Pay Up Sucka!

On May 1st I gave my brother a call. He's a CPA and a partner in an accounting firm in Ontario, Canada.

I called him on May 1st, because April 30th is when Canadian income tax is due and his firm processes a LOT of returns.

And so, I waited until the seasonal crush of work subsided before calling him. it wasn't long before our conversation turned to tax rates.

With all the local talk in the US of making income tax cuts permanent and with several of the Presidential candidates talking about gas tax holidays over the summer months, bailing out failing financial institutions, bailing out homeowners affected by raising mortgage rates, lowering corporate income tax rates and somehow paying for universal healthcare, Social Security and Medicare/Medicaid against a backdrop of a declining US dollar, a slower economy and an ongoing expensive war, I thought it was time to inject a dose of reality into the discussion.

In Canada, they have universal healthcare, Social Security and are NOT fighting an expensive war.

My brother reminded me that in Canada, the highest personal tax rate is 46.4% and that it applies to all incomes over $120,000. In Canada, mortgage interest is NOT deductible. And remember too, that Canada has a consumption tax of 15% (Provincial Sales Tax and a Federal Goods and Services tax) on stuff you buy with your after tax dollars! Oh, and gas is currently (the US equivalent) of about $4.25 a gallon.

The Canadian economy is about 10% the size of the US economy and yes, they have a National debt.

The big difference between the approach that the two countries take is that in Canada, they attempt to "pay as you go" for services. In the U.S. we tend to try to keep taxes low, count on a growing economy to make up the shortfall and put the difference on the charge card (increase the national debt).

It allows us all to live "the American dream".

Question is: Which of the Presidential candidates will have the courage to wake us?