Monday, November 14, 2005

Economic update

The feds are announcing a $500 increase in the basic personal exemption this year. The BPE is increased every year by inflation anyway. The inflation adjustment (assuming a 2.7 per cent inflation rate) would have increased the BPE by $219 . That means the $500 increase in the basic personal exemption will save a low income taxpayer around $45 dollars next year.

All told, it works out to a Big Mac a month.

By my napkin math, the increase in the basic personal exemption and the one point reduction in the lowest tax rate will save the average taxpayers making $35,000 or more $265 next year.

Update (November 16, 2005): Never rely on napkin math
The accelerated BPE schedule announced yesterday is in addition to increases that take effect due to indexation. The new BPE figure for 2005, since it is retroactive to January 1st is $8,648. This figure will be indexed and then another $200 will be added to arrive at the 2006 total etc. With indexation and the new increases, it will be slightly over $10,000 by 2009. The tax savings for 2005 is therefore $80 for low-income Canadians.

Same for the spousal exemption. The 2005 figure is $7,344, making the tax savings $68.


Gary Freedman said...

Greetings from south of the border.

Chad Moats said...

I going to mark this day on my calender, once again I agree with you David. The personal excemption should never be below the poverty line. Have you ver read Dr. Bo Rothstein ? She as a unique look on taxation and social programs. Take a google and let me know your thoughts.

Anonymous said...

The tax cut from the feds may be just enough to offset the increases coming from Canada's cities, who have now emerged as the tax and spend kings of the three levels of government. I would love to see the CTF cast a critical eye towards the "mission creep" entering every big city, as all of these third rate politicians enact new programs completely outside their jurisdiction. It is accompanied, of course, by a voracious appetite for new taxes and tax increases.

Chad Moats said...

I can not encourage you enough to look into Dr. Rothstein. You will see how the debate over taxes vs. social programs is a fallacy. Please google: Bo Rothstein and flat tax.

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