[Zarley]

Originally Posted by opendoor

That's not really unexpected, given that individuals earning less than $60K make up about 80% of tax filers. The fact remains that something like only 1 in 20 Canadians earning less than $60K a year were able to max out their TFSA at the $5K level.

And when you really dig into the numbers, it's pretty clear that a good portion of that 1 in 20 aren't really typical middle earners. 25% of the sub-$60K earners who maxed out TFSAs made less than $20K, and a good chunk made less than $5K. To me, that looks like higher earners shifting money to lower earning family members. In fact, of the 1.1M people making under $60K who maxed out their TFSAs, the majority earned less than $35K. Maybe some of the people earning that little manage to sock away 20-50% of their after tax income, but I really doubt that's what's going on with most of them. Or to put it another way, there were as many people maxing out their TFSAs with $10-15K income as there were with $55-60K in income.

I believe you're quoting figures from the Broadbent Institute report, which has a decidedly anti-TFSA bias, so I'd take those with a grain of salt. The report also fails to consider any public benefits derived from increased investment activity due to the program.

Originally Posted by opendoor

How is maintaining the rules that have existed for most of the last decade disincentivizing investment and savings?

Because you are replacing something that incentivizes disciplined savings and investment (good behaviour), with a tax cut that will result in increased spending for the majority of those affected (poor behaviour).

Originally Posted by opendoor

And really, TFSAs haven't really done a great job of that anyway. Nearly 2/3rds of those eligible haven't even opened an account, and among those that have, maximization rates have fallen dramatically, and are 1/4 of what they were in 2009.

At the beginning of the program, many were shifting savings from non-reg accounts to TFSAs. Given this, maximization rates were bound to decrease. The fact that 2/3rds of eligible Canadians have not opened accounts points to a shortfall in personal finance education in this country and generally poor financial habits - another issue that needs to be tackled.