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Proposed tax changes - what will that mean for us

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3 hours ago, ploughboy said:

Just wait until the Toronto Star starts publishing MD gross billings, without any context.  That's gonna be such a great day.

Yeah - and just as the negotiations between the OMA and province should be really starting up.  Both the OMA and CMA will be caught off guard again and will struggle to get what was offered before.  The CMA should anticipate this and start reporting net incomes (not gross), student debts, and lack of benefits.    

It's time the CMA adopts simpler language in terms that people can understand - e.g. medical student debt is almost as much as a mortgage on a middle-class home and takes at least for most 4+4+2 (outside QC) years of post-secondary education where little is earned.   doctors don't get any benefits - especially pension, maternity... This previously posted graphic shows how long it takes to pay off that debt in the US - I'd estimate roughly 10-15 years for most (the mortgage analogy).  CMA needs to come up with similar material.

In contrast, Morneau example careers, a police officer can start training right after high school, start working within 6 months, and within a few years earn almost 90K (RCMP).  A nurse practitioner, has 4+2 years of post-secondary education, at a much lower cost and earns benefits with about a salary of 100K.   Apparently, these are acceptable pay scales, but don't have as much of the debt or as a long training period.  I think ralk mentioned at one point studies comparing FP and NP which basically showed good financial value in FPs- these should definitely be publicized.   

As I understand, medical student debt has to be paid using after tax income (can't be written off), which when getting taxed at a very high marginal rate means takes long time to pay down.  

Tha taxfairness campaign isn't really going over that well from what I can tell - just makes doctors look out of touch.  Also, small business owner groups are known for vigorously opposing minimum wage hikes, etc.. not maybe what many doctors believe in..  

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4 hours ago, calcan said:

Yeah - and just as the negotiations between the OMA and province should be really starting up.  Both the OMA and CMA will be caught off guard again and will struggle to get what was offered before.  The CMA should anticipate this and start reporting net incomes (not gross), student debts, and lack of benefits.    

It's time the CMA adopts simpler language in terms that people can understand - e.g. medical student debt is almost as much as a mortgage on a middle-class home and takes at least for most 4+4+2 (outside QC) years of post-secondary education where little is earned.   doctors don't get any benefits - especially pension, maternity... This previously posted graphic shows how long it takes to pay off that debt in the US - I'd estimate roughly 10-15 years for most (the mortgage analogy).  CMA needs to come up with similar material.

In contrast, Morneau example careers, a police officer can start training right after high school, start working within 6 months, and within a few years earn almost 90K (RCMP).  A nurse practitioner, has 4+2 years of post-secondary education, at a much lower cost and earns benefits with about a salary of 100K.   Apparently, these are acceptable pay scales, but don't have as much of the debt or as a long training period.  I think ralk mentioned at one point studies comparing FP and NP which basically showed good financial value in FPs- these should definitely be publicized.   

As I understand, medical student debt has to be paid using after tax income (can't be written off), which when getting taxed at a very high marginal rate means takes long time to pay down.  

Tha taxfairness campaign isn't really going over that well from what I can tell - just makes doctors look out of touch.  Also, small business owner groups are known for vigorously opposing minimum wage hikes, etc.. not maybe what many doctors believe in..  

This point is what I hope I can emphasize through this entire discussion - we need to pick our battles and choose how to fight them carefully. The CMA and physicians in general have a winning argument when it comes to the disparity between physicians and traditional employees when it comes to saving for retirement along with other benefits. Yet they're wasting that argument on tax breaks that are unpopular and don't help all physicians equally (many get no benefit from them). We could be turning this around to push for new retirement vehicles for those without pensions, or ways to set up benefit plans that have the similar tax benefits larger companies get for their employees, or a simple increase in maximum RRSP contributions, but instead we're pursuing a reactionary response on a fight we're likely to lose.

Similar deal with the OMA negotiations. From the beginning we should have been making this a fight about labour rights, not fees. Canadians across the economic spectrum believe in fair negotiations, and fair negotiations with independent arbitration is our best pathway to reasonable, overall fee increases. Instead we stalled things for years trying to promote our value to society in the hopes it would force the Ontario government to negotiate fairly on their own, which didn't work at all. Once the tPSA went down in flames we finally got a reasonable - but by no means perfect - deal on how negotiations would progress, but it took too long to get to that point and we killed a lot of goodwill to get there.

I like the mortgage analogy, but I worry what happens when numbers start getting thrown around. For lower-earning physicians we could definitely get some sympathy, but notably some of the most vocal physician groups in both these fights are not the lower-earning specialties and the higher-earners aren't going to engender much support from average Canadians even after accounting for everything. If the government says a physician's gross billings are $500k per yet and we turn around and say "well actually, after training time, debt, overhead, and lack of benefits are accounted for, it's only $400k!", well, then we've lost right there. The difference between $500k a year and $400k a year to most of the public is a quantitative difference, but not a qualitative one, and both look to be pretty rich. If physicians we fighting for better relative payments between specialties, in a way that we could focus on lower-earning physicians (FPs, psych, peds) making ~$200k, we might get somewhere with this, especially comparing to other healthcare workers who make six figures as well like NPs and pharmacists. Yet the higher-earning specialties (Ophtho, Cards, Rads) who have been so vocal would likely get hit with the blowback - though there's a good chance they get hit regardless - so I think there's some valid strategy in the CMA and OMA avoiding those numbers too concretely, as they're not going to publicly try to help one physician group at the expense of another.

Lastly, through all this we should be using our collective voice to push for improved funding and systemic changes to improve the healthcare system overall much more frequently than we do and more loudly than we do. Physicians advocate for positive changes all the time, but we often do so behind closed doors. Rather than make PR campaigns saying that doctors are fighting for better patient care, we should be constantly running at least one PR campaign that is directly fighting for better patient care. Dr Wong made the point that we're 1%'ers and that naturally means the public is less inclined to support our financial interests these days. There's definitely some truth to that. Yet medicine is one of the most respected professions out there, and that's been true for a long time. So, if we want to engender public support, we need to start publicly acting more like dedicated physicians, focusing on patients' needs, and less like 1%'ers, focused on our own bottom line.

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Great points ralk. 

I always had a trouble understanding why non-salaried doctors are not permitted to join any existing broad-based pension plans. I agree that it the CMA needs to pick the right battles to fight. From a retirement standpoint, the incorporation measures that the OMA and doctors agreed upon provided a stopgap for non-salaried doctors to have more tools for financial planning.

End of the day, the income from non-salaried physicians are largely from the government in this single-payer model, so it seems backwards to me that they are not eligible for any pension plans like HOOPP.

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11 minutes ago, p0tus said:

With regards to pension plans, the BC medical association has such a program which is a defined contribution pension plan http://pages.mdm.ca/1219-CPRSP.html. Not sure if other provincial medical associations have negotiated similar benefits. 

honestly though, DC pension plans are not enviable. I am talking about the sweet DB pension plans.

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10 hours ago, qnzjlo said:

honestly though, DC pension plans are not enviable. I am talking about the sweet DB pension plans.

They're quite hard to get in the private sector anymore. DB plans are the realm of public sector employees.

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The Liberals are now no better than the NDP. Same stuff different logo for the most part.

This is not about "fairness". That is the message that is fed to the mob to justify a more pragmatic rationale.

 

During the election, Trudeau said his 2017-18 deficit target was $9.5 billion.  Now his projected deficit is $28.5 billion.

During the election, Trudeau said his 2018-19 deficit target was $5.7 billion. His projected deficit is now $27.4 billion.

During the election, Trudeau said his 2019-20 target was a $1 billion surplus. His projected deficit is now $23.4 billion, with continuing annual deficits after that. Always in the red... 

 

During the next election PM "Zoolander" will need to stand up and justify all this as the Conservatives won't let anyone forget. So Trudeau best start finding money where it won't cost him too many votes. He knows it, his MPs know it, their jobs and political careers depend on it. Where is a safe place? Doctors, lawyers, accountants, small business owners (he is miscalculating all thing in reality). He is selling this plan by using conjuring up notions of class warfare (rich versus poor). His political base loves this type of thinking. It sounds simple and non-threatening to the majority of voters. 

This said, the liberals only care about this today for one reason. Money is needed to make the budget look better. The money is needed now. So, it is time to pillage a segment of the population to help decrease that nasty Liberal deficit. It won't get rid of it... But maybe it might help put a dent in it...

Funny thing is, this whole thing will backfire on the federal government. They are pissing off a portion of the population that might not control the ballots by a simple majority but does control a major segment of campaign financing. History does not bode well. The Liberal cash grab certainly won't come without major political capital being spent. It writes a hefty check to the Conservative campaign machine. So the silver lining is that it might help us show Trudeau the door faster. 

Edited by rogerroger

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8 hours ago, NLengr said:

They're quite hard to get in the private sector anymore. DB plans are the realm of public sector employees.

Well in theory, isn't fee-for-service technically all public monies hence we are effectively public sector from an income standpoint.

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Like many others, I'm going to sit down with my financial advisor and accountant and have a serious discussion about how these changes, along with the higher marginal tax rate (which I didn't really make a fuss over), will affect my long-term financial security. With a weak dollar, significantly higher taxes, and declining salaries (when adjusted for inflation), I'll be thinking about moving to the US. I've already completed all the USMLEs and waiting on the results of the American board exam for my specialty which I just wrote last month. 

If the govt introduces a nice pension plan, EI, mat/pat leave, sick leave, vacations and other benefits that empoyees get, I wouldn't care. But to equate my situation with an employee as if we should be taxed the same is a joke.

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On 9/7/2017 at 0:23 PM, Bambi said:

Governments are not in the habit of reversing taxes that form part of the general revenue of the country. They have no incentive to do so. You are speculating, so am I.

ha quite true - 

anyone remember the GST? Or let's go way back - income tax itself :)

Lot's of examples of even temporary taxes sticking around. 

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On 9/7/2017 at 7:51 PM, ploughboy said:

Just wait until the Toronto Star starts publishing MD gross billings, without any context.  That's gonna be such a great day.

Yup

I mean if the government actually wants to step up and start paying for all the needed staff, equipment and building costs for the out patient X-Ray, US, and nuclear medicine tests as an example many people won't complain. Some owners of those have been trying to dump them for a while as they may look wonder in terms of revenue but in terms of profit not at all. They want to complain about costs charged by doctors but don't actually want to take them on directly. 

 

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8 hours ago, rmorelan said:

ha quite true - 

anyone remember the GST? Or let's go way back - income tax itself :)

Lot's of examples of even temporary taxes sticking around. 

The GST was one of the reasons for the absolute decimation in 1993 (and subsequent disappearance) of the Federal PC party. 

 

Tax increases carry significant risks to a government, as I'm sure the Liberals are now learning. It's got a ton of back benchers scared although Trudeau is being arrogant as per usual. 

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1 hour ago, NLengr said:

The GST was one of the reasons for the absolute decimation in 1993 (and subsequent disappearance) of the Federal PC party. 

 

Tax increases carry significant risks to a government, as I'm sure the Liberals are now learning. It's got a ton of back benchers scared although Trudeau is being arrogant as per usual. 

and yet the following government left the tax in place. Even in the face of destruction of a party. Even after campaigning against the tax in the first place. 

You are right about the evolving backlash - you can say this affects doctors but of course it affects vastly more people than that. 

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Does anyone have any insight (particuarly Ian Wong) on the liberals plan to cap passive investments at 50k per year? Does this soften up the blow or is it still very detrimental. At this point is it still worth incorporating as a physician?

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What I find interesting is that the argument is over small business tax in general, but then we argue about wanting things that no small businesses are afforded. For example they threaten to take away tax breaks that for the most part are used by wealthier people. Our response is that well we should get to keep those tax breaks until we get better hours and a pension. No business owners get these things. Are we small business owners or not? Also just technically speaking we do have a retirement vehicle if we incorporate. You just put your money into a business pension plan that you set up and it is not taxed, and then when you retire that money can be drawn in the form of a pension. 

It is my opinion that the system does need to change because doctors shouldn't be structured as small business owners anyway. Our patients shouldn't be seen as a commodity. With all that said I think the more doctors try to act like they are underpaid or don't make enough, or talk about well what about the debt we take on .. the more the general public will judge us. Right now people think of doctors as dedicated, well paid, and smart. If we start whining that can easily change. Even with the big debts of medical school we will still make more money than most canadians will ever see.  

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I recently read a news article about a large group of emergency physicians in Northern Ontario who wrote a letter to their local MP, stating that they will leave their current jobs if the proposed tax changes go through. It’s worrisome, especially because that region is already underserved. 

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Personally these changes will affect my practice patterns.

I'm just now finishing my first full year in practice. I do a mix of family practice, walk in, LTC and I fill a need by doing rural emergency locums. The latter is the most well paid for the time. Given that I still have debt, I am motivated to work extra and I do work weekends by driving to rural and remote locations to cover other GPs.

Once I pay off my debt and get a bit of a cushion, my motivation and incentive to work extra will be entirely gone. Every dollar past 150 or 200,000 is taxed very heavily. With the current incorporation scenario you can defer that tax, work hard now and slowly taper your working hours once you are older. But If I'm forced to pay that tax now then the incentive to work those extra weekends is greatly diminished. I will likely cut back on my hours and the rural locums will likely be the first to go.

Some places already have trouble with staffing and this will undoubtedly get worse. Those communities have circumvented this by paying more handsomely by giving stipends, fee premiums, yearly bonuses, etc. These lose their luster if they are taxed now at a high marginal rate. So either provinces will have to sweeten the pot, or GPs will flee.

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