evandyk
Senior Member
The OAS clawback should be more aggressive. You can make around $150k before it’s fully clawed back. Paid to you by people making a lot less than 150k (which puts you in the top 5-10% of tax filers).
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PM Justin Trudeau's Canada
- Thread starter King of Kensington
- Start date
afransen
Senior Member
Yes, I feel like OAS should be structured more like universal basic income, where it is clawed back from $1 of other income, but at a lower effective marginal rate. The OAS clawback makes marginal effective taxation pretty onerous for those higher income earners.
kEiThZ
Superstar
This screws young people who have this as their primary savings vehicle. All to fund more payments to asset-millionaire retirees? It's actually nuts that OAS clawback doesn't start till ~80k while we have families with kids going to the Food Bank.
After reading about this issue, I am right steamed. We are figuratively (and maybe soon literally) burning the furniture to keep the gerontocracy living in luxury.
Generation Squeeze had asked the government to institute a requirement to apply a generational fairness lens to their policies. Funny how the government has no issues forcing GBA+ everywhere, but won't touch generational fairness at all. I wonder why.
kEiThZ
Superstar
That you can collect OAS with a six figure income is pretty ridiculous.
Northern Light
Superstar
That, it essence, is what GIS is today.
I don't know that it makes sense to modify OAS into a second GIS.
Lets remember what OAS really is; its a part of the basic pension stipend, but its a fixed based amount (until the clawback kicks in) as opposed to being tied to your income/contribution like CPP. )
Canada's CPP is a relatively meager pension plan if left to stand on its own.
Even with the reinvesting savings from raising the retirement age that I note above you only get a combined income replacement of 65.5% (on average)
I think if you wanted to do away w/OAS you would need to further enrich CPP which means larger payroll tax deductions.
We could certainly argue for starting the clawback sooner; though I'm uncertain on how far one might go w/this. My concern is, that if you remove too many people from benefiting, they stop caring, and indeed may advocate for further cuts.
Buy-in is important.
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Side note, the National Child Benefit is more generous in term of its clawback/phase-out, offering at least some money to families exceeding $200,000 in annual income.
That seems more problematic than OAS, in light of child poverty.
Perhaps we could curtail the NCB to a $160,000 income, like OAS; the reinvest the savings in households whose incomes are below $60,000?
kEiThZ
Superstar
I am curious why we need to provide 65.5% of income in retirement. There should be no obligation on taxpayer to provide more than sustenance. And $80k/yr ain't sustenance. What have these people been doing all their lives with the money that was rolling in? Why isn't there an expectation that they cash out their large homes and use some of the absolutely spectacular capital gains (paid for by young people) to fund their retirement?
100%.
I don't think OAS is necessary at more than 2x the poverty line. This basically amounts to robbery of younger generations.
If I had been more aware of this policy in 2019, I definitely wouldn't have voted red. They created a structural deficit to buy votes and literally screwed the country over for every other priority. All to benefit the richest cohort in the country. And they claim to be progressive. Unbelievable.
Northern Light
Superstar
The CPP portion of retirement is and would remain entirely funded by those who collect CPP with payouts in line w/their contributions.
As noted above, OAS is a staple built into our public pension system in lieu of a more generous CPP, most OECD countries have a more generous pension system (income replacement rate).
We could shift the function of OAS into the other 2 streams, by raising the CPP contribution rate and income/contribution cap; and also by raising GIS and then ditch OAS.
But that's a big change.
kEiThZ
Superstar
It's the OAS blowing up the budget. Not child benefits. Indeed, thanks to this kind of gerontocratic thinking our TFR is tanking, which means in absolute dollars spent on families aren't growing as much while spending on seniors skyrockets.
Also those child benefits are to literally support a child who has never had a chance to earn anything. Meanwhile those asset millionaire seniors with six figure incomes collecting OAS had half a century to save up.
Gen Squeeze literally similar examples to point out how unfair things are. A couple making $200k in Toronto will barely be able to afford a house in Toronto to raise their kids. Meanwhile the senior couple who entered real estate in the 90s will have incredible disposable income on half that income, having paid off their house. So who really needs the help here?
Northern Light
Superstar
Lets see what the OECD norms look like
Source: https://data.oecd.org/pension/net-pension-replacement-rates.htm
The OECD average is 61.4%
kEiThZ
Superstar
With how much young people have been screwed over, nobody would trust what you propose. My 40 yr old spouse routinely says we shouldn't plan for CPP or OAS. There's absolutely no trust in government or the generations ahead of us to not rob the till on the way out.
I used to think that was conspiratorial nonsense. But watching this government fund all kinds of benefits to seniors, I'm coming around to that view.
Northern Light
Superstar
1) Either $200,000 is a lot of household income, or it is not.
If you want to apply an Asset means test as well, that's an interesting idea, we do that for Social Assistance (max wealth) so we could certainly do it for other programs.
See my comment above on applying an Asset qualifier/cap.
I would note, not all seniors are in the real estate market. Neither of my parents (now deceased) ever owned a condo or house.
I think its wrong to broad brush the entire demographic, but fair to discuss how to support those who need it.
I don't own a house, and while I'm quite comfortable in my standard of living, I don't have kids, a choice I made long ago.
I'm perfectly fine w/my taxes going to support a child benefit, and to support universal healthcare, affordable childcare, modest university/college tuitiions and help for low and lower-middle income seniors.
However, I'm not ok w/my tax dollars going to support the home ownership ambitions of a household whose income is higher than my own.
kEiThZ
Superstar
1) I fail to see what relevance the OECD average is here. What's the rationale for saying we should be close to, below or above it?
2) It's one statistic among many. How does Canada compare on all those statistics for youth, from housing to cost of raising a child, etc?
kEiThZ
Superstar
Here's the neat part. You already supported them in the past. Everybody in your cohort that banked up millions each in untaxable capital gains have already won. All that's happening is screwing over the next generation.
Gawd, it's great that Millennials have finally outgrown Boomers as a cohort. Maybe governments will finally start taking care of another cohort's interests for once.
Northern Light
Superstar
I'm not sure that exact stat is OECD tracked.
Here's a page of Child/Family Data you can peruse:
Benefits and wages - Net childcare costs - OECD Data
Find, compare and share OECD data by indicator.
data.oecd.org
On Child Poverty Rates there is this from 2017:
This is a more comprehensive look at OECD poverty and child poverty by country - Excel Spread Sheet:
Northern Light
Superstar
Of course, I am on the record as supporting a higher capital gains inclusion rate, and one that caps the primary residence exemption or eliminates it.