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Originally Posted by Antikarma
I'm not entirely sure how you meant that, and I hope you didn't mean it as you wrote it. That's incredibly presumptuous to the point of rude if so. You don't subsidize my family at all. We pay money to the government, not receive it, and proudly so.
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Families recieve tonnes of tax breaks from the government, and children have higher medical costs than adults do. Single people don't. I shouldn't have used the a specific noun, pointing to your case. My apologies.
I subsidize families in the same way that elderly people's property tax subsidizes young people's education. =)
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Originally Posted by Antikarma
That being said, we're looking at this from two separate perspectives. The argument you use is sound, and of course, correct. My argument is approaching this from another perspective.
Let’s assume we use your numbers, because I find no fault in them at all. Let’s assume that she does go to work, for 12 dollars an hour (which by the way in my neck of the woods, not happening. But I'm pretty sure that’s doable anywhere else in Canada),
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I assume you mean 12$/hour unskilled labour isn't doable? Or, working full time at 12$/hour isn't doable?
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Originally Posted by Antikarma
and send her child to daycare at a cost I believe we both agree on. All being said, with what she takes home, she cannot survive.
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She cannot be well off. I would argue she could survive.
However, please examine the implications of both keeping social assistance and lowering the effective marginal tax rate on low income individuals. The end result is a relatively low marginal tax rate on low income people, and a net
negative tax rate on low income individuals.
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Originally Posted by Antikarma
The amount of money that she would bring home, deducting rent, childcare costs, food, utilities, essentials such as a small budget for clothes etc, if she DOES manage to somehow get by living in a cheaper part of the country, leaves absolutely nothing to allow for educational upgrades or spending on the child.
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*nod*, children are extremely expensive.
Luckily, the child could self-finance an education, given the Canadian student loans/bursuries/etc system.
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Originally Posted by Antikarma
Now, my perspective is this. Let’s do as you say and allow the daycare costs to be deducted from taxable income. Molly goes to work, making, using the numbers, a total of 23160 a year, or 1930 a month. Before, using the taxable combined rate in BC, she would be paying 425.57 a month in taxes, taking home 1504.43 a month. Now, using the new numbers, with daycare rate deducted from the taxable income, molly has a taxable income of 15360 and pays 282.24 a month in taxes, taking home 1647.76.
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Alright, I'll take those numbers as accurate. I assume you rolled CPP and EI into the income tax rate?
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Originally Posted by Antikarma
Rent:650 (lets assume she lives in the ghetto)
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Heh, I'm not living in a ghetto. I'm sharing a 3 story house with 2 other people, and paying 430$/month, inclusive.
If you can't afford the rent in a big city, get the hell out of it.
A shared telephone would cost me another 10-20$ -- instead, you could get a cell phone (100$ hardware costs/5 years, or less if you buy used) and a pay-as-you go plan (10$/month, only minimal phone use, no viable long distance).
And no, I don't live in a big city. =)
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Originally Posted by Antikarma
Daycare: 650 a month
food: 200 dollars a month
We're up to 1500 dollars a month in expenses and she's eating rice every night without a telephone.
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Using 450$/month rent, that means she now has 350$/month in disposable income, for things like clothes, food upgrades, or savings.
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Originally Posted by Antikarma
You see, we're approaching this from separate perspectives, and both of us are right in one way. But even with the daycare removed from taxable income molly could not support the family.
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She can't support her family out of (relative) poverty.
She is a single, unskilled, mother, with no support from the father or her family. She should be
relatively poor. And I mean relatively poor in the sense that she should be worse off than a single unskilled woman.
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Originally Posted by Antikarma
Feel free to poke holes in that. It's an open discussion and I'm never always right (according to my wife, its actually quite rarely I am). But unless I'm misunderstanding your perspective, which I don't believe I am, I don't think what you have offered provides a solution more than a band-aid to the people we are both talking about.
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Lets examine what I meant by "marginal tax rate on the poor".
Lets say social assistance comes to 8,000$/year (lower than current), and that marginal tax rates on the poor cap out at 40%.
So, if you go out and get a job, and earn 100$/month, at most 40$/month is clawed back from your social assitance
and taxes. I
Income(annual):Assitance-taxes (negative = taxes, positive=income)
0$:8,000$
5,000$:6,000$
10,000:4,000$
15,000:2,000$
20,000:0,000$
25,000:-2,000$
Extreme? Well, considering that the
top marginal tax rate anywhere in Canada is 52%, should we be taxing the poor on the margin at a higher rate?
Under this model, she is earning 12.50$/hour, 7.5 hours/day, 48 weeks/year, for an income of 22,500$ before taxes.
650$/month in child care comes to about 8,000$, lowering her income to 14,500$.
14,500$ at 40% marginal comes to 5,800$ in taxes. After child care expenses.
Paying 650$/month for an apartment to herself leaves her with 6,500$/year, or 540$/month for food, clothing and the like.
Is this ridiculous? Quite possibly. The fact is, right now, the effective marginal tax rate on the poor is higher than it is for any other demographic in Canada. 40% is already a higher marginal tax rate than most of the middle class.