Description: There has been considerable protest over the current federal government’s proposal to close tax loopholes for private corporations. Small business owners and professionals have been using various forms of ‘income sprinkling’ to lower their tax burden. One Liberal MP, Wayne Long, has broken ranks with his government colleagues, expressing his concern about the impact of the planned reforms on entrepreneurs. Meanwhile Michael Wolfson of the University of Ottawa maintains his research indicates the impact of the changes will be minimal.
Date: September 14, 2017
Source: cbc.ca
Link: http://www.cbc.ca/news/canada/new-brunswick/economist-defends-tax-changes-1.4289675
Discussion Points:
1) Do you know any entrepreneurs or professionals who have been discussing how these pending tax changes will impact them? What have they been saying about the matter?
2) Which argument do you find the most convincing, that of Professor Wilson or that of Mr. Long?
3) MP Wayne Long has taken the unusual step of publicly disagreeing with his own government. What might be some of the implications for his political career?
Rhonda McIver
If all of the tax changes proposed are implemented, Canadian professionals and other small business owners are going to question whether there is any value left in incorporating a business at all. The ability of professionals to incorporate was purposely implemented a number of years as a tool to improve retirement planning opportunities. Few of these proposed changes are actually “loopholes” but a change of heart by the government that will have negative repercussions for tax revenue generation due to the inability of Canada to attract and retain professionals (just one example). Instead of attempting to generate more tax revenue, there are many ways in which our government might be able to decrease expenditures through the creation of organizational efficiencies. Lots to think about – thanks for the blog!
Rhonda McIver
One source of additional tax revenue would be to eliminate the 33% tax credit for donations made in excess of $200 for individuals with income exceeding $202,800. Why should wealthier individuals receive a greater benefit for charitable donations than anyone else?