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Thread: 2019 Provincial Election - Personal and Corporate Tax Discussion

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    Default 2019 Provincial Election - Personal and Corporate Tax Discussion

    With the 2019 election call, it is time to stop with the conversations pre election, and get down to debating actual platforms announced. This thread will deal with Corporate and Personal Income Tax.
    Ow

  2. #2

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    Originally Posted by Dave

    Originally Posted by seamusmcduffs
    Nah his base won't care, because "jobs" and "taxes".


    He didn't "guarantee" jobs and taxes, did he? With his lack of business experience, I doubt he will be able to deliver anyways and it sounds like the only tax cuts that would happen under Kenney would be for large corporations. I believe he actually already said personal tax rates would be unchanged.
    Cutting corporate income tax again? Why is every government racing to the bottom to give corporations a free ride? The huge tax cus in the US backfired.


    Income taxes on the public are completely different than income taxes on corporations.


    Your gross income is taxed and even if you spend all your money and can't pay your bills or rent, other than writeoffs, you still have to pay your taxes.


    Corporations are taxed only on their profits. So they can pay their executives millions a year, spend money like crazy and if they just break even, they don't get taxed.
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  3. #3

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    And from an annual perspective, a way to avoid paying tax is to spend more - which helps the local economy.

    Higher federal corporate taxes take profits out of Alberta and thus potential spending out of the local economy.

    Lower corporate taxes enable building savings through retained earnings to make larger investments or smooth out operations. That or creating a low tax slush fund for owners to accumulate and compound wealth at a lower than personal tax rate.

    Lower corporate taxes also attract new investment but then let more in the way of any profits flow out of Alberta.
    Last edited by KC; 20-03-2019 at 09:20 AM.

  4. #4

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    One way around that would have been if Alberta had taken an ownership stake in every project with the profits flowing into the Heritage fund.

    But that's just silly, expecting the owners of a resource to actually benefit from it.

    https://en.wikipedia.org/wiki/State%...ncial_Interest

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    Quote Originally Posted by Edmonton PRT View Post
    Originally Posted by Dave

    Originally Posted by seamusmcduffs
    Nah his base won't care, because "jobs" and "taxes".


    He didn't "guarantee" jobs and taxes, did he? With his lack of business experience, I doubt he will be able to deliver anyways and it sounds like the only tax cuts that would happen under Kenney would be for large corporations. I believe he actually already said personal tax rates would be unchanged.
    Cutting corporate income tax again? Why is every government racing to the bottom to give corporations a free ride? The huge tax cus in the US backfired.


    Income taxes on the public are completely different than income taxes on corporations.


    Your gross income is taxed and even if you spend all your money and can't pay your bills or rent, other than writeoffs, you still have to pay your taxes.


    Corporations are taxed only on their profits. So they can pay their executives millions a year, spend money like crazy and if they just break even, they don't get taxed.
    except it doesn't really work that way does it?

    you are correct when you note that if an individual earns $100.00 they are taxed on $100.00. for argument's sake, lets say that tax (federal and provincial) totals $40.00 which means the taxpayer gets to keep $60.00 of that $100.00 and the government gets $40.00.

    if that $100.00 was earned by a corporation, you are correct when you say that if they spent it all on salaries they would pay no tax. except you fail to note that the individuals who received those salaries would be paying the same $40.00 tax on that $100.00 so there is zero revenue loss for the government.

    in fact, the paying out of all net earnings is not very common by any corporation. assuming that 50% is retained by the company as working capital or for reinvestment in the business and 50% paid out, assuming a corporate tax rate of 40%, on $50.00 in retained earnings the company would keep $30.00 while paying $20 in taxes. of the $50.00 paid out, at the same tax rate as above, again $30.00 would be net income for the taxpayer(s) and the government would get another $20.00. The end result - again - is that of the $100 in total income earned, $60.00 would be "kept" by the parties responsible for the monies being earned and, again, the government would receive the same $40.00.

    this is pretty simplified as there are various tax levels incurred federally and provincially by both corporations and individuals but the whole intent of the tax structure is to be revenue neutral for the government even after allowing for small business tax rates and credits and the preferential treatment given to dividends vs salary. in total both the intent and the results are pretty balanced (as they should be).
    Last edited by kcantor; 20-03-2019 at 02:57 PM.
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  6. #6

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    Quote Originally Posted by Edmonton PRT View Post
    Originally Posted by Dave

    Originally Posted by seamusmcduffs
    Nah his base won't care, because "jobs" and "taxes".


    He didn't "guarantee" jobs and taxes, did he? With his lack of business experience, I doubt he will be able to deliver anyways and it sounds like the only tax cuts that would happen under Kenney would be for large corporations. I believe he actually already said personal tax rates would be unchanged.
    Cutting corporate income tax again? Why is every government racing to the bottom to give corporations a free ride? The huge tax cus in the US backfired.

    Income taxes on the public are completely different than income taxes on corporations.

    Your gross income is taxed and even if you spend all your money and can't pay your bills or rent, other than writeoffs, you still have to pay your taxes.

    Corporations are taxed only on their profits. So they can pay their executives millions a year, spend money like crazy and if they just break even, they don't get taxed.
    I don't have a problem with businesses being taxed on their profits, but the tax cuts Kenney is proposing are only for large corporations. Small businesses earning under $500,000 a year of active business income (that would be most small businesses) would not pay a lower rate of tax under Kenney.

    I suspect many small business owners might be surprised and later disappointed to find out they will actually get no benefit from this tax cut. Of course, Kenney hasn't clarified this probably in the hopes that they will vote for him in the expectation this will help them and when they find out the truth it will be too late. I suppose this is yet another example of Kenney not being completely honest with people to advance his own interests.

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    Quote Originally Posted by Dave View Post
    Quote Originally Posted by Edmonton PRT View Post
    Originally Posted by Dave

    Originally Posted by seamusmcduffs
    Nah his base won't care, because "jobs" and "taxes".


    He didn't "guarantee" jobs and taxes, did he? With his lack of business experience, I doubt he will be able to deliver anyways and it sounds like the only tax cuts that would happen under Kenney would be for large corporations. I believe he actually already said personal tax rates would be unchanged.
    Cutting corporate income tax again? Why is every government racing to the bottom to give corporations a free ride? The huge tax cus in the US backfired.

    Income taxes on the public are completely different than income taxes on corporations.

    Your gross income is taxed and even if you spend all your money and can't pay your bills or rent, other than writeoffs, you still have to pay your taxes.

    Corporations are taxed only on their profits. So they can pay their executives millions a year, spend money like crazy and if they just break even, they don't get taxed.
    I don't have a problem with businesses being taxed on their profits, but the tax cuts Kenney is proposing are only for large corporations. Small businesses earning under $500,000 a year of active business income (that would be most small businesses) would not pay a lower rate of tax under Kenney.

    I suspect many small business owners might be surprised and later disappointed to find out they will actually get no benefit from this tax cut. Of course, Kenney hasn't clarified this probably in the hopes that they will vote for him in the expectation this will help them and when they find out the truth it will be too late. I suppose this is yet another example of Kenney not being completely honest with people to advance his own interests.
    i suspect you're right - kenney's announcement is a election promise not worth the paper it might be written on.

    firstly, it's not even a reduction from 12% to 8%. it's a 1% per annum reduction from 12% to 8%.

    secondly, i would like to the see the percentage of election promises actually delivered by the end of the first term of office, particularly when they were "fiscal promises".

    thirdly, there is no way that kind of fiscal framework even if it is more than an election promise is going to be attractive to large corporations as it doesn't have the one thing large corporations (and small for that matter) require more than anything else and that's certainty. even if it's hoped to be considered a stimulus to business investment that we need now, not five years from now, why accelerate nvestment plans - which is what we really need now - instead of postponing them further until the cuts take place. if they're going to be such a stimulus, drop the rates now from 12% to 8%. which we won't see on a bet because the province actually has an income problem, not an expense problem and cutting income won't solve that.

    drop tax rates and eliminate the carbon tax and move to a balanced budget all at the same time? someone must be partaking too much of a newly legal substance in canada to think that's really going to work. it makes as much sense as campaigning on the basis that budgets balance themselves.
    "If you did not want much, there was plenty." Harper Lee

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    Quote Originally Posted by kcantor
    drop tax rates and eliminate the carbon tax and move to a balanced budget all at the same time? someone must be partaking too much of a newly legal substance in canada to think that's really going to work. it makes as much sense as campaigning on the basis that budgets balance themselves.


    Don't forget that Kenney will not lay off or fire a single teacher or nurse while accomplishing all of the above!

  9. #9

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    Herbert Hoover 1928 "a chicken in every pot and a car in every garage.“

    Jason Kenny 2019 "a pot smoking chicken, no taxes and Ralph Bucks for everyone!"
    "Albertans, Vote for me, I am the oiliest candidate"
    Last edited by Edmonton PRT; 20-03-2019 at 04:26 PM.
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  10. #10

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    Quote Originally Posted by Marcel Petrin View Post
    Quote Originally Posted by kcantor
    drop tax rates and eliminate the carbon tax and move to a balanced budget all at the same time? someone must be partaking too much of a newly legal substance in canada to think that's really going to work. it makes as much sense as campaigning on the basis that budgets balance themselves.


    Don't forget that Kenney will not lay off or fire a single teacher or nurse while accomplishing all of the above!
    What are the available factors?

    Savings via: pay cuts, benefit cuts, attrition, strikes, contract cancellations, spin offs and asset sales, downloading costs, pension cuts, reclassification of what are costs...

    Revenues: high forecasts and reclassification of what are revenues (asset sales being called revenues...), new and higher revenues (are oil royalties due to kick in with any plant completions? I don’t know how the royalty structure is set up but I understand that minimal or no royalties were payable during construction, or something like that), new fees (but not new “taxes”)...

    Equalization renegotiation?

  11. #11

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    Quote Originally Posted by kcantor View Post
    Quote Originally Posted by Dave View Post
    Quote Originally Posted by Edmonton PRT View Post
    Originally Posted by Dave

    Originally Posted by seamusmcduffs
    Nah his base won't care, because "jobs" and "taxes".


    He didn't "guarantee" jobs and taxes, did he? With his lack of business experience, I doubt he will be able to deliver anyways and it sounds like the only tax cuts that would happen under Kenney would be for large corporations. I believe he actually already said personal tax rates would be unchanged.
    Cutting corporate income tax again? Why is every government racing to the bottom to give corporations a free ride? The huge tax cus in the US backfired.

    Income taxes on the public are completely different than income taxes on corporations.

    Your gross income is taxed and even if you spend all your money and can't pay your bills or rent, other than writeoffs, you still have to pay your taxes.

    Corporations are taxed only on their profits. So they can pay their executives millions a year, spend money like crazy and if they just break even, they don't get taxed.
    I don't have a problem with businesses being taxed on their profits, but the tax cuts Kenney is proposing are only for large corporations. Small businesses earning under $500,000 a year of active business income (that would be most small businesses) would not pay a lower rate of tax under Kenney.

    I suspect many small business owners might be surprised and later disappointed to find out they will actually get no benefit from this tax cut. Of course, Kenney hasn't clarified this probably in the hopes that they will vote for him in the expectation this will help them and when they find out the truth it will be too late. I suppose this is yet another example of Kenney not being completely honest with people to advance his own interests.
    i suspect you're right - kenney's announcement is a election promise not worth the paper it might be written on.

    firstly, it's not even a reduction from 12% to 8%. it's a 1% per annum reduction from 12% to 8%.

    secondly, i would like to the see the percentage of election promises actually delivered by the end of the first term of office, particularly when they were "fiscal promises".

    thirdly, there is no way that kind of fiscal framework even if it is more than an election promise is going to be attractive to large corporations as it doesn't have the one thing large corporations (and small for that matter) require more than anything else and that's certainty. even if it's hoped to be considered a stimulus to business investment that we need now, not five years from now, why accelerate nvestment plans - which is what we really need now - instead of postponing them further until the cuts take place. if they're going to be such a stimulus, drop the rates now from 12% to 8%. which we won't see on a bet because the province actually has an income problem, not an expense problem and cutting income won't solve that.

    drop tax rates and eliminate the carbon tax and move to a balanced budget all at the same time? someone must be partaking too much of a newly legal substance in canada to think that's really going to work. it makes as much sense as campaigning on the basis that budgets balance themselves.
    I think you have touched on another important point - certainty. I don't think the increase in large corporate tax rates by 2% made by the NDP was so onerous that it caused economic damage. At the same time, the NDP actually reduced the small business corporate tax by 1%, which seems to never gets mentioned by the UCP, maybe because it does not fit their narrative about tax increases.

    The real economic damage here was caused first by a decline and later uncertainty about oil prices and more recently by serious pipeline capacity issues. None of these things are controlled by the Alberta government, these are all things largely determined outside of Alberta so we are delusional if we think voting for one party or another here in Alberta will magically fix these problems. Corporations care more about profitability than tax rates and the oil business lately has neither been as certain or profitable as it was in the golden years before 2014 and if there is a decline in corporate activity here, it is attributable to that.

  12. #12

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    With all the loopholes and fancy accouning, how many big companies in Alberta pay corporate income profit taxes anyway?
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    Corp tax rate and small business tax rate should be ZERO. Time to get serious about diversifying.
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  14. #14

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    I don’t disagree with the above- I would also add that income tax should be zero and replaced with consumption and pollution taxes coupled with higher vehicle registration costs.
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    Quote Originally Posted by edmonton daily photo View Post
    I donít disagree with the above- I would also add that income tax should be zero and replaced with consumption and pollution taxes coupled with higher vehicle registration costs.
    iím not sure you need to go that far...

    the singapore model is progressive on personal taxes from 0 to 22% on s$330,000 and above. Only money earned in singapore is taxed and there are no inheritance or capital gains taxes.

    small business tax is 8.5% and corporate taxes are 17%

    in regard to both of the above they are the total tax paid - ie there is no layering of federal plus provincial taxes.

    there is a 7% vat that applies to virtually everything and it is one of the more expensive places in the world to operate a private vehicle. mrt, bus, taxi and uber service is extensive and affordable.

    the key with taxation is not to get it to zero, itís to facilitate and not remove incentive from the system whether personal or corporate.
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  16. #16

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    My only concern with Corp tax is eventually the pound of flesh payed is payed for by the customer. Iím far from a conservative minded voter but I actually do support zero or near zero Corp tax models with that taxation room being shifted elsewhere.

    Singapore is also a bit of a global unicorn but I agree with you that it doesnít have to be a race to no tax, as I think the USA deficits clearly show you canít cut indefinitely. I would however like to see us shift to taxing things/outcomes we donít want and reduce taxes on things like profit and income. All the while ensuring that the true costs of things like roads and infrastructure are more transparent. That is if you believe these things are subsidized and that people/companies use these items in ways that allow them to profit off of greater society.
    Last edited by edmonton daily photo; 25-03-2019 at 08:43 AM.

  17. #17

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    Quote Originally Posted by the.tru.albertan View Post
    Corp tax rate and small business tax rate should be ZERO. Time to get serious about diversifying.
    Check out what happened in Kansas when they slashed their business taxes.

    https://en.wikipedia.org/wiki/Kansas_experiment#Results

  18. #18

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    Yes... but Iím all fairness I offset my statement about tax cuts with proposed increases on other taxes that I feel are more transparent or are more desirable.

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    Election over. Thread closed.
    Ow

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