Wednesday, October 21, 2009
IT DEPENDS ON YOUR...
IT DEPENDS ON YOUR PERSPECTIVE
A commentary on the Federal Government’s new
“WHITE COLLAR CRIME BILL”
By Victor Drummond ©
October 2009
The Honourable Ron Nicholson, Minister of Justice, has recently announced, with great fanfare, the introduction of an updated “White Collar Crime Bill” which – according to Minister Nicholson --will protect honest hard-working Canadians from the financial ravages of “White Collar” criminals.
Apparently Minister Nicholson considers the taking of one person’s hard-earned savings, under false pretenses is a criminal act.
What does he consider taking a persons hard-earned savings, up to and including their home and possessions, under the assumption these people have conscientiously and intentionally decided to take their potential – unrealized – profit from shares purchased from their employer – to play the stock markets for even greater gain?
This one-sided, mostly unproven, assumption on the part of the Canada Revenue Agency (CRA) has been used over and over to extort after tax dollars from thousands of victimized Canadians for the past nine years.
It doesn’t seem to phase Minister Nicholson one bit that a document published by the Federal Government – with the title: “Serving Canadians – Canada’s System of Justice” contains statements that assure all Canadians “fair’ treatment and protection of all Canadians from intimidation by “stronger people, or stronger groups of people” and guarantees Canadians, accused of criminal acts, the presumption of “innocence” until proven guilty.
The CRA using the guilty until proven innocent flies in the face of the assurances Canadians receive in the document “Serving Canadians – Canada’s System of Justice” as does the CRA using it’s muscle to intimidate the weaker individual taxpayers into paying taxes that often exceed their gross income for the entire year.
These victimized Canadians are in every bit as much, if not more, financial distress as those who have been bilked out of their life’s savings by some ponzi scheme artist.
Yet our Hon. Minister of Justice won’t even acknowledge there is anything wrong with the Canadian Taxable Benefit Legislation and/or the CRA application policy regarding the taxing of pretend income.
No one has shown me – as yet – that an employee who purchased shares in their employer’s company – using their own after-tax dollars to make the purchase – is guilty of any violation of the laws of Canada, or established tax legislation, if they decide to hold their purchased equities after the time of delivery in hopes of making even greater profit.
Is it not their property to do with whatever they want?
Isn’t the taxman going to get his slice of the pie if the taxpayer actually does make more money on the investment?
So why apply this unfair, punitive, abusive unjust tax policy in the first place? It looks as though the Canadian Government has adopted the attitude: “I’ll do it – because I can and no one can stop me.”
The practice of Corporations offering “Incentive Shares Options” (ISO) plans to valued employees got off to a huge start during the evolution of the Personal Computer (PC’s) and with the proliferation of PC’s the demand for faster communications systems took off like a rocket.
Corporations along with the Canadian and U.S. Government encouraged the introduction of the ISO plans as a means of improving employee loyalty and as a performance incentive.
Both the Canadian and U.S. Governments had income tax legislation in place that allowed the IRS and the CRA to levy a tax on any potential gain the participating employee might receive if they sold their purchased shares at the time they took control over them.
During the Hi-Tech boom years this tax policy did not inflict hardship on the taxpayer as the shares could be sold at any time for more money than the taxes levied.
The hidden tax-trap created by this policy didn’t begin to cause taxpayers any real grief until the Hi-Tech Stock market began a long term downturn in July of the year 2000.
Taxpayers on both sides of the U.S. Canada border were stunned to find they were now being levied horrendous taxes on purely theoretical profit from ISO equities that were now a loss item not a profit item.
Citizens on both sides of the border found they were financially destroyed and their life’s savings were gone and sometimes so were there family homes.
Two U.S. Citizens groups soon appeared and began to lobby the U.S. Government to make changes to their “Alternative Minimum Tax” (AMT) legislation which had now become the basis for the IRS to demand tax payment on phantom income.
The two U.S. Citizens Lobby Groups are:"THE COALITION for FAIR TAXES" (CFT)
www.fair-iso.org and REFORM THE AMT: www.reformamt.org
In October 2008, just as the world economic recession arose, the U.S. President signed the reformed AMT legislation into law -- which put an end to the IRS demanding payment of taxes and related penalties, on phantom income.
Not only has the U.S. Congress recognized the unjust, unfair and abusive nature of taxing honest, hard-working citizens on money that only existed in theory – and put an end to that atrocity but they have done so retroactively in order to be fair to those who have previously paid this penalty.
What is different about taxing phantom income in Canada that makes it “fair” and “justified” but is CONSIDERED BY A LARGE MAJORITY OF THE U.S. CONGRESS to be grossly “unfair”?
Not only did the U.S. Government decide the tax on phantom income was not fair or justified they went the next step and passed legislation to fairly compensate U.S. taxpayers who had already been victimized, by this tax policy, retroactively.
Do the U.S. Congressmen have a better sense of fair play than Canadian MP's?
Is their sense of decency more highly developed?
It certainly looks that way.
Is the U.S. economy in a better state to absorb the loss of accounts receivable that follows the cancellation of hundreds of millions of dollars on the tax receivable records?
Not according to our Prime Minister who keeps assuring Canadians our economy is in much better condition than the U.S. economy.
So it must boil down to a matter of perspective.
In the opinion of our esteemed Prime Minister -- and our elected representatives in the House of Commons -- Canadians do not deserve the same fair treatment our American cousins are receiving from their government.
And as long as we do nothing more than grumble about the neglect and abuse our governmemnt dumps upon us -- we deserve their low opinion of us.
See you at the voting polls for the next federal election O’Grady.
Victor Drummond ©
Sunday, October 11, 2009
SO WHAT IS YOUR ...
TELL ME -- WHAT IS YOUR IQ?
My version of a political put-down tale
making the rounds in the U.S.A.
October 2009
By Victor Drummond ©
The latest thing in Hi-Tech cocktail bars opened recently in Canada’s Silicon Valley North with a lot of media reporting of the excellent service provided by robot bartenders.
One of the first persons to patronize the new bar was the head physicist at the National Research Council.
He took a seat at the bar and was promptly attended to by a robot bartender. “What may I do for you?” asked the robot.
Make me a martini replied the customer. The bartender buzzed, and clicked, flashed a few lights and placed a martini on the bar in front of the customer. After taking a few sips of the drink the customer exclaimed: “That is the best martini I have ever tasted.”
The robot thanked the customer for the compliment and said: “I hope you don’t mind but would you tell me your IQ level?” The customer looked a bit surprised but replied: “My IQ rating is in the high 150’s!” “Why did you ask?”
The robot replied: “I have been programmed to provide conversation to customers that are suited to their interests and make their visit here as pleasant and normal as possible.”
With that the robot engaged the customer in a conversation that dealt with the theory of the origin of the universe, the structure of atoms from neutrinos to positrons. The scientist found the robot had boundless information on all topics in the field of physics.
Another customer arrived and took a seat at the bar. The robot bartender asked this new customer: “What may I do for you?” The customer replied: “Make me a Pina Colada”
The robot, clicked, whirred, flashed a few lights and placed a Pina Colada on the bar in front of the customer. After taking a few sips the customer exclaimed: “This is the best Pina Colada I have ever tasted.”
The robot thanked the customer and then said: “I hope you don’t’ mind my asking but would you tell me your IQ level?”
The customer looked a bit surprised but answered: “I don’t mind telling you my IQ level is in the 100 range but why do you want to know?”
The robot explained to this customer – as he had for the first customer -- and then went on to discuss Sports, Global Warming, Environmental protection, and the Canadian government policy of taxing phantom income.
The robot exchanged comments on how government expediency often supersedes qualities such as honesty, decency, integrity, morality, fairness and even justice.
The robot explained that a rationale of any government in assuming the purchase of a corporation’s common shares, via an employee Incentive Shares Option (ISO) agreement, to be somehow an exclusive transaction that justifies levying a stand-alone tax was discounted, by the robot, as a self-serving unjustified action on the part of the government.
Such shares acquisitions, the robot explained, are no different than any investor buying the same shares on the open market.
They are not a gift or an award from the employer bestowed upon the employee. They are simply a purchase by the employee from their employer bought and paid for with the employee’s own after tax dollars.
Participating employees were frequently misled by their employer ISO plan administrators as to the tax liabilities that would be incurred by holding their purchased equities past the time of delivery.
This deception by the plan administrators was not deliberate -- but was due totally by the confusing ISO tax policy the government itself was declaring publicly.
The bottom line result was that honest, hard-working Canadians found themselves entrapped in an outrageous, unfair, unjust, financially devastating tax levy.
Customer number two was amazed at the depth of knowledge the robot had on so many topics’.
They were just in the middle of their conversation, on the phantom income tax issue, when a third customer took a seat at the bar.
The robot then soon asked this last customer: “What may I do for you?” The customer replied: “C3PO Just pour me a pint of beer.”
The robot clicked, whirred a bit and flashed a few lights and then placed a mug of beer on the counter in front of the customer.
The customer chug-a-lugged the whole pint down and as he wiped his mouth on the sleeve of his jacket he said “C3PO Fill-er-up”. “And by the way I have a comment to give you guys on the phantom tax thing I heard you talking about.”
He went on to say: “Of course it is fair to tax people on money they might have had.” “It is their own stupid, greedy, fault if they didn’t take a profit when they had the chance.” “Then they whine and cry they have been badly treated.” They are just a lot of tax evaders now looking for sympathy.” etc. etc.
The robot refilled the mug of beer for this customer and then went back to talk with customer number two.
Customer number two then said: “How come you didn’t ask your last customer what his IQ was?” The robot replied: “I didn’t ask because he wouldn’t have a clue.” “Besides my customer IQ response program doesn’t function at IQ levels below 50.”
=====================================
So what is your IQ level? “Do you believe taxing honest, hard-working Canadians on income that only existed in theory – is fair?”
Do you believe levying a tax on potential gain that is immune to the real losses produced by those very same equities is fair, or even reasonable?
In my opinion those are ideal questions to establish the IQ and quality level for Canadians.
For Canadians that have the power to elect a government which truly represents, and protects, the best interest of all Canadians -- but couldn’t care less about the denial of their own rights and the abuse of their fellow Canadians by their own government – it is their compassion/quality factor not necessarily their IQ level that is deficient.
The government is the servant of the voters – not the other way around. So use the power of your vote to elect the government all Canadians deserve.
See you at the voting polls for the next Canadian federal election O’Grady
Victor Drummond ©
My version of a political put-down tale
making the rounds in the U.S.A.
October 2009
By Victor Drummond ©
The latest thing in Hi-Tech cocktail bars opened recently in Canada’s Silicon Valley North with a lot of media reporting of the excellent service provided by robot bartenders.
One of the first persons to patronize the new bar was the head physicist at the National Research Council.
He took a seat at the bar and was promptly attended to by a robot bartender. “What may I do for you?” asked the robot.
Make me a martini replied the customer. The bartender buzzed, and clicked, flashed a few lights and placed a martini on the bar in front of the customer. After taking a few sips of the drink the customer exclaimed: “That is the best martini I have ever tasted.”
The robot thanked the customer for the compliment and said: “I hope you don’t mind but would you tell me your IQ level?” The customer looked a bit surprised but replied: “My IQ rating is in the high 150’s!” “Why did you ask?”
The robot replied: “I have been programmed to provide conversation to customers that are suited to their interests and make their visit here as pleasant and normal as possible.”
With that the robot engaged the customer in a conversation that dealt with the theory of the origin of the universe, the structure of atoms from neutrinos to positrons. The scientist found the robot had boundless information on all topics in the field of physics.
Another customer arrived and took a seat at the bar. The robot bartender asked this new customer: “What may I do for you?” The customer replied: “Make me a Pina Colada”
The robot, clicked, whirred, flashed a few lights and placed a Pina Colada on the bar in front of the customer. After taking a few sips the customer exclaimed: “This is the best Pina Colada I have ever tasted.”
The robot thanked the customer and then said: “I hope you don’t’ mind my asking but would you tell me your IQ level?”
The customer looked a bit surprised but answered: “I don’t mind telling you my IQ level is in the 100 range but why do you want to know?”
The robot explained to this customer – as he had for the first customer -- and then went on to discuss Sports, Global Warming, Environmental protection, and the Canadian government policy of taxing phantom income.
The robot exchanged comments on how government expediency often supersedes qualities such as honesty, decency, integrity, morality, fairness and even justice.
The robot explained that a rationale of any government in assuming the purchase of a corporation’s common shares, via an employee Incentive Shares Option (ISO) agreement, to be somehow an exclusive transaction that justifies levying a stand-alone tax was discounted, by the robot, as a self-serving unjustified action on the part of the government.
Such shares acquisitions, the robot explained, are no different than any investor buying the same shares on the open market.
They are not a gift or an award from the employer bestowed upon the employee. They are simply a purchase by the employee from their employer bought and paid for with the employee’s own after tax dollars.
Participating employees were frequently misled by their employer ISO plan administrators as to the tax liabilities that would be incurred by holding their purchased equities past the time of delivery.
This deception by the plan administrators was not deliberate -- but was due totally by the confusing ISO tax policy the government itself was declaring publicly.
The bottom line result was that honest, hard-working Canadians found themselves entrapped in an outrageous, unfair, unjust, financially devastating tax levy.
Customer number two was amazed at the depth of knowledge the robot had on so many topics’.
They were just in the middle of their conversation, on the phantom income tax issue, when a third customer took a seat at the bar.
The robot then soon asked this last customer: “What may I do for you?” The customer replied: “C3PO Just pour me a pint of beer.”
The robot clicked, whirred a bit and flashed a few lights and then placed a mug of beer on the counter in front of the customer.
The customer chug-a-lugged the whole pint down and as he wiped his mouth on the sleeve of his jacket he said “C3PO Fill-er-up”. “And by the way I have a comment to give you guys on the phantom tax thing I heard you talking about.”
He went on to say: “Of course it is fair to tax people on money they might have had.” “It is their own stupid, greedy, fault if they didn’t take a profit when they had the chance.” “Then they whine and cry they have been badly treated.” They are just a lot of tax evaders now looking for sympathy.” etc. etc.
The robot refilled the mug of beer for this customer and then went back to talk with customer number two.
Customer number two then said: “How come you didn’t ask your last customer what his IQ was?” The robot replied: “I didn’t ask because he wouldn’t have a clue.” “Besides my customer IQ response program doesn’t function at IQ levels below 50.”
=====================================
So what is your IQ level? “Do you believe taxing honest, hard-working Canadians on income that only existed in theory – is fair?”
Do you believe levying a tax on potential gain that is immune to the real losses produced by those very same equities is fair, or even reasonable?
In my opinion those are ideal questions to establish the IQ and quality level for Canadians.
For Canadians that have the power to elect a government which truly represents, and protects, the best interest of all Canadians -- but couldn’t care less about the denial of their own rights and the abuse of their fellow Canadians by their own government – it is their compassion/quality factor not necessarily their IQ level that is deficient.
The government is the servant of the voters – not the other way around. So use the power of your vote to elect the government all Canadians deserve.
See you at the voting polls for the next Canadian federal election O’Grady
Victor Drummond ©
Wednesday, October 7, 2009
YOU ARE EVIL THEIVING ...
YOU ARE EVIL THEIVING BASTARDS
That is what Ann Minch of California U.S.A. publicly called the Bank of America and the whole U.S.A. financial system when a 30% interest rate was applied to one of her Credit Cards on which she had been paying the minimum monthly payment schedule.
Ann’s Facebook Video can be viewed at:
http://www.thebigmoney.com/features/youtube-brandwatch/2009/09/30/debtors-are-coming
Ann Minch is one person who believes in treating others fairly, honestly, with compassion and tolerance for those with acceptable levels of imperfection.
In her Facebook video: “The Debtors are Coming” she declares war on the Bank of America and all large U.S.A. Financial organizations that have adopted usurious interest penalties on outstanding credit card accounts.
Ann relates how she has been a loyal customer of the Bank of America for the past 14 years and currently has two Bank of America credit cards. One is paid up to date while the other has a reasonable level of balance on which Ann has been paying the minimum monthly payments.
All was well --- so far as Ann was concerned – while the interest rate charged on her outstanding credit card balance was in the 13% range. But Ann’s tolerance for unfair play was exceeded when the Bank of America suddenly more than doubled the interest rate on her outstanding credit card balance to 30%.
She relates how she was deceived by Bank of America commercials that declared customers who had issues with the interest rate applied to outstanding credit card accounts could contact a bank investment counsellor and negotiate a rate more acceptable to both parties.
So acting upon the information the bank was providing, in their commercials, Ann contacted the bank by phone and asked to be connected to someone who she could discuss the outrageous new interest rate now being applied to her outstanding account balance.
Ann relates how her phone call was shuffled back and forth between Bank employees until she finally found herself talking to a Bank Investment counsellor. What happened next was that Ann was advised the 30% rate was not negotiable and would remain in force – period.
That was when Ann blew a fuse and declared: “You are evil thieving bastards” and “I could get better loan interest terms from any number of loan sharks.” And you know Ann is right. There are loan sharks that would be happy to get a rate of 20% on each months outstanding loan balance.
I can barely imagine what Ann would call Canada’s Minister of Finance if she were to be taxed 500% of her entire gross income for a year, on money deemed to be “Earned Income”, from ESPP/ESO shares she actually lost money on.
“Evil thieving bastards” would be mild compared to the words she would produce under those circumstances, I’m sure.
Canadian voters should be more like Ann. She is not only fighting for her own benefit but for the benefit of every American that holds a credit card. The spill off from her battle with the American Financial system may actually be of benefit to Canadians as well.
Whether, or not you approve of Ann’s choice of words the fact remains she has had enough of bureaucrats running the show and abusing their power to demand outrageous payment from honest, hard-working taxpayers and honest debtors.
Every Canadian has lost rights guaranteed under the Canadian Charter of Rights and Freedoms as well as rights supposedly guaranteed by the updated “Taxpayers Bill of Rights” and the only way to retrieve those rights is to demand our elected representatives amend Canada's flawed taxable benefit legislation and put an end to taxing phantom income as the U.S.A. government has already done. Ref: www.reformamt.org
Stand up for your rights and for the protection of all Canadians against taxes levied on deemed “earned income” money that never existed.
Show a bit of the fighting spirit of a little Ann Minch who took on the U.S.A. Financial system, by herself, when she found their abuse of power was hurting her and her fellow Americans -- she fought for the rights of people she doesn’t even know.
And the risk she took to take her situation to the public paid off. The Bank of America restored Ann’s credit card interest rate back to 12.99%
see:- http://www.sciforums.com/showthread.php?p=2375445
Canadians – “Stand up for your rights” to equal treatment under the laws of Canada and inform your elected Members of Parliament you demand they commit to amending Canada’s defective taxable benefit law to put an end to taxing honest, hard-working Canadians on money that never existed.
See you at the voting polls in the next federal election O’Grady.
Victor Drummond (c)
Saturday, October 3, 2009
SHOWDOWN ON PARLIAMENT ..
SHOWDOWN ON PARLIAMENT HILL
A Commentary on the conflicting views on taxing fictitious
(phantom) income between the Minister of Finance (MOF) and
the House of Commons Standing Committee (HOC) on Finance, (FINA).
by Victor Drummond ©
October 2009
On June 2nd 2009 members of the House of Commons (HOC) standing committee on Finance (FINA) convened meeting No. 33 to consider a motion by M. P. Thomas Mulcair to amend Canada’s defective taxable benefit legislation as requested by the group of Canadians known as: “Canadians for Fair and Equitable Taxation” (CFET).
After hearing the CFET members appeal for implementation of the governments “Fair Taxation” plan for all Canadians, and the grossly unfair exclusion of thousands of Canadians taxed, on money never seen, from the Gary Lunn Tax Remission Order (TRO) the FINA members passed the motion, introduced by member Thomas Mulcair, by a vote of 7 to 0 in support the CFET request.
The 7 to 0 vote in favour of the CFET appeal for “fair” taxation is very strong evidence FINA members personally believe taxing of fictitious income is neither justified nor fair -- especially in view of the Gary Lunn C.P. M.P. TRO revoking all such taxes levied on 37 victims in his riding and also the U.S. A. government having amended their defective Alternative Minimum Tax (AMT) legislation thereby putting an end to taxing their citizens on phantom income. Ref: www.reformamt.org
When approving the Thomas Mulcair motion FINA members issued a request on the Department of Finance for information that would provide them with the financial aspects of revoking taxes already levied on phantom income and putting an end to the policy altogether.
Information FINA requested clearly related only to Canadian taxpayers who had been levied taxes on shares acquired via an Employee Share Purchase Plan (ESPP) and/or an Employee Share Option agreement and losses generated by those very same equities and allowing the losses to be applied to offset taxes levied on any fictitious gain before the shares had actually been sold.
FINA set a target date of August 31, 2009 for the Department of Finance to respond to in order to assure the Finance Department would not stall their reply to FINA’s request indefinitely.
A reply from the Minister of Finance, The Honourable Jim Flaherty, was received on behalf of FINA, by the Honourable Jean-Francois Page, HOC Committee Directorate, Sixth Floor, 131 Queen Street, Ottawa ON, K1A 0A6 on, or before, the date requested by FINA.
And what information requested by FINA was contained in the letter?
Did the letter provide any financial data relative to the number of taxpayers who had been levied taxes on phantom income? Answer: No.
Did the letter state how much money might be deducted from the government accounts receivable if the outstanding taxes currently on deferral via form T1212 were revoked? Answer : No.
Did the letter indicate how many Canadians had taxable benefit entries reported by their employers on the T4’s issued, in any given year, from the Hi-Tech stock market crash beginning in the year 2000?
Answer: No.
Did the letter report the number of Canadians who had appealed for a tax re-assessment in an effort to have taxes levied on money never seen cancelled?
Answer: No.
Well then what information did the letter from the Minister of Finance provide to FINA for their consideration?
The letter’s opening paragraph merely states why this letter was written.
Paragraph 2, side steps addressing the specific information requested and diverges into a long diatribe on the tax treatment of employee stock options – etc. etc. and how employees who have been levied horrendous taxes on phantom income may obtain tax relief via applying for tax deferral via form T1212.
No one asked for this lesson in phantom tax history so why fill three pages with this well known information?
Then near the bottom of page three the letter informs the reader that many investors lost money when the downturn in the technology sector struck in the middle of the year 2000.
“REALLY” So what? That is general information that anyone following the economy already knows.
Page three provides a review of how “Capital Gains” and “Capital Losses” are treated. Information that is provided in every T1 General Tax Guide. Information that was not requested in the first place.
The letter then goes on to regurgitate the way that taxes levied on a “deemed” ESPP/ESO taxable benefit are immune to any real losses generated by those same equities and attempts to equate a taxpayer financially devastated by taxes levied on the fictitious gain at time of taking possession of their ESPP/ESO shares – and who failed to dispose (sell) those shares at the time of delivery -- are then treated the same as all other stock market investors/speculators.
In the bottom paragraph on page three, the letter (accidently?) confuses allowing “Capital Losses” to be applied against all other forms of income – which is not the proposed tax treatment – and fails to address the real proposal to allow losses generated by the equities already taxed on fictitious gains to offset each other.
In the same paragraph is the confusing comment: “As a result, individual investors would be able to receive tax relief for their capital losses even though the overall value of their portfolio is increasing.”
Since when does the value of an investors “portfolio” have any bearing upon the tax treatment of the equities the investor actually traded?
Equities in an investor “portfolio” are holdings for which the gain or loss to be generated has not yet been established and therefore have no influence on the tax treatment of the loss or gain actually realized by the investors buy and sell activities.
Page four has a pitch for the Conservative “Canada’s Economic Action Plan” declaring “we are taking action to support Canadians affected by the global recession, to create jobs for the future, and to equip our country for success in the years ahead, We are making the investments that are needed to ensure our long-term quality of life.
signed by the Honourable James M. Flaherty with a copy to Ted Menzies, M.P.
While the same government is holding horrendous, unfair, unjustified taxes levied on fictitious “Earned Income” it is a hollow mockery to make a pitch for the Conservative “Economic Action Plan” that makes a show of concern for Canadians affected by the global recession while applying a tax policy that creates more financial distress than the economy.
There is no more effective and fair way to implement a Canadian Economic Recovery Plan than to abolish taxing honest, hard-working Canadians on a fictitious taxable benefit, based on an arbitrary moment in time and a volatile Fair Market Value.
The Ball is now back in FINA’s court.
How will they view this response to their request for impact information which was never provided?
Who does the FINA Committee really report to?
Their title suggests they report to the House of Commons.
Will they now introduce a bill to follow the U.S.A. government lead to amend our equivalent defective, unfair, unjust, outrageous taxable benefit legislation and fairly compensate those already victimized by it?
It will be very interesting to witness the show-down on Parliament Hill when FINA next reports to the HOC.
Will FINA fold as Canada’s PM’s have done in the face of opposition by senior bureaucrats in Canada’s Department of Finance?
See you at the voting polls in Canada’s next federal election O’Grady.
Victor Drummond ©
A Commentary on the conflicting views on taxing fictitious
(phantom) income between the Minister of Finance (MOF) and
the House of Commons Standing Committee (HOC) on Finance, (FINA).
by Victor Drummond ©
October 2009
On June 2nd 2009 members of the House of Commons (HOC) standing committee on Finance (FINA) convened meeting No. 33 to consider a motion by M. P. Thomas Mulcair to amend Canada’s defective taxable benefit legislation as requested by the group of Canadians known as: “Canadians for Fair and Equitable Taxation” (CFET).
After hearing the CFET members appeal for implementation of the governments “Fair Taxation” plan for all Canadians, and the grossly unfair exclusion of thousands of Canadians taxed, on money never seen, from the Gary Lunn Tax Remission Order (TRO) the FINA members passed the motion, introduced by member Thomas Mulcair, by a vote of 7 to 0 in support the CFET request.
The 7 to 0 vote in favour of the CFET appeal for “fair” taxation is very strong evidence FINA members personally believe taxing of fictitious income is neither justified nor fair -- especially in view of the Gary Lunn C.P. M.P. TRO revoking all such taxes levied on 37 victims in his riding and also the U.S. A. government having amended their defective Alternative Minimum Tax (AMT) legislation thereby putting an end to taxing their citizens on phantom income. Ref: www.reformamt.org
When approving the Thomas Mulcair motion FINA members issued a request on the Department of Finance for information that would provide them with the financial aspects of revoking taxes already levied on phantom income and putting an end to the policy altogether.
Information FINA requested clearly related only to Canadian taxpayers who had been levied taxes on shares acquired via an Employee Share Purchase Plan (ESPP) and/or an Employee Share Option agreement and losses generated by those very same equities and allowing the losses to be applied to offset taxes levied on any fictitious gain before the shares had actually been sold.
FINA set a target date of August 31, 2009 for the Department of Finance to respond to in order to assure the Finance Department would not stall their reply to FINA’s request indefinitely.
A reply from the Minister of Finance, The Honourable Jim Flaherty, was received on behalf of FINA, by the Honourable Jean-Francois Page, HOC Committee Directorate, Sixth Floor, 131 Queen Street, Ottawa ON, K1A 0A6 on, or before, the date requested by FINA.
And what information requested by FINA was contained in the letter?
Did the letter provide any financial data relative to the number of taxpayers who had been levied taxes on phantom income? Answer: No.
Did the letter state how much money might be deducted from the government accounts receivable if the outstanding taxes currently on deferral via form T1212 were revoked? Answer : No.
Did the letter indicate how many Canadians had taxable benefit entries reported by their employers on the T4’s issued, in any given year, from the Hi-Tech stock market crash beginning in the year 2000?
Answer: No.
Did the letter report the number of Canadians who had appealed for a tax re-assessment in an effort to have taxes levied on money never seen cancelled?
Answer: No.
Well then what information did the letter from the Minister of Finance provide to FINA for their consideration?
The letter’s opening paragraph merely states why this letter was written.
Paragraph 2, side steps addressing the specific information requested and diverges into a long diatribe on the tax treatment of employee stock options – etc. etc. and how employees who have been levied horrendous taxes on phantom income may obtain tax relief via applying for tax deferral via form T1212.
No one asked for this lesson in phantom tax history so why fill three pages with this well known information?
Then near the bottom of page three the letter informs the reader that many investors lost money when the downturn in the technology sector struck in the middle of the year 2000.
“REALLY” So what? That is general information that anyone following the economy already knows.
Page three provides a review of how “Capital Gains” and “Capital Losses” are treated. Information that is provided in every T1 General Tax Guide. Information that was not requested in the first place.
The letter then goes on to regurgitate the way that taxes levied on a “deemed” ESPP/ESO taxable benefit are immune to any real losses generated by those same equities and attempts to equate a taxpayer financially devastated by taxes levied on the fictitious gain at time of taking possession of their ESPP/ESO shares – and who failed to dispose (sell) those shares at the time of delivery -- are then treated the same as all other stock market investors/speculators.
In the bottom paragraph on page three, the letter (accidently?) confuses allowing “Capital Losses” to be applied against all other forms of income – which is not the proposed tax treatment – and fails to address the real proposal to allow losses generated by the equities already taxed on fictitious gains to offset each other.
In the same paragraph is the confusing comment: “As a result, individual investors would be able to receive tax relief for their capital losses even though the overall value of their portfolio is increasing.”
Since when does the value of an investors “portfolio” have any bearing upon the tax treatment of the equities the investor actually traded?
Equities in an investor “portfolio” are holdings for which the gain or loss to be generated has not yet been established and therefore have no influence on the tax treatment of the loss or gain actually realized by the investors buy and sell activities.
Page four has a pitch for the Conservative “Canada’s Economic Action Plan” declaring “we are taking action to support Canadians affected by the global recession, to create jobs for the future, and to equip our country for success in the years ahead, We are making the investments that are needed to ensure our long-term quality of life.
signed by the Honourable James M. Flaherty with a copy to Ted Menzies, M.P.
While the same government is holding horrendous, unfair, unjustified taxes levied on fictitious “Earned Income” it is a hollow mockery to make a pitch for the Conservative “Economic Action Plan” that makes a show of concern for Canadians affected by the global recession while applying a tax policy that creates more financial distress than the economy.
There is no more effective and fair way to implement a Canadian Economic Recovery Plan than to abolish taxing honest, hard-working Canadians on a fictitious taxable benefit, based on an arbitrary moment in time and a volatile Fair Market Value.
The Ball is now back in FINA’s court.
How will they view this response to their request for impact information which was never provided?
Who does the FINA Committee really report to?
Their title suggests they report to the House of Commons.
Will they now introduce a bill to follow the U.S.A. government lead to amend our equivalent defective, unfair, unjust, outrageous taxable benefit legislation and fairly compensate those already victimized by it?
It will be very interesting to witness the show-down on Parliament Hill when FINA next reports to the HOC.
Will FINA fold as Canada’s PM’s have done in the face of opposition by senior bureaucrats in Canada’s Department of Finance?
See you at the voting polls in Canada’s next federal election O’Grady.
Victor Drummond ©
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