Going in opposite directions

No matter what anyone thinks about Prime Minister Trudeau’s proposed changes to 1297602170253_ORIGINALsmall business taxes ~ and opinion range from thinking that they are either long overdue closing of loopholes that allow the wealthy to avoid taxes to believing that they are a grossly unfair tax-grab on hard working independent small business owners or hoping that they are something in between ~ it appears that they will make it harder for entrepreneurs to succeed and prosper in Canada.

trump-tweeting-1-300x224Meanwhile, in America, President Trump, the New York Times reports,  “began an ambitious push to slash taxes … [by] … proposing a politically challenging array of tax cuts for individuals and businesses that would constitute the most sweeping changes to the federal tax code in decades.

In the Financial Post, Jack Mintz says that “While Canada debates hiking taxes on small businesses, the Trump administration and Congress launched a tax-reform process Wednesday that could make the United States one of the most competitive countries in the world … [and] … If significant tax-rate reductions occur as contemplated, Canada will be distinctly offside, especially when it comes to retaining entrepreneurs. The call to “go south, young enterpriser” could well be the end result if we continue to tax more heavily the skilled population who pay a hefty price to support public budgets in Canada.Dr Mintz, who is an expert on tax policy, concludes that all the proposed changes to US tax policy, if passed by the Congress, “would put it well below Canada’s corporate and personal tax burdens on small business profits that are now subject to tax rates potentially over 50 per cent. One can hear the giant sucking sound for startup companies from Canada as we burden small businesses with higher taxes while the U.S. goes in an opposite direction … [but] … U.S. tax reform is not all bad news for Canada. A more vibrant U.S. economy will help push up our exports. The only question is whether we can keep businesses here to export to a U.S. market that becomes increasingly protective yet more attractive with lower taxes and less regulation. What is striking is that the U.S. tax policy is focused on growth, while ours is aimed at soaking the job creators.

web-budget-04There are a number of good economic and political creationswap6005_6005_5-1reasons why Finance Minister Bill Morneau and Prime Minister Trudeau should hit the pause button and review their proposed tax changes. Keeping us “competitive’ with the USA is just another one, but it is a vital one and it may be just the excuse they need to recalibrate their entire increasingly  troubled proposal. They could start by proposing to make Canadian corporate taxes, on large and small business, lower ~ much lower ~ that they are in the USA. (Corporate taxes are inefficient, anyway, and the taxes should be levied on the profits (but not losses) of the owners, which is, very often you and me through our pension funds and investments, however small.)

There are many ways to make Canada’s tax system  more “competitive” with America’s … we are, after all, competing for the same people: entrepreneurs and knowledge workers and the like. The thing to not do is to go in an opposite direction, making our tax system less competitive.

One thought on “Going in opposite directions”

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s