You want my idea for the wage subsidy… well here it is.
WARNING: It is so simple to implement, there is no way a government would do it.
COVID-19
Keep It Simple S…ubsidy
People have said “you are quick to pick apart the wage subsidy, so what is your solution?”
So… you asked for it… here it is:
I’ve said it from the very beginning that it should resemble EI support. All they should be doing is simple.
(No this is not an April Fool’s joke… but I am hoping the Press Conference on April 1, 2020 by the Minister of Finance was)
I was fine with EI amounts… but since we have the Canadian Emergency Response Benefit (CERB)… let’s use that amount to keep it more simple.
The amount is this:
(just like the CERB). $2,000 per worker per month, taxable, and no withholdings up front
Put a ‘clawback’ amount on those that are getting it like the clawback on Old Age Security or regular EI benefits for when they file income tax next year.
The 3-prong approach to the subsidy
Prong 1 – CERB from Service Canada
Everyone should get it. Yes, everyone.
However, anyone that makes more than the EI maximum in 2020 must pay back 30 cents of the CERB on every dollar over the $54,200 EI maximum threshold when they file their 2020 taxes.
So when you file your personal 2020 income tax, if you ended up making more than $80,667 in income, you will have had to pay back the full $8,000 of CERB received on a T4E.
This results in helping everyone today, help jump start the economy when we need to and have those that get back on their feet quicker, paying some or all of it back.
If you received both the CERB from Service Canada, and the CERB through your employer, you have to pay back the amount greater than the $8,000 received, and then any other amount based on the formula above.
This will prevent or reduce the double dip.
Prong 2 – CERB through the Small Business employer
The small business (less than $15M in assets of all associated corporations) employer would also get the CERB on a per-employee basis. They already have to fill out the number of employees when they file their remittance forms, so what’s the difference?
This $2,000 flows through to subsidize the wages, and must be paid to the employees. You create a different box number to track it on the T4 slips next year for audit purposes and to make sure the employee got the money.
I know this isn’t 75%, but the 75% was a capped amount anyways. That’s why I said keep it simple.
In order to incentivize the small business employer so they don’t lay them off, treat it as a flow through, and non-taxable to the employer.
So if there are five employees at the small business, the employer will get $10,000 of CERB to flow through to the employees.
The employee’s wages will be subsidized by the $2,000 amount, and they will put the $2,000 in a different box on each T4 slip for tracking purposes.
In order to incentivize the employer to act as the flow-through for Service Canada, this $2,000 will not be subject to EI or CPP by the employer and will not be included in the taxable income of the employer.
This allows the employer to claim the full wage deduction, have subsidized payroll costs, and save the income tax amount by deducting the full payroll.
By not counting it as income, this tax and remittance savings can be viewed liked an “admin fee” for acting on Service Canada’s behalf.
On $10,000 (5 employees) this would save up to $252 in Employer EI, $525 in Employer CPP, and $900 in federal income tax.
Cost to government for employer being the administrator instead of Service Canada: $1,167.
Incentive for employer to NOT lay off the staff, $10,000 in wage costs… and $1,167 in tax savings.
Prong 3 – CERB through Large Corporations
If the employer is getting the CERB on a per-employee basis and they are a large (greater than $15M in assets) corporation or associated group, allow them to not pay employer EI or CPP on the CERB.
100 employees = $200,000 = up to $5,040 in reduced EI, and $10,500 in reduced CPP remittances as the incentive.
So the employer gets $2,000 per employee as a subsidy to cover wage costs, and does not have to do payroll withholdings on the amount, saving them a total of $200,000 + 5,040 + 10,500 = $215,540.
Or put another way, they can save $15,540 by not laying them off.
If that’s not enough incentive, then perhaps look at it being only 50% taxable, which in the example above, would reduce Federal income tax by $15,000 (using 15% general rate x 50% x $200,000)
Audit Tracing
By simplifying the process, there is less ability for abuse.
Service Canada will issue everyone a T4E with the CERB they personally received from them (no application necessary).
T4 box numbers can be reconciled by CRA on slip filing to amounts of CERB received by the employer through the PIER system.
Those same boxes can be reconciled to specific individuals on tax filings to see if there were any that should repay.
Amounts greater than $8,000 received by anyone will need to be repaid.
Those with income over the EI Maximum amount, will have to repay some or all of the CERB back when they file.
If you don’t agree… well… the specific repayment formula can be figured out later… we have a year for that. We need the money in the public’s hands now though.
In Conclusion
These incentives and recapture mechanisms will reduce the likelihood of layoffs in low-margin industries like hospitality since $2,000 a month goes a long way to covering those wages; it will “Flatten the EI Curve” (trademark pending – not really… but I like saying it)
It would get everyone back working quicker after this is done by maintaining the connection to employers, and get the economy kick-started with cash injections at the front of this thing, rather than the end.
In the end… you have employers flowing the $2,000 through to the employee on Service Canada’s behalf as a no-withholding amount and a nominal cost to the employer to administer it, rather than Service Canada processing hundreds of thousands (if not millions) of individual applications.
If they are a small business, they actually get a tax savings by being the administrator and helping Service Canada in the process.
If they are a large business, they can have a good chunk of payroll costs reduced by not having to pay EI and CPP on the amount, and perhaps tax savings.
In the end, every worker gets $8,000 over 4 months just to buy everyone time and we have Flattened the EI Curve.™
Biography of Cory G. Litzenberger, CPA, CMA, CFP, C.Mgr can be found here.
Throughout the last three years people around the world have been searching for answers. As the Covid pandemic swept the globe, hundreds of millions of people where locked down. Most turned quickly to their trusted news sources for information. But as the pandemic continued, millions found that this time newspapers, tv reporters and the regular experts haven’t been very much help.
After the initial lockdown turned from two weeks into month after month, regular citizens everywhere started to question what they were being told. From lockdowns, to mask mandates, to early treatment, to vaccine mandates, millions became sceptical of media sources as they discovered data from around the world, experts who had different opinions, and doctors who treated patients despite the consequences.
But how could they know who was correct?
That’s where Dr. John Campbell came in. Dr. Campbell is a retired nursing instructor from the United Kingdom. For years, before the days of youtube even, he’s been making informative videos about health studies and sharing them with what used to be modest audiences of a few thousand medical enthusiasts. When the pandemic began and he switched his focus to covid-19 topics, his popularity exploded.
His videos of 10 to 20 minutes are short enough to watch daily. His conversational approach is easy for regular people to follow. But perhaps his best attribute is that he shares every single source of information he talks about. And he tends to only share data and studies from legitimate, recognizable and verifiable sources. When data changes or new information comes to light, he apologizes and makes corrections. In short, his daily presentations are like nothing else out there.
In the late fall of 2021, millions of people followed his videos as he tracked the new Omicron variant in South Africa. Campbell correctly predicted the new variant would be far less dangerous than the Delta variant it was replacing. He predicted almost to the day when Omicron would sweep into the UK and then through North America. While the regular news outlets warned their viewers the new variant would affect even more people, Campbell was assuring his viewers that this was perfectly OK because the strain wasn’t very dangerous. Thousands, and millions stopped going elsewhere for the latest information on the pandemic.
For three years, his audience has been growing steadily. His presentations are often seen by larger audiences than almost any media outlet could hope for. Dr. John Campbell has become “the” source of trusted covid information for millions.
If you haven’t been introduced to Dr. John Campbell yet, this interview by Russell Brand is a great place to start. In this video Brand takes Dr. Campbell on a very quick and informative look back at the last three years of covid, and all the information surrounding the pandemic.
If you’d like to dive deeper into this conversation, here’s the entire conversation which lasted about an hour.
Here’s the very latest daily video from Dr. Campbell posted Thursday, March 30. In this video Campbell shows how Covid symptoms have evolved into what looks almost precisely like the common cold.
Kaycee Madu shakes hand with Alberta Premier Danielle Smith after he was sworn into cabinet in Edmonton, Monday, Oct. 24, 2022. Madu says it was appropriate for his boss to phone up a pastor charged over pandemic-rule protests and discuss the accused’s upcoming criminal trial. THE CANADIAN PRESS/Jason Franson
By Dean Bennett in Edmonton
Alberta’s deputy premier says it was appropriate for Premier Danielle Smith to phone up a pastor and discuss his upcoming criminal trial on charges stemming from protests over pandemic restrictions.
Kaycee Madu, who is also the province’s former justice minister, said Thursday that Smith is working to make Alberta better, adding that she is free to contact whomever she wants in pursuing that mission.
Opposition NDP Leader Rachel Notley labelled Madu’s comments a dangerous “la la land” rationale and the start of a slippery slope toward a “tinpot dictatorship.”
Smith faces renewed criticism over a leaked phone conservation she had with Calgary pastor Artur Pawlowski in January about his looming criminal trial for his role at a protest over COVID-19 health measures that blocked the United States-Canada border-crossing at Coutts, Alta., in January 2022.
Audio of the call was obtained by the Opposition NDP and played for reporters Wednesday.
In it, Smith is heard commiserating with Pawlowski over her government’s trial tactics, offering to make inquiries on his behalf and saying the Crown is pursuing politically motivated charges against him.
Legal and political observers say the call is a profound breach of the firewall separating politicians from those who decide who gets prosecuted.
Smith has long been critical of COVID-19 masking, gathering and vaccine mandate rules, questioning if they were needed to fight the pandemic. She has called them intolerable violations of personal freedoms.
Madu, when asked by reporters whether it was proper for Smith to have called Pawlowski, said: “COVID policies were divisive for the people of Alberta. I am looking to see us pass that particular era and focus on the people’s priorities.”
He said Smith’s focus as premier has been on things that matter to Albertans, such as affordability, economic growth and taking care of the vulnerable.
“In the course of that particular work, the premier is free to speak with anyone that she wishes to speak with.”
Notley said those remarks, coupled with Smith’s words on the phone call, put Alberta on a slippery path to the politicization of its justice system. She called for an expedited independent inquiry into the matter before the writ is dropped next month for a scheduled provincial election.
“We’re on the verge of a tinpot dictatorship,” Notley said.
“You start ripping apart the fundamental tenets of democracy, you move into dictatorship. It’s that simple.”
Madu moved out of the justice portfolio under former premier Jason Kenney after a third-party report found he tried to interfere in the administration of justice by calling up Edmonton’s police chief to complain about a traffic ticket.
Madu was given a new portfolio under Kenney, then promoted to deputy premier when Smith won the party leadership and became premier in October.
Smith has not spoken to reporters since the audio was released, but in a statement Wednesday reiterated she has acted strictly within the parameters of advice from justice officials and has not spoken directly to Crown prosecutors.
“There is no need for further investigation of this matter,” Smith said in a statement Thursday.
Notley said the call is dramatic and disturbing proof of Smith breaching the judicial firewall.
“You cannot have unfettered power in the office of the premier. There are limits,” Notley said. “Our Constitution for as long as we’ve been a country has said that those limits are defined by an independent judicial system.”
Calgary-based pollster Janet Brown said the controversy will reanimate voter concerns with Smith.
“Why was she even taking a call from someone facing a criminal offence and talking about their criminal charges?” said Brown in an interview.
“This will give undecided voters pause. They will be wondering about her judgment, and her judgment is her Achilles heel.”
Political scientist Duane Bratt said Smith is exerting pressure on the justice system by constantly questioning justice officials about why they are pursuing COVID-19 cases.
“Even if this isn’t about talking to Crown prosecutors, this is clear pressure on (Justice Minister Tyler) Shandro,” said Bratt, with Mount Royal University in Calgary.
Constitutional law professor Eric Adams, with the University of Alberta, said the call threatens public trust in the courts.
“You expose the administration of justice to the reasonable concern of the public that some people have access to the premier and preferential treatment and some people don’t,” said Adams.
“Our system can’t function on that basis.”
This report by The Canadian Press was first published March 30, 2023.
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