There are only two things you can guarantee in life: death and paying taxes.

January 29, 2007
Income trusts: What's behind the change.
On October 31, 2006 Finance Minister Jim Flaherty changed the tax rules governing income trusts, removing much of the incentive for companies to convert from a corporation to an income trust. An income trust allows a company to avoid the double taxation that now applies to its income - first, the corporate taxes it pays, and then the personal taxes on dividends it pays out to its shareholders. Trusts manage to pay little or no corporate tax because they aren't corporations. Income trusts are simply vehicles that "flow through" interest, dividends and capital gains directly to their investors (called unitholders) as distributions. Now, Flaherty believes that these companies shouldn't have these tax breaks because trusts pay out so much of their income to investors that many don't make the internal investments necessary to build their businesses.

Relation to Chapter 4
This is when the federal and provincial government take responsibility when they feel it will better the economy and ultimately benefit themselves (and us, if you want to think about it that way.) If big corporations can actually find ways in not paying a higher income tax than they are suppose to, that means less money for the government. With the substantial growth in government spending, they need all that they can get. Every government seems to be in huge debt with their people, having expenditures on health care, education and social service. Taxes are imposed to provide revenue for the government and they should be, in all cases or the best to the government's ability, equitable. If somone does not have the financial back up to invest large sums of money into a stock, RRSP, or bonds, they will get taxed more opposed to someone who's making more but putting their money away. Income trusts was a big way for multi-million corporations to dodge the large tax bracket and relieve their profits to their investors, consequently not making economical changes to the business itself. A progressive tax method, one that Canada is using now, declares the greater your income the greater your tax rate will be. Sounds equitable, right? But if you're not declaring your true income, in some means, even if it's legal, can con a person to paying more. So when the government intervenes, we can soon appreicate the different responsibilities in which they provide.


News Article:
http://www.cbc.ca/news/background/personalfinance/incometrusts.html

I know doing income taxes is not one of my yearly routines, but I found the urge to hate it already. All this jargon about percentage rates, loop holes, and financial advisors just makes me feel like I'm not going to make any money if I work harder. The more you make, the more you get taxed and you jump into higher tax bracket which means your marginal tax rate is greater. That's why people like getting paid in cash, right? No paper trail, no declaration of income, no tax.