Which Country Can..

WHICH COUNTRY CAN BEST AFFORD TAX FAIRNESS
CANADA OR THE UNITED STATES?

A commentary on the taxation of phantom income
In Canada versus the U.S.

By Victor Drummond ©
January 2009

The big day has finally arrived. The United States of America have inaugurated their very first non-white president:- Barack Hussein Obama.

January 20 2009 is indeed an historic day that will be recorded in the world’s history books.

President Obama has taken control of the world’s most powerful nation in the midst of a world wide economic downturn that shows no sign of abating in the foreseeable future.

Canada, by comparison is in relatively good financial condition with a national debt per capita less than half that of the United States.

The following data is from an article by journalist Harvey Enchin, that appeared in the January 21st 2009 issue of the Vancouver Sun Newspaper.

… total U.S. federal debt stands at $10.6 trillion, or about $37,316 per capita. Canada's debt is $457 billion, or $13,760 per capita. Throw in Canada's pension liabilities and accounts payable and the amount rises to $581 billion, or $17,520 per capita, still less than half the American burden.

For the past seven or eight years both countries have endured flawed income tax legislation which frequently resulted in innocent, hard working citizens, being levied huge income tax on phantom income, e.g. money that only existed in theory but not in reality. The flawed American legislation has the title:- “Alternative Minimum Tax”, (AMT).

Taxes levied on fictitious income were unfortunately real and caused many victims in both Canada and the U.S. to lose their life’s savings, go bankrupt and/or even lose their homes.

News media in the U.S. alluded to the AMT tax, on phantom income, as being a contributing factor in the suicide of two American taxpayers.

Two grass-roots lobby groups formed in the U.S.A. to appeal to the U.S. government for correction of this unjustified and unfair tax.

One group is named:- “The Coalition for Tax Fairness”, (CFT) and the second group is called:- “Reform AMT”

In October 2008 the U.S. Congress passed a bill amending their defective AMT legislation thereby putting an end to the taxing of phantom income in the U.S.A. and in addition providing compensation to those taxpayers who had already paid such taxes and/or related penalties.

In February 2008 Canadian victims, of our equally defective taxable benefit legislation, have likewise formed a grass-roots group called:- “Canadians for Fair and Equitable Taxation”, (CFET).

The declared purpose of CFET is to lobby our Canadian government to amend their flawed taxable benefit legislation and put an end to the taxation of phantom income in Canada.

So far none of our federal political party leaders have so much as mentioned this on-going atrocity.

Why are any, and all, of them willing to standby -- doing and saying nothing about the financial decimation of ESPP/ESO victims while figuratively wringing their hands and vocalizing loudly about the plight of Canadians who have recently lost their employment and others facing loss of employment.

If their incentive, to raise a commotion on the behalf of Canadians now being victimized by world economic condition is due to genuine concern for the plight of their fellow Canadians, they would not keep silent while many other fellow Canadians are likewise financially ruined by an outrageous tax policy.

They may not be able to do much about the plight of Canadians in financial distress, due to the world economic state, but they sure can do something to relieve the on-going financial distress of those Canadians deliberately taxed into financial ruin by their own government.

Until the taxable benefit situation is corrected, and those victimized by tax imposed on phantom income are treated fairly, all the noise they make about distress due to current job loss is hypocrisy to my ears.

The foregoing comparison between U.S. debt per capita, versus Canadian debt per capita, plainly tells it the way it is.

Canada can much better afford to be fair to our victims, of phantom tax, than can the U.S.A. government afford to do the same.

Yet the U.S. government has revoked all such taxes and related penalties while Canadian Politicians continue to turn a blind eye and deaf ears to this identical tax atrocity which is still on-going in Canada.

If this issue is not corrected in the next federal budget then a federal election would be welcomed by me and I would look for a new slate of candidates, with a more developed sense of decency and fairness, to run for office.

Victor Drummond ©