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Canada needs massive tax reform…
Canada is a high tax jurisdiction and most Canadians seem to accept that.
We shouldn’t.
Canadians pay far too much in tax and it has a negative impact on our economy.
That’s what I want to focus on today, taxes and how we spend too much.
I’ve been slowly working on a bigger plan for what we can do to boost our competitiveness as an economy and taxes are a big part of that. Taxes in Canada are too high on both the personal and corporate side.
My Toronto Sun column on Wednesday focused on this issue detailing five areas where I think we need to change our tax code.
Lower personal taxes
Lower corporate taxes
Special tax treatment for IP/patents etc if they stay in Canada
An elimination of the surtax on banks and insurance companies
No capital gains on profits reinvested in a Canadian company
These are just some ideas to get the discussion going.
Give the column a read or watch the video below. It’s one proposal of what I hope will be many on how to reform Canada’s tax code to make us more competitive.
Giving ourselves more than anyone can take away…
Mark Carney likes to say that as Canadians, we can give ourselves more than anyone else can take away. He’s almost always talking about the US, not China, and in many ways he’s right, but that requires a different way of thinking.
The tax changes that I laid out above could do a lot of the heavy lifting, I’m just not sure they would be politically popular with our Laurentian Elite establishment and the media in this country. As much as the impact of the mainstream media is fading, it still holds significant sway, especially within the Ottawa bubble.
You can be sure that giving every single Canadian a significant tax break would be popular with voters.
Much of the criticism my proposal would face would come from those concerned that most of the benefit would go to upper income earners. That’s the point though, everyone would get a tax cut, but the biggest cuts would be at the top compared to existing levels.
Why?
Because those are the people we need to keep here. We need them to start companies, invest, expand their existing companies.
Right now, our personal income tax rates punish people at every level.
Here’s a chart showing the changes at all levels.
What’s interesting is that everyone in this example gets a 21% income tax cut. Clearly that’s more in real dollars for the person earning $300,000 than the person earning $75,000 but they are also paying more.
All things being equal, the person earning $300,000 per year currently pays $70,040 while the person earning $75,000 pays $8,408. After the proposed cut, the person earning $300,000 would still pay $54,784 and the person at $75,000 would pay $6,589.
They would both get a significant savings from the cut, but despite the person at the top getting the bigger cut they would still be paying more in tax and more as a percentage of their income.
These are all just general numbers to illustrate what is happening now and what could happen going forward.
Enough of the politics of envy…
For years, any tax cut in Canada had to focus on either raising the basic personal exemption or lowering the bottom rate. The thinking was, this would be seen as a tax cut for all and tax cuts for wealthy Canadians would not be politically popular.
At the same time, we’ve had left leaning politicians bring in surtaxes on wealthy Canadians saying they don’t pay their fair share.
The vast majority of income taxes collected in this country come from people at the upper end.
That’s fine, but there comes a point where this is self-defeating and drives people away. We have been at this point for quite some time in Canada and it is time to roll it back.
So yes, my tax cut proposals would see a bigger cut for those at the top.
Do you know what they would do with that?
They would hire more people in their companies. Or they might hire more people to look after daily tasks in their lives.
When government taxes become overbearing do you know who hurts the most? People in service industries that support the lifestyle of the professional and entrepreneurial class.
If you are a hard leftist, you might scoff at that but in reality what you are saying is that people providing services can starve.
The person providing lawn care services, the dry cleaner, the cleaning service, the restaurant worker who no longer gets a shift because people are eating at home more often. What you might consider luxuries, these workers consider a paycheque.
When taxes get too high, we choke off these services, then eventually we drive the professional and entrepreneurial class out of the country.
With the tariffs coming from south of the border, with Trump doing everything he can to lure production to the United States, we need to find a way to make our economy one that people want to invest in.
Right now, we aren’t there, but with the right moves, we could be.
Let’s go all in.
Thank you!!! Explain well communism versus capitalism!
The experience of trying to hire people to do various maintainance , plumbing and heating , construction etc, people began a long time ago to reduce their taxes . Avoiding taxes has become a cottage industry .