What do I think of the Morneau Tax-Grab?
This is all about fairness in taxation is it? As a former owner of a smaller-size business (a consulting firm for thirty years) I can fully understand the uproar against the Minister of Finance — but let me leave that more the moment. As the current owner of a professional corporation, I can tell you that the proposed changes have more negative consequences than Morneau fully appreciates. There are many good reasons for professionals to incorporate — the need for liability insurance, the ability to access certain contracts (where the client will only deal with a company), the necessity of separating one’s personal life (and finances) from one’s corporate self, etc., etc. Not that many of us make enough money to be considered super-rich or elitist, and to penalize us because it appears we don’t pay the same tax — well, there are a good many appearances that are not even, level or fair that could suggest this is just the tip of the iceberg, but more on that later.
First let me ask another question: am I living a repeat of the late sixties when a PM by the name of Trudeau talked about wanting to help the middle class through “The Just Society” which really meant his version of that group (and few, in any, lived west of southern Ontario)? Remember all the social programs that suddenly appeared, few of which were even asked for and yet we continue to pay for them to this day, without a significant improvement in the lot of those who were supposed to be helped.
And now, today…
It is difficult, I’m sure for someone who has never had to risk starting, let alone trying to maintain, a small business, to understand why there is opposition to his great plan to level the playing field so that there would only be people working for someone else on salary (and have we actually parsed that goal? who would the someone else be, other than big corporations AND big governments…). But I digress. Let me put forth another approach to this entire dilemma that seemingly has appeared before us all — tax reform.
If tax reform is needed, and there are good arguments to be made that it is, then reform the entire income tax field. Institute a flat tax system with NO deductions at all — let each person decide where/how s/he wants to spend/donate/give/earn money.
When a political party promises to help the middle class and gets elected, it should then reduce the salaries of its members (but not those of the opposition benches) to the average salary of what it deems to be the middle class with NO tax exemptions for any of its MPs’ perqs. That way it would truly know what the middle class feels like and it could then better determine what fairness might actually mean.
Furthermore for all MPs, restore the five day working week at Parliament with only one paid return trip each month to the constituency (probably on a holiday weekend). With the variety of interactive and social media now available, it is much easier to keep in touch, so travelling back every week-end is not a very green-friendly action. As well, Parliament should be required to work ten weeks of every season — still less than their middle class constituents, but at least enough to understand how difficult it is to balance all aspects of life including one’s personal budget.
Eliminate any tax-free benefits for all MPs and dissolve the pension fund (make this dissolution retroactive to the last election so politicians can experience what it is like when they change laws midstream or without any serious long-term warning — any surplus funds can be given to a fund to establish a national “apology day”) and simply institute a matching-funds contribution system using the CPP process (complete with current normal maximum limits). But to help them understand better the way small businesses operate, make each MP pay both the employer and employee contributions to CPP and UIC (and then make sure they are ineligible to collect UIC!!).
These are just a few ideas that should be considered by Mr. Morneau and Mr. Selfie. Remember, the problem was not dreamed up by the gurus in the Finance Department who do their own share of off-piste thinking. No, this time it was all political — so let’s make the solution all about politicians. Whoever is your MP (but especially if s/he sits in opposition, like Mr. Canning and Mr. Albas here in the southern portions of the Okanagan Valley), encourage them to join together and push these options to the forefront. Let’s have a real conversation about tax reform.