Trudeau vs. Harper: Who has the better tax plan for you?

The party that will save you more money

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family taxThis upcoming election, Canadians will have two very distinct family tax plans to choose between. Shortly after the Conservatives unveiled plans to expand the current Universal Child Care Benefit program, the Liberals countered with a pledge to replace it with a new $22-billion Canada Child Benefit and overhaul existing personal tax rates. Below, we crunched the numbers to find out which party’s plan will save families more money. Parents with two kids and household income below $150,000 could see an extra $1,500 under the Liberal’s plan and families with lower incomes will see an even higher benefit. But once you have a household income above $150,000, the Conservatives’ plan starts looking more attractive. As campaigning heats up, more announcements could follow.Screen Shot 2015-06-22 at 4.25.25 PM

 

52 comments on “Trudeau vs. Harper: Who has the better tax plan for you?

  1. Where are the Liberals going to get this money??? The Conservatives have consistently demonstrated that they can manage a balanced budget and still provide tax breaks. RRSP’s are not for many “middle income” earners but the TFSA is a great investment avenue.

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    • A single (barely) balanced budget after seven straight deficit budgets consistently demonstrates what exactly?

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    • Not sure what you have been smoking friend. The Conservatives ran up a 159 billion in debt this last decade. Their projections have been wrong every single year.

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      • Previous Liberal governments ran surpluses and were paying down the national debt. Harper’s tax cuts blew the whole thing apart and dumped us deeper into debt, with consistent deficits.

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        • Interested to know what year you say the liberals had a revenue surplus. You have Mulroney and the Federal Conservatives who introduced the GST and it saved Canada’s credit rating rather than following the path Mexico took with a devalued Peso. The Liberals campaigned on a promise to cancel the GST but knew full well they couldn’t afford to do away with it and they never even thought of reducing it once they were in office! It took the Federal Conservatives to realize they could afford to reduce it when they got elected and if anything they can increase it to balance the books. An expenditure tax (with provisions to rebate for low-income earners) if far better than using the income tax approach. Enough said.

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          • You could educate yourself at this website:
            http://www.cbc.ca/news2/interactives/canada-deficit/

            If an expenditure tax is “far better than using the income tax approach” why did the Harper government reduce the GST instead of reducing income tax?

            Would it be (as you suggest) acceptable Conservative policy to increase the GST in order to balance the budget after the election? It doesn’t seem to be part of the electoral platform!

          • Good points. Also, the Liberals hiked Employment Insurance rates (formerly Unemployment) into the stratosphere, put the funds into general revenue, then made it almost impossible to actually receive the benefits when needed. When Liberals were in power, this country had more of a dictatorship than ever, and they thumbed their noses at average Joe’s. And don’t forget that Trudeau is also from a wealthy, elitist family; he has no idea what it’s like to be average/middle class.

    • the only thing conservatives have succeeded in doing is taking money from the poor and giving it to the wealthy, i am one of those working poor that has suffered at the hands of the conservatives, and the NDP is no better, so this time I am voting Liberal, even if i’m in the minority, i would never vote PC ever again, don’t believe me? Check back a few years and see what Mike Harris did for Ontario

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      • Come on man! The poor ain’t got no money to give! All they do is take from the hard-working Canadians who break their backs!

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      • Maybe you should consider going back to school to further yourself and get out of the slums!

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    • “Consistently” – are you for real, they haven’t balanced a budget yet. Early surplus was thanks to PM Martin. They added over $150 billion to the debt, a third of the whole debt.

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    • The Liberals have said that they will cancel the Conservatives’ Income Splitting program (but NOT the Pension Splitting program). Various analysis showed that income splitting would cost about the same as the Liberal proposal, but would deliver over 60% of benefits to high-income families. Not sure what the NDP proposes to do about the higher TSFA allowance, but the Liberals would cancel that as well (returning it to $5000 per year) because of the significant negative impact on future government revenues.

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    • I thought the Conservatives have had 8 straight deficit budgets!

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  2. Your comparison was rather simplistic to say the least. There are numerous variables you omitted such as the mentioned stay at home spouse. Also the TFSA increase which favours those of all age groups that are inclined to save, regardless of their income.

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    • Increasing the TFSA helps wealthy seniors (past the age where they can leave RRSP money alone) primarily as few others have $10k left over after expenses each year.

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      • Your conclusion is partially correct, but your explanation of it is not at all. RRSP is not supposed to be maxed first.

        I will let you google it, but RRSP vs TFSA comparison has bee done and basically it’s all about current tax rates vs tax rates at retirement that matters. If your future tax rates at retirement is higher, then TFSA makes more sense to max first than RRSP. That applies to most young people with a good job prospect and a future high income and lifestyle at retirement (aka current and future wealthy people, which is the partially correct part). However, wealthy seniors in theory have no use of the TFSA, since the limit is so low. It has no impact at all on their wealth. The only moment where RRSP is better than TFSA is that sweet spot where your current income puts you in a higher bracket than at retirement, while still having enough years to make it worth delaying paying those taxes.

        As for middle income earners, a lot of factors comes into play, but in general, the younger the people are, the better the TFSA is for them, since the odds of them having a higher tax rates at retirement then currently is higher.

        It’s obviously more complicated than that, but again, a google search might save you some money, and perhaps enlighten you on Canadian politics and what each party is offering.

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        • Well, I’m retired, and the only use I make of the TFSA is to move existing savings into it. Same for my wife, and my daughter. I’m pretty sure it’s the same for a high proportion of those who max out their TFSA’s.

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  3. Considering the Conservatives are running second, and the Liberals are currently running third, why are the front-running NDP not included in this comparison?

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    • I agree. Very weird to not even mention the NDP.

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  4. Not sure which Canada you’re living in, but here, we have more than two political parties running in the upcoming federal election.

    Also, basing one’s vote on taxation policy alone is just the kind of money-blinded foolishness Canada is becoming known for. Way to perpetuate materialism over matter.

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    • I agree. The basic hypothesis here is that people will vote for what is best for them personally (which is best for YOU), not what is best for Canada.

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  5. No one earning LESS than 60,00 a year should NOT have to pay any tax PERIOD

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    • ^ Wait… what are you trying to say? Nobody earning less than $6000 should NOT have to pay any tax? So everyone who makes less than $6000 / year should pay tax? Do you mean anyone making less than $60000 / year should not have to pay tax? There’s so many things wrong with that sentence.

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      • Haha, right. I believe he means anyone who earns less than 60k should not pay any tax, which I strongly object to. The threshold is too high to be realistic.

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    • Every Canadian should have to pay income tax, even it is a small amount. It takes money to run this country and all of us have a responsibility to contribute. Yes I understand everyone pays gas, sales and other types of consumer taxes.

      I also agree that Mr. Wiebe’s comment is difficult to understand. We all need to ensure we use and force our politicians to use simple language to avoid these types of confusing statements

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  6. Not much transparency given with these calculations. Does the Conservative tax savings take into account whatever non-taxable investment income you get on the extra 4.5k in TFSA space. Liberals keep saying that is a ton of money Canada would be missing out on. So that should be recognized in the calculations.

    Also I think it’s irresponsible to make just one chart with the appearance that it might apply to most families. Why not present several charts (single, no dependants – married, one kid – married, no kids, etc).

    Anyway, I suspect this article and the calculations are heavily biased and are not showing the true plans of both parties. I also agree with other commentators that other political parties (NDP, etc) should also be showcased.

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    • Yes Patrick you do have a point. This graph does not illustrate the “perpetual savings” forgone to those who can afford to sock away an additional $4,500 each year in their TSFA’s. It seems you think it should be shown as a “benefit or a positive” to the conservative blue bar graph. But it would be hard to ‘capitalize” the forgone tax savings for any one individual. (see my explanation below) If anything, I am sure you would agree it would increase the blue bar for higher incomes. (if only for the fact that they can afford to sae every year) It is noted that the LPC is considering those forgone savings as a funding mechanism and maybe that is why they did not attempt to capitalize these and show them in this graph.

      Make no mistake the prosperous guys are gong to be hit the most. One commentator gave an example of his making $180,000, his spouse making $80,000 and I believe they had 2 children. It worked out that his family would be receiving about $700 a month (after tax) LESS under the LPC program even excluding the TSFA limit increase. That is a real visible change. An ouch moment!

      Say at 4% interest===> $180 can be shielded from taxable income each and every year====> a contributor can save a total of about $90 each and every year that would be payable in otherwise federal and provincial tax. So that is $90 in year 1, another $90 in year 2 and another $90 in year 3 and on and on until it is cashed in for real goods and services. Then next year, anther $90 in perpetuity is added because of that year’s additional $4,500 shielded. So considering all future years where the additional $4,500 room is fully utilized we have the picture of year 1 $90, then year 2 $90 plus $90 for $180, then year 3 for $270, year 4 $360, year 5 $450 and on and on.
      But Patrick you raise the question of WHO benefits the most from this conservative program of increasing TSFA limits? The prosperous. Common think about it. Who can afford to sock away $4,500 every year? The LPC is effectively saying that this otherwise perpetual tax savings from the prosperous will be used to help fund the reallocation program.

      Patrick…you say “Also I think it’s irresponsible to make just one chart with the appearance that it might apply to most families. Why not present several charts (single, no dependants – married, one kid – married, no kids, etc). ” Well I have done that using a 3d bar chart. It still paints the picture that the rich are paying for it. As a statistician I can easily look at such a graph and draw inferences but it does confuse many others so I do not criticise the depiction s being misleading. Trust me (lol).

      Patrick.. you say “Anyway, I suspect this article and the calculations are heavily biased and are not showing the true plans of both parties. I also agree with other commentators that other political parties (NDP, etc) should also be showcased.” I cannot disagree with your scepticism as we all wonder who we can trust these days. Why should you trust me? That is the result of partisan media articles. I say the “Rob Ford” effect where you tell a lie enough times and people only remember that they have heard the message before so there must be some truth to it. I agree the NDP program should also be examined. They have some excellent points themselves. Like the LPC they are attempting to help families. A child does not get to choose which family they get born into.

      But the LPC party is really going for REAL CHANGE. And this is the best time to go for it as the number of voters who will be better off exceed those that will be worse off. I know it sounds cynical but it is hard to change the rules of the game during the game.

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  7. FINALLY someone caught on. This graph illustrates the REAL CHANGE that the LPC are promoting. To those who say “where is the money coming from”, well there are saving from cancelling income splitting, cancelling the TPSA limit, etc. I remember Trudeau addressing this and I believe there was a shortfall of about 2billion……and this (in my opinion) is the crux of his program. This would be the first budgetary pressure and given top priority.
    This is really a class warfare. And so what? Even the most jaded must agree that we cannot go on the way we are going. Even the Pope would agree.
    This income inequality must be addressed sooner rather than later. The LPC is tilting benefits for incomes over $150,000 to those making less. Sharing the wealth and investing in our children. A MAJOR SEISMIC SHIFT. I am a demographer, statistician and actuary and in my opinion this change has to happen for the betterment of society.
    It is always hard to change the rules of the game mid game partly because of human avoidance of change of any sort and partly because of ignorance. It does not help when noted tax experts like Jack Mintz, Palmer Chair of Policy in Calgary put out blatantly erroneous statements about the LPC program and go unchallenged. He has not responded to my queries on his May 5, 2015 article in the Financial Post. Who can the public trust? They certainly do not trust politicians, or at least have a high degree of scepticism. They also question media because of their own motives for news-entertainment at all costs.
    I believe this is the time for change because unfortunately voters tend to vote for what benefits them and the numbers of voters who will be better off under the LPC exceed the number of prosperous voters who will be better off under the status quo.
    SO THANK YOU FOR THIS WONDERFUL ILLUSTRATION – LET THE VOTING BEGIN

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  8. Why just two parties? There’s a good chance the current opposition party could form the Government this fall.

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  9. I always thought your magazine was anti-conservative. You can crunch the numbers to show whatever tax plan you favour. I am not wealthy but could use the extra tax breaks to fund my retirement. You may not like Harper but the alternatives are frightening. Look at the mess Ontario is in with the provincial Liberals. If only Mike Harris could have finished what he started here!

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  10. One thing missing, the comparative cost. The other concern from a tax point of view is the possible change to TFSA.

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  11. Looks like another anti-conservative article to me. You can skew the numbers to favour either party but do we need to experiment with another Trudeau? As a retired unwealthy taxpayer, I am happy to see the TFSA limit increased along with many other tax breaks. It is my money, not the government’s that Trudeau will use for more social spending. Look at the mess Ontario is in with their reckless spending and Mike Harris’s plan doesn’t look so bad now. We don’t need a guy with nice hair experimenting with Canada’s social, economic and international policies.

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  12. Considering I would NOT vote for either of these, at 82 it is of no assistance to me. I agree with the letter below, there should be a higher level of income where one PAYS NO TAX. Not being in one of the higher income brackets, I am a strong supporter of the TFSA & have almost filled my allotment as it at least lets me keep more of my money & gives me a better chance of growing my money than many other options.

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  13. Thank you for detailed number crunching. Obviously the Cons favour only the rich.Nothing about Tom who is looking miore and more like the next PM and to what extent can webelieve these guys will ever implement theiroans?

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  14. How wonderful of you to only publish one perspective: “based on a dual income family”.
    I am a university educated parent who has consciously chosen to stay at home while my spouse works full time. Contrary to popular Canadian opinion, I am not lazy nor unmotivated. It was simply a choice we made together to offer household stability.
    Sadly, stay-at-home parents are under valued and, from what you have (not) published in this article, not worthy of being recognized.

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    • This magazine, like the vast majority of Canadian media, is extremely liberal. This is nothing more than a propaganda piece.

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  15. The Conservatives have promised then did balance the Budget. But at what cost. They have hurt Parks Canada, Canada Revenue, Veterans Affairs Environment Canada ETC to he point of stupidity. The liberals will be more rational. Will vote liberal for the first time in years.

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  16. This sounds like Justin Trudeau wrote this story. Don’t fall for it!

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  17. I am a 67 year old widower and for me the increase in the TFSA is very valuable, just wish I was 30 years younger! If I was, a TFSA contribution would be just as important as a RRSP. The plan would be to contribute to the RRSP and take the refund and max out the TFSA contribution. At my age, CRA will take 50% of my RRIF withdrawals but none of my TFSA. The key to happiness in life is to ‘under-consume’ and save as much as you can!

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  18. So the Conservative savings are based on what they have already done………..and the Liberal savings are based on what they are saying that they will do if you elect them? Interesting!!!!

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  19. There has been a great deal of discussion about families in so many of the recent economic and tax announcements, and now this article is also focussing on families with children. As a single person with no kids, no income splitting, no deductions, and yet a significant yearly tax obligation despite using fairly few public services, I’d welcome an article which also breaks down the tax plans for us singles. C’mon Money Sense, there’s lots of us singles out there in all age ranges from young to retired!

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  20. I’ll do better with Mulcair.

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  21. What they say and what they do are usually very different.

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  22. Harper has been keeping his promises by accomplishing them.
    He is experienced through the 9 years running and steering Canada from falling into the 2008-09 crisis.
    If we elect a new government with no experiences then they will spend a lot of our taxes for their trial and errors doinng.

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  23. You forgot Liberal Carbon Tax.

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  24. Harper has only ever balanced one budget; and that was only after raping a billion dollars from the emergency federal contingency fund to do it.

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  25. Keep in mind that the Conservatives took power at the start of the worst recession since 1929. How would tax and spend policies of the NDP or Liberals have fared in that environment. Very few countries in the free world came through that ordeal in as good fiscal condition as Canada did.

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  26. what about those who make less than $64,000?

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  27. Where’s information on the NDP, Canada’s Official Opposition’s comparison notes to the other parties? The Conservatives with their one-note ‘Oil’ gambles, have contributed to our economy’s present day recession. It seems Money Sense is not even considering the NDP as a true contender. Wake up Money Sense – as Harperman & Trudeau are not the only valid choice.

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  28. Shocked by the over simplification and the absence of an analysis of the NDP platform. I am reconsidering my decision to subscribe.

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  29. Thanks , would like to see below 64 k and single parent which affects a lot more Cdns

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  30. The Harper throwing money on the table is of course a scam if this is true above. Why is it that the Prime Minister of our country always decides to lie to Canadians? We are truly sick of the Harper immature deceptive and possibly psychopathic continual lies. There is something wrong with that man. No he wont get my vote! Harper blew 150 Billion extra dollars on his poorly thought out WAR plan. Talk about destroying the good name of Canadians we are now seen as a ROGUE nation….Not a good name. How embarassing for Canadians when Harper took the information from Australia and pretended that the Niqab was an issue in Canada. The same news releases in Australia desparatly got the Conservatives into Australia…Even Bill 51C was an Australian COPY. We are not that stupid and you will be held accountable for All your lies!!

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