Quote:
Originally Posted by bizaro86
Sure - that would definitely get them closer - any non-taxable number you add to spending makes higher consumption taxes less favorable. I'd comment that the GST rebate actually goes up with a child. I'll go throught the math again and see whether that makes a big enough difference to swing the result.
I found the same benefit calculator I think it's likely you used to determine that number, and of the $11k per year $205.25 per quarter is a GST rebate, or $821/year, so I'll use that for the GST rebate portion.
So let's re-run the numbers for your scenario. $14k+11k tax benefits is $25k total cash. Now we have a kid involved, which probably makes it harder to find shared accommodations at $500/month. Let's be very aggressive and assume we're still sharing rent somehow at $500/month. I think this is almost certainly going to be higher but a lower number benefits your side of the argument so I'll assume the roommates were cool with having the kid stay for no extra rent split. So keep the same $6k.
To get that level of subsidy the child has to be under 6 years old (the subsidy goes down once the gov't assumes they're in school). So lets take our $3k/year food cost and add a single child from the ages 1-3 category from the report I linked above, rounding down to $2200. This is generous to your cause, as both younger and older groups are more expensive according to the report. That gets us to $5200/year in food.
So a total of $11,200/year of exempt/zero rated spending. You've specified a single mom so some of the other exempt categories almost certainly apply eg feminine hygiene products, but we'll assume zero for those (could be a single dad), transit, bank fees, medical, etc as well to benefit your case.
That leaves $25k - $11.2k = $13,8000 of spending that attracts GST, or $690 of GST paid. Still less than the $821 GST rebate per year, so this hypothetical person with all assumptions maximized in favor of this not working still benefits from a doubling in GST/GST credits.
Basically, I still think you're wrong and while I took the time to go through the math on what is likely the most favorable situation to your opinion I don't think you can get there (and my rent assumption especially is pretty generous I think - I suspect a single mom+toddler would have a very hard time finding something at $500/month).
I actually think this is symptomatic of a major problem in our public discourse. Many people on the left care about people but haven't reliably costed their ideas to see whether they'll actually benefit the people they're trying to help. And many on the right are good at math but don't give a #### about people, especially poor people. I really believe that when you're considering public policy change how it quantitatively affects the most vulnerable in society over the long term should be a key factor, and I think higher consumption taxes paired with increased tax credits would absolutely help that demographic.
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When it comes to things like this I think the problem goes beyond a lack of understanding by two sides on a made up spectrum. The biggest problem is that the overwhelming majority of people on either “side” don’t understand poverty because they’ve never actually been in it or have really seen it.
Your conclusions aren’t unreasonable based on the calculations you’ve used and I don’t disagree with a lot of what you’re saying but some of the examples you’re using for numbers like rent don’t really accurately reflect the situation for those living in poverty. While $500/month rent seems like a low figure it’s really not for people in poverty who may be living in low income housing for less, people living shelters, etc so to say with certainty that it would be higher isn’t an accurate assessment.
I’m not trying to nitpick or pointing that out to be critical of your arguments or position, I’m pointing it out because I think that it’s very relevant and I know you to be a poster who is typically very analytical and who when presented with facts you may have unintentionally overlooked will actually take the time to reconsider your position.
Also, as you stated and proved, using your figures having the one child reduces the overall benefit of GST rebates. That’s despite a 75% increase from $467 to $821 to the GST rebate. Had you continued to look further you’d see that if that same person has a second child, then despite receiving double in child tax benefits they only see a 20% increase from $821 to $992 in GST rebate.
So while the increase to non GST exempt spending on items needed to raise that child would be consistent with the increase for the first child, the GST credit isn’t as high. Meanwhile life is getting far more challenging for that person who is now living in a far more precarious situation where the likelihood of a random unexpected expense arising, doubling the tax that person has to pay at that moment when they are already broke, even if they know they’ll get it back later, can be devastating if they simply don’t have it.
Like you said $200 is a lot of money for a low income earner, and so is the additional 5% in tax they’d have to pay in an emergency on a non GST exempt item that costs the same.
On paper it looks great and in most situations the GST rebates work, but for the most at risk in society it’s not always practical as is and doubling it will make things more difficult for those already falling through the cracks. That number is certainly higher than the 10 Fuzz tried to downplay it as.
We haven’t even brought up the vulnerable people who still have to buy things they pay taxes on but may not have the ability to file their taxes and therefore don’t receive a rebate. I would hope we can all(even Slava) at least agree that those people aren’t going to benefiting by doubling the amount of GST that they pay.