When you dig behind the headlines, there’s quite a lot wrong with it.
Kenneth Rowe, executive chairman of Nova Scotia’s IMP Group of Companies, announced his gift to Dal last week. Rowe is one of those “self-made men” who launched the company during the 1960s and has guided the firm into a multi-billion-dollar international venture with holdings in aerospace, aviation and commercial development.
The first thing to note is that Rowe’s personal fortune will not be hit for anything close to $15-million. Instead, it is likely he will be out of pocket by about $8-million or $9-million.
This is because he will receive a tax reduction of perhaps $6-million to $7-million spread over the 15 years of the gift.
Neither Dal in its press release nor Rowe in his statement make mention of the fact that, in effect, it appears Canadian taxpayers will cover the cost of close to 50 per cent of the gift.
Too bad. I would have liked to have received a little credit for the contribution I made as a taxpayer.
It likely would have been impossible for him to save close to 50 per cent of the $15-million had he used any other income tax provision.
Rowe cannot personally be faulted for taking advantage of this goldmine for rich folk that exists in the Canadian tax system. What might be seen as a “tax loophole” was created for the rich by our federal government.
Revenue Canada crafted a 3-minute video that takes potential donors through the process of how they can save the most money. The video appears on an independent site called “Helping Canadians to Maximize Tax Refunds.”
Note how the video outlines the “pretty sweet deal” Canadian taxpayers can get due to giving to registered charities. And it explains that…”the benefit to you can be as much as a half of what you give.”
Hmmm! I thought the role of Revenue Canada was to help collect money for Canadians, not to tell rich people how they can get our money!
The charitable tax provision in both Canada and the United States is so appealing to the super-rich that the resulting tax breaks have become a drain on the revenues of both countries.
In Canada in 2009, the total value of charitable donations for which a tax receipt was issued was $7.7 billion. Figures were not available for how many very large donations were included but, if the total was, say, 50 per cent, the cost to taxpayers was more than $3-billion.
In the U.S., a surge in donations in recent years is one of factors contributing to the government’s funding shortfall. Between 2010 and 2014, this deduction -- excluding donations for education and health -- will mean the U.S. Treasury will be out an estimated $182 billion. President Obama says that this has created a serious financial problem for the U.S. government.
Not only do the wealthy receive a huge tax break when they donate to a university, they also get to decide how their money is used. Because of their preference for making donations related to promoting business, the country has an absurd number of business schools – at least 59!
Many of the schools are named after wealthy men who wanted to have their name recorded in history – people such as ‘Izzy’ Asper, Frank Sobey, Richard Ivy, Ted Rogers, and Kenneth Rowe.
Had these men been required to pay higher taxes throughout their lifetime, the Canadian government would have had access to billions of dollars it could have used to provide cash-strapped universities to pay for programs that are much more needed than business courses.
The lucrative charitable tax facility is just one of many tax breaks used by the rich to reduce the percentage of money they contribute to our governments compared to the rest of us.
“We currently have a so-called progressive tax system,” says the group Canada Without Poverty, “although it is not where it should be.
“Between 1990 and 2005 the Canadian tax system has dramatically grown less fair. In recent years the richest one percent of families pay less in taxes compared to 1990 while the poorest 20 per cent pay more – significantly widening the gap between the rich and the rest of us.”
As the thousands of people involved with the Occupy Wall Street Movement are saying, it is about time that everyday people rebelled against this type of legal theft performed by the rich.
Note: Kenneth Rowe was offered the chance to provide a comment concerning this article, but had not responded to my request after four days.