Double J's Tax

The Tax System, How It Works and How It Doesn't

I am finding myself being asked more often than not to explain to many clients why don't they get the same benefits that they see others getting. Unfortunately, the answer is, we have a system that doesn't reward people who try harder to advance themselves. In the past this system kind of worked, I found myself advising people with decent paying jobs to not get a second job because the tax bracket they were in made it so the job wasn't worth it, their time was worth more. This works when that second job provided just extra spending money, this doesn't work when that second job is a necessity of life.

When I'm telling people that a minimum wage job that they need to make ends meet is technically making as much money for the government as it is them how do I advise them not to do it? Right now the more you make, the more you pay is only part of the rule. People who make $40,000 a year are not rich but if they work hard to make more, not only do they pay more but they lose benefits. In some cases the reduction of the HST credits, trillium benefits and even child tax credits can mean that going from 40,000 to 50,000 doesn't mean a 25% tax bracket it can mean almost 40% on that extra 10 thousand.

In the case of a couple this even gets worse. Two people, individually make $40,000 per year, both would qualify for some benefits, make them a couple and they get nothing. When they talk to their single friends, who may even work at the same job, and they brag they got their credits this month, the couple are left sitting there wondering why they got nothing. The world is not that much cheaper for couples and yet this system unfairly eliminates support for people who choose to be together.

I'm left in the unenviable position of explaining to people that working harder in an expensive world has consequences. They need the money to survive and should be proud when they are self sufficient, and yet I have to tell them that this system does not reward hard work, it penalizes it. The government is always happy to announce its support for those in the lowest income brackets. If you are a couple and you make less than 50,000 per year, you get lots of support. If you are single and you make less than 30,000 you are "lucky", but get a raise or find a better job and all that support is gone. Essentially, the government is here for the poor and the number of poor is increasing. Rising costs make more people feel even poorer but middle earners don't get rewarded for their "success".

This system is broken. When someone works harder to make a better life for themselves and their family, when it is increasingly harder just to make ends meet, the reward should not be reduced government assistance and higher taxes. Any family with less than 100 thousand dollars income is not even middle class and yet you have to go below 50,000 to get real support. Individuals who make 50,000 are not rich yet get nothing. You need to go below 30,000 and if the person gets married all benefits could cease immediately even though the couple makes far less than 100 thousand.

In the end, the poorer we are as a country the more people qualify for assistance the more they vote for a government that provides that assistance. Is this the way it should be? We need a way to incentivize success again. We need a way to reward people who are proud to work and succeed again. Without that we are nothing more than a welfare state with everyone giving up hope for a better life.

At Double J’s you get many years experience behind every return. We know the new tax rules and how to make them work for you

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Doing your taxes and dealing with the government can be very stressful and intimidating. We strive to make this small, but important, part of your life easier.

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