There's been a lot of hay made over Trudeau, Morneau, and Co.'s renovation of our tax code. From what I can gather through the various echo chambers on high, there are essentially two problems: first, that there are indeed many loopholes in our tax code; second, that closing them in regards to small business and individual incorporations will not raise much revenue, but will certainly adversely affect the profit margins of those concerned. Cue pandemonium.
Tax reform is incredibly boring - a rather ironic fact given that taxes are the only indisputable responsibility of government. Without revenue, there are no rubber ducks nor spurious CBC documentaries on which to splurge, let alone capital for roads, the armed forces, and heating hospitals in winter. I will never understand Canadians' ignorance of taxation policy and their government's egregious mismanagement of those funds.
Because of how boring tax policy is, it always has to be framed as a fight for "fairness," a laughable rhetorical trope as the only thing fair about taxation would be if we all paid the same percentile of tax.
Furthermore, if taxation was fair, I wouldn't need to employ anyone, either the humble seasonal H&R Block employee or a major firm's accountant to intercede on my behalf with the dark mystical world of Canadian tax law and exemption.
"Fair taxation" would result in someone with the most basic understanding of math to do my taxes in a matter of minutes precisely because there would be three lines - income, the universal bracket as a decimal and taxes owed. For those in business, there'd be only one more line, sales taxes paid, as tax fairness would end write offs and business taxes, which only raise prices while tasking the big firms and CRA in useless, costly, legalized money laundering. But I digress.
The issue at hand is that small businesses and individual corporations are being named as easy methods to squirrel away money in a lower bracket and effectively hide some income from the government. The answer from the merry band of cabineteers in Ottawa is to close these loopholes and even raise revenue from this shell game that is mostly played by young entrepreneurs, mom and pop shops, and of course, everyone's favorite enemy, doctors.
To be clear, this is not really evasion, nor even the exploitation of tax loopholes to the same extent as business as usual on Bay Street; nor is it quite the same soak of the taxpayer that our precious dairy market enjoys, while simultaneously buying ad time to convince us that overpriced milk is just the Canadian way, so feel good about it. Yes, these are loopholes, but even a cursory glance of who is using them reveals a significant difference in means and ends.
People starting out in business need a way to raise revenue while keeping investors' trust, usually through transparency about the money; e-transfers to Baldric Blogin's chequing account with an "IOU" response doesn't quite cut it. Likewise, small businesses have a right to leverage their profits without the CRA treating it like direct income, which hurts everyone. And in the case of professionals, the distinct lack of pensions and other labour protections is obvious.
In fact, these loopholes are proof that docile Canadians are really ruthless market rationalists when they need to be and that government usually only serves to make more work for itself in the future through bad policy in the past. For example, there would be no need to use incorporations to hide money from the government if my modest proposals above were adopted or if governments didn't try to buy votes through subsidies every election (shame on you).
And so the battle will continue to rage. Yes, we all ought to "render unto Caesar," what is due; but by that same token, it'd be nice if Caesar could bloody well decide what he wants.
