Rob and Mike were having a chat…

Rob is left scratching his head

And then uttered a classical Canadian phrase eh?

By Rob MacLellan and Mike Harris

We just love it when there is dialogue – people exchanging views and asking questions.

Rob, my neighbour who has a great big snow blower, so we are buddies if you know what I mean.  Rob tells people he hails from Cape Breton (hope he doesn’t put that on his resume) sent me this:

From Rob:

I thought this might interest you given your the attention paid to politics and political figures on your website.  I recently sent a message to Burlington MP Mike Wallace and have attached it along with his reply below.

Kind of makes you scratch your head and think a bit.  Personally, I cannot see how a cut in personal taxes would save the average Canadian family enough to not mortgage their futures.

Here is what` Rob sent Mike Wallace, his Member of Parliament:

Hello Mike,
I recently received a mailer from your office and I wanted comment on it.  This particular mailer has a focus on families with respect to taxes and such.

I am sure you are probably quite aware of the costs of raising a family, it seems the bills never seem to end.  Two of the more substantial costs coming from child care, and saving for post secondary education.

I view myself as one of the lucky ones who doesn’t feel the pinch too badly with respect to these costs, but it always leaves me to wonder about those who may have a more difficult time making ends meet.

Let’s focus on child care as I think it would likely be the most universal issue to young families.

Assuming the “Average Canadian” household income is ~ $70,000, say $35,000 per spouse.  If the average tax rate is approximately 19%, so approximate Net family income each year is $56,700.  Breaking it down even further, gives a family $1,090 each week to spend.  I know there are tax experts out there who would curse such a rough calculation, but I would hope I am still fairly close to the mark here.

For this example I will use a family with two (2) children, who are at daycare age.

Now if we factor in the $2,400 / year Universal Child Care Benefit, or $1,944 after 19% tax, it gives a family an extra $37 per week.

So, assuming $1,127 / week take home pay for an average Cdn. family.  Where does that money need to go?

Household Costs (avg. per week):
– $490.00 Child Care(example taken from Woodlands Childcare centre here in Burlington)
– $30.00 Hydro
– $26.00 Union Gas
– $30.00 Telephone / Television / Internet
– $150.00 Grocery
– $242.00 Mortgage (assuming $200,000 mortgage, 3.99%, 25 years, weekly payment)
– $50.00 Property Tax
– $40.00 Insurance (home / auto[1])
– $50.00 Gas (for auto)
$1,108.00 Average

That leaves $19 per week to cover miscellaneous expenses (clothing, furniture, car payments, home/auto repair, life insurance, etc.), spending money (entertainment), savings (Vacation, RRSP, RESP), etc.  I don’t know about you, but I know I spend a fair deal more than $19/week on miscellaneous type expenses.

The single largest cost based on my calculations is Child Care.  I know my estimates are raw and debatable, but I suspect they are not far from what families are paying.

I have a hard time seeing how Canadians will be to live day-to-day and make ends meet, let alone be able to save for their future (i.e. retirement), and the future of their children (i.e. post secondary).

My question is this.  If the above information is even close to accurate, would you want to live like the “Average Canadian”?

I welcome your feedback.

Here is what Rob got back from his Member of Parliament.

Hello Mr. MacLellan

First, I would like to thank you for taking the time and effort to write a detailed response to my recent mailer.  I will not dispute your numbers.  The issue the mailer addressed was that families faced a higher family tax burden prior to us taking office.  The tax burden was about $3000.00 more for a family of four.  This is not to say the job is done, but we have been reducing federal taxes for individuals and families.  Tax freedom day now comes weeks earlier in the year than under previous governments.

This may not be enough, but we will continue to find ways to cut personal taxes.

Rob is still scratching his head over this one.

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