The tax changes are not a slam dunk.

Even if the tax changes come into effect, the damage is already done.

Vancouver condo developer cancels Langara West on Cambie
 

Feel sorry for the folks who bought presale in this development.

Vancouver condo developer cancels Langara West on Cambie

hi friends i need some advice. I just started my 5yr variable term mortgage and im getting prime -.65% = 2.55%. To lock in i would be getting 3.04%. I truly believe by this time next yr, itll be more than 3.04% and will only go up, but the bank, wife and some other friends dont think so. What does revscene think?

Your variable rate is not too bad - mine is Prime - 0.7% and I suspect that these days you could do a little better as there tends to be more room as rates go up.

Your fixed rate seems high, I had a friend who was approved a few weeks ago and he was offered 2.85% but we ended up getting it down to something in the 2.6s, I can't quite remember the exact rate. Since then, rates have gone up, but I think that you should be in the 2.8s at least with some shopping around.

If you are planning on buying something you will stay in, you should definitely lock in - the prognosis is almost assured you will see at least 2 more rate increases next year and BMO is projecting 4 increases.

-Mark

fixed is probably higher because switching from variable?

fixed is higher but not that high......

He's currently on a variable rate 5 year term, no bank is just going to allow you to switch to their best possible fixed 5 year without penalty. They probably offer the 3% rate due to their leverage in the position.

No one is getting 2.6X now, so closing in on 3 isnt surprising.

If you buy a condo at 500K with 5% down.

If you are paying 2.55, you are paying 75K principal and 58K interest interest over 5 years. (with an avarage of 2.55 rate) 133K total over 5 years.

If you pay 3.0 fixed, you are paying 71K principal 68K interest interest over 5 years. 139 total over 5 years.

So by going variable, you are saving 6K.
In the same time, for 6K, you can have sanity of mind, and FORGET about worrying about rate surging over the next 5 YEARS.

Ok, so now you are "down 6K over 5 years", and probably up XXX,XXX K up from the value of your home rising.

note: yeah theres endless variables, but in general, this is what made me choose fixed.

For what it's worth most people I know in finance with mortgages who have preached variable rates for the last 10-15 years have started locking in on 5 year fixed terms.

In that above example, if all you're outing down it 5% (if that's possible) I'd be pretty worried going with a variable rate

@riceIntegraRS check aging. 3+ seems to high to lock in. I'm looking aswell for a bigger place currently at 2.39 For 5, I was offered 2.85 as a blended rate if I decide to take on more mortgage debt. Get ur bank to do better than 3.04

But as Hondaracer pointed out. They have leverage so... I don't think they'll be another hike this year as they don't want to cool of too much and crack the housing market.

Ouch

didn't even know about the news until i read this off facebook from an anesthesiologist in Edmonton

There's a reason he's an anesthesiologist and not in finance. If you're paying 50% effective tax rate on capital gains, then either you're retarded or you don't know how to do taxes. So much misinformation and blatent lies in the post.

i'm not in finance either..but his post said 25% tax in AB which I thought was believable

either way, Trudeau going after self-employed professionals for tax hikes seems out of line

anyways.. wasn't trying to derail this thread by too much

I think he's obviously cherrypicking data to prove his point. He picks Alberta to compare the 70k worker which has one of the lowest effective tax rates in the country (Compare that to BC where the worker would pay an effective tax rate of ~23%). There are also lots of other tax breaks that are applicable to him that would bring his tax rate much lower than he would claim which would be why these individuals pay to hire an accountant. He is just using the worst possible situation to exaggerate his claims.

He also fails to mention that at the end of the day, he still made 180k after taxes which is still 3-4 times what the 70k worker brings home at the end of the year. Am I supposed to pity him for feeling that 180k is too little money?

The point of taxing the rich is that $1 to a poor man is worth many times more than $1 to someone who is rich. They may cry and complain but at the end of the day, they're still living very comfortably and helping make sure society around him doesn't go to shit.

That FB post:
1) Spelling and grammar, holy shit.
2) Only 'MURRICA! uses 'check'
3) Apostrophes, apostrophes everywhere
4) If that's a real scenario (which LOL if it is), you're doing it wrong.

Just on Federal Tax Rates alone, the $70k worker in AB would pay:

15% on the first $45,916 ($6,887.40)
20.5% on the remaining $24,084 ($4937.22)

$11,824.62 in taxes ...

Then in Provincial taxes:

10% on $70,000 ($7,000)

$18,824.62 on $70,000 of income is a tax rate of 26.9%

Of course, he doesn't show the calculations for the $70k worker, but I assumed he put in a $15k RRSP contribution and, low-and-behold, using his tax calculator link ... OH, LOOK AT THAT, $9669 Total Federal & Provincial Tax. Exactly the same number he quoted. Aside from being impossible (max is 18% of earned income), very few $70k workers can afford to put $1250/month into RRSPs/savings.

well he does live in AB
yes it's assuming he doesn't take advantage of tax incentives (which he has identified in the post)

It's not so much about the dollar amount, but how the current system is already taking a significant chunk from that group and to have the PM/MoF accuse them of not paying a fair share is a slap in the face. Even if you wanna go down the route of comparing salaries, I'm familiar with that program he's trained in, and it's an abysmal amount compared to what the colleagues he graduated with makes

agreed with your last point

You are forgetting one thing though. To get to the top 1% is not just like flip of a switch. Lot's of these type of profession put in more than 40 hours a week. They have to go to school every year to obtain, attend conference, pay liscense fees, take a risk of operating a business etc etc WHILE the rest of us works 40 hours go home and not worry about work.

I remember a long time ago I need to see my family doctor really bad (major back pain ) he wouldn't book in till 2 weeks later because if he sees more paitents per day the gov doesn't pay for it so he is working for free. Image if lets say a lot of top 1% decided not to over work and stay just below a certain tax barcert a lot of people (us) are going to have to wait to get our services dentist, doctors , lawyers etc etc. Or you are going to see a lot more business taking "taking cash only" and not report what they all earn.

Let's face it a lot of self employed business (especially contractors, the construction dude you hire to reno your house, the handy you hire to fix your pipe, the gardener you hire to take care of your lawn) do you thick they all report all the income they earn? Of course not that's why they like cash. The gov should go after these people not people who actually report their income.

^The govt should go after CEO's, CFO's, COO's who work in large corporations like Telus, Bell, Rogers, Shaw as well, those are the guys that are nickel and diming the Canadian community, yet making hundreds of millions in QUARTERLY profits hand over fist, and yet, the people JT chooses to ding are the upper middle class - effectively making them, middle class. If he really thinks that all doctors are upper class, he's a complete idiot.

His campaign promise was to lower the tax rate to 9% (What the Liberals may have in store for the small business tax rate | Financial Post). What.the.fuck happened?

Trudeau, planned on running the country at a deficit of no-more than 10 billion over the first couple years in office. But as of right now, we have a shortfall of nearly at a $30 billion. This is a scam at the highest level. He's lost money, now he needs to find a scape goat to pay for his poor spending habits, so he targets the middle class.

Once doc's and other small business owners feel the crunch, they may start letting go of some staff, or closing shop all together to go to a different country. Jobs will surely diminish from the small business sector.

Couple the above with rising interest rates, a housing bust may, actually, soon be on the horizon.

But we all know the gov will never got after the CEO's and big corporations since that's where the gov gets their donations or favors. So they go after the professionals who in my books have paid enough tax already. Is not like they haven't been thorough schools (8+ years) and then still need to update their skills and to top it off work long hours.

$300k/year is not upper-middle class. Fuck off

Middle class is defined as making between 75% and 125% of the median income, which is obviously nowhere near $240k in Canada.

Even by the extremely loose "updated" definition the Americans are now using of 66.7% to 200% of the median income, it's not even close.

https://en.m.wikipedia.org/wiki/Upper_middle_class

Jmac, your right, the definition is loose. I'll go by the definition given by Wikipedia for presenting my argument, you can go with your source of choice.

My friend and I were talking about a time when his classmates father, a physician, managed to raise a family in Shaugnessy. We took a moment to pause, and laugh at that absurd idea, that a doctor could actually afford a property like that anymore.

People don't understand the sacrifices involved when choosing this profession. It delays life, with 60-100hr work weeks. Unlike many other professions, to start and raise a family requires, often (not always), one spouse to give up their career goals and become a full time care taker. A physician who, under the proposed taxes, typically bills 400k, will pay 100k worth of expenses, including other salaries. They will likely have a taxable income of 300k , and will only take home 175k. That's equivalent to two working professionals who work 40hrs/week each. That seems like a typical middle class family to me in Vancouver with salaries of two nurses/pharmacists/accountants/engineers. That doesn't even go into the issue of debt accrued, or the total lost income during all the years of education where we could have been doing other things.

The "loose" definition used by the United States isn't loose in terms of quantification, but in terms of the number of people who fall within it.

The original definition from the 1980s, using the median income (where exactly half of the people are above and half of the people are below) used +/- 25% as that resulted in approximately 1/3 of the people falling within that range using the data from the 1960s and 1970s. So literally the middle third of earners (with the lower third being lower class and the upper third being upper class).

The updated definition of middle class that the US now uses is set so roughly the lowest 20% of earners and highest 20% of earners don't fall within it, which equated to roughly 66.7% to 200% of median income by state (so middle class varies state-to-state). This results in 5 income classes: Lower class (bottom 20%), Lower-middle class (20%-40%), Middle class (40%-60%), Upper-middle class (60%-80%), and Upper class (Top 20%).

Sources would be MIT (where the term was originally coined), Statistics Canada, and Pew Research Center (the US government uses their definitions).

In any case, the highest earning states still top out that definition of the upper-middle class at around $145k USD.

Nurses aren't making $130k/year working 40 hours/week, which is approximately what would be required to take home $87.5k/each. Not even close. With lots of overtime, maybe, but definitely not without.

https://www.bcnu.org/Contracts-Barga..._Wage_Grid.pdf

Nurses top out at $52.14/hour for a level 6 RN in wage category 9 (which is VERY, VERY few nurses). Even assuming the top wage bracket ($52.14/hour) and they work all night shifts (+$3.50/hour) and two of those shifts fall on a weekends every week (+$2.30/hour) and that nurse works 52 weeks/year, that still only tops out at $117,644.80/year (and, again, we're talking an extremely generous scenario that would literally never happen).

Pharmacists working for the health authority aren't doing that either (I'm not going to post info off my employer's internal postings). Can't speak for the private firms (though, what I've found online hasn't been any better than the health authority). I can't see too many accountants making that, either.

Without belabouring the point of what the definition of upper middle class means, maybe we can change the conversation to the idea of 'fairness'. I don't know what your stance is on the Trudeau taxes are, so I won't make any assumptions. Since I'm curious what your take is on it, please let me know your thoughts.

I was a pharmacist working in a health authority making approximately $45/hour and change before I went back to school, for the record. Is it really fair that a pharmacist working for a health authority can retire by the age of 58-65 and earn 70% of their highest 5 years of income for the rest of their/spouse's life, INDEXED TO INFLATION (for the next 30-40 years)? Not to mention paid sick calls, paid vacation time, paid benefits, paid union protection, paid insurance etc.?

A lot of my friends that work as health authority pharmacists are cracking over 100k already, with hardly any extra overtime, all the while collecting one of the sweetest retirement nest eggs in the world.

Private sector business owners (doctors et al.) get none of that luxury, instead we were provided with the ability to incorporate, to somewhat try to replicate what government employees are privy to by investing with our corporation in stocks, real estate, etc. All of which are entirely up to the gods of economics and bull/bear cycles.

Sure, in the grand scheme of things, neither system is fair for the greater good of the people (homeless population, school teachers, single parents, etc.). But, is there one that seems fairer than the other? And if so, why?