Comments for Werner Patels - My Two Canadian Cents

Comment on Obama all about ‘divide and conquer’ by Robert Andrew

Robert Andrew — Thu, 02 Feb 2012 02:53:00 +0000

It is common for companies to return profits to shareholders by buying back stock in order to raise the stock price so the stockholders can collect a capital gain instead of a divided, thereby paying much lower taxes. There are other methods as well, like have to company keep the profit as cash and paying executives with stock options. Of course, these method only really work for large publicly traded companies.Market prices are supposed to be based on a rational reason, like supply and demand. After all capitalism is based on the assumption that people make rational decision or the whole thing would be subject to wild swings that would devastate the economy and throw millions of innocent people out of work.If there is no apparent reason for CEO salaries to increase so rapidly that means the market has been undermined and that places an unnecessary cost on the economy.

Comment on The self-employed need a fairer system by Werner Patels

Werner Patels — Wed, 01 Feb 2012 03:51:00 +0000

True, people are free to sign up to this “lifestyle”, but it doesn’t give government the right to double-dip into the pockets of the self-employed. It’s actually a gross case of discrimination, probably even actionable under the Charter, I’d say.

Comment on The self-employed need a fairer system by Dave Hodson

Dave Hodson — Wed, 01 Feb 2012 01:42:00 +0000

You’re absolutely correct that if you’re without work for a while, then the contract route may end up paying less over the year, or even a lot less. What’s the phrase they say in the car business… ‘your mileage may vary’? Fortunately, in our case, my wife normally has a contract lined up before the current one ends, and I’ve never known her to be without a client for more than a week or two, which I hope will continue, but you never know… that’s part of the gamble we signed up for.

Comment on The self-employed need a fairer system by Werner Patels

Werner Patels — Tue, 31 Jan 2012 23:23:00 +0000

You may be able to command higher rates on individual projects, but don’t forget that even such mark-up cannot always compensate for the fact that you might be without a single project for months, for example. The gainfully employed counterpart may earn less per hour, but he or she will still have a regular paycheque regardless. The self-employed person, however, only has that one-off income but may then be without work for a long time thereafter. On average, therefore, the former may often end up making more at the end of the year than the one living from contract to contract (even if such contract comes with higher hourly rates). For this reason, the self-employed should not be forced to pay double for such government programs.

Comment on The self-employed need a fairer system by Dave Hodson

Dave Hodson — Tue, 31 Jan 2012 23:10:00 +0000

The situation is definately different for the “self-employed”, and it certainly isn’t for everyone. In my situation, I’m employed full-time, while my wife prefers working contracts for different clients. We actually find this works rather well for us. She has worked full-time for employers before, but we’ve come to find that the hourly rates paid when working as a contractor are significantly higher than the salary she would receive for the same position in a full-time role somewhere. So this gives our family unit a hybrid of some full-time stability with some potential for higher income. She doesn’t get health benefits, but then my benefits cover her, so we’re not really missing much there.

And it’s no surprise that contract workers can command a higher wage. They want compensation for the risk/stability loss, and as an employer, when I need to bring in some extra help for a temporary project, I can afford to pay a contractor more since we’re not paying the fringe costs associated with full-time staff (EI, CPP, Pension, Benefits). On one hand, it seems expensive for self-employed people to have to pay both the employee and employer share of CPP contributions, but on the other hand, if you’re able to earn a higher wage because of it, then it can (but not necessarily) compensate for it. She can also write off a lot of expenses for income tax purposes that I cannot as a full-time employee, and in her case, the income tax savings more than offset her additional CPP payments.

Still, I’d just like the ability to opt out of all of these programs and self-insure!

Comment on Obama all about ‘divide and conquer’ by Werner Patels

Werner Patels — Tue, 31 Jan 2012 18:51:00 +0000

Dave, excellent 101 introduction for lefties LOL

Comment on Obama all about ‘divide and conquer’ by Dave Hodson

Dave Hodson — Tue, 31 Jan 2012 18:42:00 +0000

Robert, corporations don’t pay their owners in the form of a capital gain. There are basically 2 ways to take money out of a corporation. You ‘bonus’ out the money, much like you would a salary, in which case the money is deductible by the corporation for tax purposes, but would be taxable to the shareholder like any other regular income. The other method is by dividend. You don’t pay out a capital gain.

For me to realize a capital gain on a business I own, I would need to sell the shares. If I buy a share for $10 and sell it to you for $15, I have a $5 capital gain. But, the corporation has given me nothing in this transaction, and I wouldn’t even own it anymore. If you own a business, either in full or in part, the profits are not paid to you through capital gains.

Regarding the CEO pay, what makes the pay right or wrong other than the market? Unless it’s a business that I own, I couldn’t care less what the CEO earns. If it is a business that I own, then I can make my opinion known by voting for a slate of board members who plan to change things. If the vote doesn’t go my way, I can either live with it, or sell my holdings.

Comment on Obama all about ‘divide and conquer’ by Robert Andrew

Robert Andrew — Tue, 31 Jan 2012 03:37:00 +0000

“Every person in Canada with a pension plan, and RRSP, or a few investments.”

That is far from everybody in Canada. Probably almost half of the people in Canada don’t have any of those. Nevertheless, the 1% own a highly disproportionate amount of shares in companies and would gain much of the benefit of corporate tax cuts. If you want to help all Canadian that are far more efficient ways to do it.

“If you cut corporate taxes, then the corporation passes on more income to their owners, who in turn have a higher personal income and therefore pay more personal taxes.”

Not if it is passed to the owner as a capital gain, where the personal income tax rate is much lower, which brings us back to my original point.

As for CEO pay, do you believe the market is always right and can’t be undermined? I think the evidence shows that happens very frequently.

Comment on Obama all about ‘divide and conquer’ by Robert Andrew

Robert Andrew — Tue, 31 Jan 2012 03:29:00 +0000

The crash was caused by the bank repackaging high-risk mortgages as low-risk. During the peak the bank weren’t forced to give people mortgages. They desperately wanted people to have them so they would have more to repackage.

Of course the real problem was all the derivatives built around the mortgages.

As for France it has a lower debt to GDP ratio then the United States. In fact it is even slightly lower then Canada’s.

Comment on Politicians must think first, then act by Robert V

Robert V — Mon, 30 Jan 2012 16:02:00 +0000

Personally I’d like to see them get spending under control before introducing even more spending.