 7%
for a total of 25%.
Lets say your marginal average tax is 22% Fed and 10% Prov. total 32%.
$145 x ( -32% +25% = -7% ) + -$10. You received $100 -$10 of extra tax = $90 of net income. However your real tax is $145 - $90 = $55 / $145 = 38% Tax Rate.
A killer for seniors who have crawl backs.
If you received $145 of Income Trust distribution, you were taxed on $145.
$145 x -32% = $98.60 of net income.
So, $98.60 -$90 = $8.60 / $0 = 9.55% more in your pocket which will help pay your crawl backs.
If the Conservatives remain in power in 2011, distributions from Income Trust will be taxed 31.5%. You will received the same as a dividend if it's held outside of your RSP.
The picture is much worst if it's inside your RSP.
$15 x -31.5% Income Trust tax = $98.60 x -32% Income tax = $67.54 of net Income. $145 - $67.54 = $77.46 / $145 = 53.42% double taxation
If the Liberal enact their 10% Income Trust tax plus 10% tax credit in or outside of your RSP, is tax neutral.
I'm voting to protect my money and life style. So don't be a trained seal.
Take a bite out of the Conservatives and teach them that you can't Lie to get elected and get away it.
WE DON"T NEED LAIRS IN OTTAWA! PAY BACK IN FUTURE ELECTIONS !!!