Your job is to filter out noise. And during election campaigns, there’s lots.
Candidates shout how they’ll prop up our economy, if they’ll raise or lower taxes, and about the fate of public pensions. These issues affect financial plans, but most clients won’t—or can’t—commit the time to analyzing party platforms.
Fortunately, you follow tax and economic matters for a living, so you can translate campaign-speak. Maybe you’ve avoided talking politics with clients, lest you appear partisan. But, by decoding rhetoric and dispelling misconceptions, you’re empowering them to make their best decisions on October 19. Further, you can pinpoint which promises affect your clients, and provide them with reasoned, objective context.
To get you started, here’s one claim we’ve analyzed.
Prime Minister Stephen Harper has been touting his record of cutting taxes and providing credits to Canadians. And much of that’s justified. Since the 2014 Fall Economic Update, he’s promised $32.2 billion in tax savings and enhanced benefits. The centerpiece to that plan was the much-publicized boost to the Universal Child Care Benefit, which was handed out to almost four million families in July. But, clients may not realize those UCCB payments are taxable income, and subject to clawback next April.
And, they may forget the government eliminated the Child Tax Credit at the same time.
They may also not realize how adept Harper’s been at raising tax revenue. Over his decade-long tenure, he’s cracked down on compliance and closed loopholes by eliminating graduated rates for testamentary trusts after 36 months, nixing 10/8 insurance strategies and expanding the Kiddie Tax—among other things. The projected payoff: $31.7 billion more in tax revenue from 2010 to 2020, or 23% of the total savings promised over the same period.
And don’t spare the opposition; explain how their claims might affect clients. Liberal leader Justin Trudeau would lower the tax rate for income between $44,700 and $89,401 to 20%, but raise taxes for people making more than $200,000. He’s also promised to roll back annual TFSA contribution room from $10,000. Show clients what that would mean for their finances.
Meanwhile, NDP leader Tom Mulcair’s proposed cancelling income splitting for families with children, but keeping it for seniors. He’s also pledged to raise the minimum wage to $15, which may affect your business-owner clients. Show them, and families, the impact of these promises using their own financial information.
To help you along, we’ve put together a glossary of common election terms, such as “middle class,” “deficit,” “income splitting,” and “recession.” We also explain how to check the voting records and expense reports of your local MP. We’ve got a primer on how clients can register to vote. And, we’ll be quizzing the four major parties on small business and personal taxes, a national regulator, financial literacy initiatives, and more.
Go to our 2015 Election Guide for links to all materials.
Great advisors seize opportunities to demonstrate their value. This election, help clients vote with both their consciences and their wallets.
Red versus blue
The year with the lowest federal tax revenue since 2000 was 2003 ($25.7 billion), when the Liberals were in power. And, the year with the highest tax revenue ($45.3 billion) was during the Conservative reign, in 2008.
Source: Finance Canada
Melissa Shin is deputy editor of Advisor Group.
Originally published in Advisor's Edge Report
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