OnProbation.ca Feedback Forum - ask Stephen Harper a question

The Liberal party of Canada recently (today?) opened a new web site, onProbation.ca where they are discussing their ideas and have a Feedback Forum called Ask the PM where they state

Send your questions and comments to the Prime Minister and help us make sure that he's listening.

So I added a question regarding the taxation of income trusts, which is currently ranked number six and rising steadily.

Here's what I had to say:

The Tax Fairness Plan (which is anything but) includes a 31.5% tax on Income Trusts that has never been properly justified (the argument of tax leakage was never substantiated and independent analysis shows there is none).

The Prime Minister needs to come clean on Income Trust taxation and ultimately repeal the tax.

The Income Trust investment vehicle is available under many forms but in this form it was most accessible and beneficial to average Canadians (other forms, such as Flow Through Entities, are more complicated to participate in - although the Finance Minister himself benefits from his partnership in an FTE).

In the previous election Stephen Harper berated the Liberals for "raiding senior's next egs" by taxing income trusts (after public consultation) and yet no sooner was he in office that he imposed without consultation a punishing tax on income trusts.

I call upon the Prime Minister to repeal the income trust tax and review the entire Tax Fairness Plan.

Cross-posted on 2FatDads at OnProbation.ca Feedback Forum - ask Stephen Harper a question

Bonuses for AIG

Rex Murphy did a bit on AIG last night after the news. I can't find it online though - I guess the internet is slacking off.

Rex made a couple interesting points:

• The AIG chairman only gets paid $1 a year (no mention of other forms of compensation though, besides the bonus)
• The rescue bill that's paying the bonuses explicitly allows for bonuses
• The larger stimulus bill has over 200 "special" projects targeted specifically by the congressmen who are so furious about the AIG bonuses

So basically it comes down the AIG "fiasco" being a cover-up for how much the congress (and the senate I suppose) are taking advantage of Great Depression II to dole out the thank-you money for the lobby groups who supported them during the election.

I am normally in favour of market solutions, but JMK taught us the reactions to a system shock take longer to actually happen than when we graph them in our Econ 101 class. So I accept the government has to intervene, but there needs to be some pain, there needs to be a lesson for history to teach us. And I believe less in "innocent by-standers" than I do in gov't intervention, so I think all those poor investors who believed it was true even though it was so good need to suffer as well as the people in AIG, etc. whose job it was to see this coming and yet ignored the warning signs.

Here's a bit of a humorous take on the subject: In New Terror Video, AIG Demands Huge Ransom from U.S. (thanks to Brian for the link)

Cross-posted on 2FatDads at Bonuses for AIG

Pownce shuts down

Pownce announced today that they were closing their doors and taking their technology to Six Apart. I had an account there, but rarely used it - it was essentially like Twitter for file sharing.

It's tempting to say this the recession affecting the web. And it's probably true that the usual rationalization and consolidation is happening now that valuations are down and some people think they can make some good investments and others think they should take the money and get out before things get worse.

On the other hand, there's a lot of duplicate services out there - for alternatives to Twitter checkout Jaiku or Identi.ca to name others where I'm a lurker. It's not surprising that some of the minds behind ideas (business and technology) want to opening cooperate (and compete internally) rather than compete openly.

And the consolidation is good for the end-users too. Platform developers can concentrate their efforts and there will be a lot less jumping around trying to follow friends on one web site or another.

Four more years of Flaherty

C A I T I - O N L I N E: Happy Halloween: How BCE successfully gamed Jim Flaherty....

I wish Flaherty had let BCE and Telus and everyone else become an income trust. In the end I don't think companies should be paying any taxes at all. That's right, NO CORPORATE TAXES!!!

The problem is simple: taxation without representation. Companies don't vote, so why should they pay taxes. Let them distribute their profits to the citizens who do pay taxes and vote on what is to be done with those taxes.

Admittedly that would eliminate the ability of the politicians to use tax law for incentives that drive desirable behaviour (it would also eliminate the ability of politicians to use tax law for favours that drive un-desirable behaviour).

But tax law (all laws actually) suffer from becoming quickly out-dated. What was good five years ago may no-long apply. But a parliament that's pre-occupied or out of session or in the middle of pre-election campaigning isn't going to effectively change the laws to suite the times.

Shareholders, who vote at least annually, can always accept changes to the distribution that suit the needs of the company and desires of shareholders. And these days governments (through various social insurance programs) are large shareholders so they would retain a direct say in a company's behaviour.

Happy Hallow e'en!!!

ETF-O-Mania

Here, finally, someone with a clear head discussing the pros and cons of ETFs. Until now I have read very few articles that had anything negative to say about ETFs and none anywere as clearly as this article. What it comes down to, is that ETFs are mutual funds sold on the stock market rather than my your local bank (or whatever financial institution). Great, because there's no sales commissions to pay those financial advisors. On the other hand, you're typically paying a commission to your broker for any stock purchase you make. That doesn't show up in the ETF's MER but it affects your return none-the-less. And if you plan to purchase regularly then you're going to regularly be paying those transaction fees.