Let us all recognize that our federal and provincial governments chronically spend more than they collect and need a revenue buffer should NAFTA negotiations fail.
Our federal government has decided to do so by significantly increasing taxes from the entrepreneurial class of our society – the independent and small business owners of Canada. At the same time, others who are at the peer level of income and social standing, are protected from economic demotion and bankruptcy – government employees in senior positions, such as the federal deputy minister of finance, and senior management and owners of large corporations, such as McCain Foods Ltd.
Most small business owners who meet the Canadian tax code criteria for setting up private corporations use this financial planning method as a means to successfully operate or enlarge their businesses. Others use this method of financial planning to achieve personal and family security as they do not have benefit plans that are available to others of their peer group as noted above. The finance minister is using fancy words such as passive investment, multiplication of capital gains and income sprinkling with the end point of grabbing a bigger slice of money from successful small businesses. The prime minister has become convinced that everyone in this sector of our national economy are tax dodgers. This includes family-owned farms. The current taxation plan will make it economically punitive to pass ownership of the farm to the next generation when compared to selling it to an agricultural conglomerate. Surely our Liberal government did not intentionally decide that family owned farms should be phased out in Canada – or did they? If that is not the intent, the proposed legislation indicates both economic analytic incompetence and political sloppiness. The family farm example is but the tip of the iceberg on the change to the Canadian economy and social fabric that the current taxation plan will inflict.
Like his father, our prime minister is in office at a time of international economic upheaval. His dad tried to manage runaway inflation due to the oil crisis created by OPEC. Led by the USA under President Nixon, Canada, Great Britain and several European countries brought in wage and price controls. Canada started in 1974 and abandoned it four years later as it just made thing worse.
In Great Britain’s case, Prime Minister and Labour Party leader Harold Wilson decided that, in addition to price controls, no one in his country should earn more than 20,000 pounds annually. Income tax on top earners increased to 83 per cent. In the end, job creation stopped, the unemployment rate doubled and Conservative Party leader Margaret Thatcher became prime minister.
Our prime minister is mimicking Harold Wilson, but doing it selectively. And he is doing it when our neighbour south of the border is determined to lower corporate and individual taxes while renegotiating NAFTA. And across the pond, Europe is recovering economically and Britain is actively recruiting young business entrepreneurs.
The Trudeau-Morneau message is clear. Canadians graduating from our colleges and universities should work for the government or seek employment in large corporations if they want to succeed economically. Those who are entrepreneurs or want to operate their own business should make plans to live elsewhere.