Justin on small business owners

[bogeyorbetter]

Re: Justin on small business owners

there should be a "new candidates" option on the ballot because all 3 candidates are a darn joke this time around. Heck, if Rob Ford was running he'd probably get my vote.

Harper, Trudea, Mulcair... Wynne, Chow, Hudak... my goodness have we ever been blessed with great political choices in the last round of provincial and federal elections.

[ecgr2035]

Re: Justin on small business owners

Peter: SO THERE COULD BE A CUT FOR SMALL BUSINESS?
JT: We have, we'll probably have things to say about it, but we have to know that a large percentage of small businesses are actually just ways for wealthier Canadians to save on their taxes, and we want to reward the people who are actually creating jobs, and contributing in concrete ways. So there's a little tweaking to do around that.

Uhm, yeah, ok Justin. We're in business to save on our taxes. You've nailed it there

Full interview here:
http://www.cbc.ca/news/politics/cana...ript-1.3219779

For anyone interested, there is an interesting discussion on the topic between an Albertan economist and Ontario economist.

http://www.cbc.ca/news/politics/canada-election-2015-justin-trudeau-small-business-tax-rates-criticism-1.3221858

There seems to be a consensus between these two economists that the tax leakage is an issue with the incorporation of professionals in that much of the tax expenditure is going to doctors and lawyers who are allowed to use family members as shareholders. If the son/daughter is a student, he/she can receive up to $40,000 in dividends and pay zero tax. This revenue loss to the government does not lead to any tangible benefit to the country - certainly not job creation.

I think Trudeau's team is right to review the issue but he was wrong to mention it in the interview. This is relatively complex issue with very little upside and quite a bit of downside by going public - potential for public messaging disconnect. He simply could have responded to the question by saying he has no plans to increase the small business tax rate. Politicians often say more than they need to.

[Ignatius Reilly]

Re: Justin on small business owners

For anyone interested in this topic, there is an interesting discussion on the topic between an Albertan economist and Ontario economist.

http://www.cbc.ca/news/politics/canada-election-2015-justin-trudeau-small-business-tax-rates-criticism-1.3221858

There seems to be a consensus between these two economists that the tax leakage is an issue with the incorporation of professionals in that much of the tax expenditure is going to doctors and lawyers who are allowed to use family members as shareholders. If the son/daughter is a student, he/she can receive up to $40,000 in dividends and pay zero tax. This revenue loss to the government does not lead to any tangible benefit to the country - certainly not job creation.

I think Trudeau's team is right to review the issue but he was wrong to mention it in the interview. This is relatively complex issue with very little upside and quite a bit of downside by going public - potential for public messaging disconnect. He simply could have responded to the question by saying he has no plans to increase the small business tax rate. Politicians often say more than they need to.

Excellent post.

[smc66]

Re: Justin on small business owners

For anyone interested, there is an interesting discussion on the topic between an Albertan economist and Ontario economist.

http://www.cbc.ca/news/politics/canada-election-2015-justin-trudeau-small-business-tax-rates-criticism-1.3221858

There seems to be a consensus between these two economists that the tax leakage is an issue with the incorporation of professionals in that much of the tax expenditure is going to doctors and lawyers who are allowed to use family members as shareholders. If the son/daughter is a student, he/she can receive up to $40,000 in dividends and pay zero tax. This revenue loss to the government does not lead to any tangible benefit to the country - certainly not job creation.

I think Trudeau's team is right to review the issue but he was wrong to mention it in the interview. This is relatively complex issue with very little upside and quite a bit of downside by going public - potential for public messaging disconnect. He simply could have responded to the question by saying he has no plans to increase the small business tax rate. Politicians often say more than they need to.

Well, JT just lost the vote of most professionals (dentists, lawyers, doctors, etc.).

[Ignatius Reilly]

Re: Justin on small business owners

Well, JT just lost the vote of most professionals (dentists, lawyers, doctors, etc.).

He's also threatening the 1%.

I suspect there's some overlap between the 1% and those professionals, so I'm not sure that it adds up to all that much.

In a democracy, you have to appeal to some groups more than others.

[Jeffc]

Re: Justin on small business owners

He's also threatening the 1%.

I suspect there's some overlap between the 1% and those professionals, so I'm not sure that it adds up to all that much.

In a democracy, you have to appeal to some groups more than others.

and better to appeal to the other 99% than the 1%.

[bogey5]

Re: Justin on small business owners

For anyone interested, there is an interesting discussion on the topic between an Albertan economist and Ontario economist.

http://www.cbc.ca/news/politics/canada-election-2015-justin-trudeau-small-business-tax-rates-criticism-1.3221858

There seems to be a consensus between these two economists that the tax leakage is an issue with the incorporation of professionals in that much of the tax expenditure is going to doctors and lawyers who are allowed to use family members as shareholders. If the son/daughter is a student, he/she can receive up to $40,000 in dividends and pay zero tax. This revenue loss to the government does not lead to any tangible benefit to the country - certainly not job creation.

I think Trudeau's team is right to review the issue but he was wrong to mention it in the interview. This is relatively complex issue with very little upside and quite a bit of downside by going public - potential for public messaging disconnect. He simply could have responded to the question by saying he has no plans to increase the small business tax rate. Politicians often say more than they need to.

No politician should tell the electorate what they really plan to do. It's all about getting elected.

[bobby Jones]

Re: Justin on small business owners

No politician should tell the electorate what they really plan to do. It's all about getting elected.

Kim Campbell "an election is no time to discuss serious issues."

[Ignatius Reilly]

Re: Justin on small business owners

Well, JT just lost the vote of most professionals (dentists, lawyers, doctors, etc.).

Did you watch the video?
I was unaware that a relatively recent tax change had created a pretty unproductive tax savings for some of those groups.
It's a key point that both interviewees agreed on.

and better to appeal to the other 99% than the 1%.

It's the two-edged sword of democracy.
You want a system that reflects the will and desires of the majority. But the 1% are (with some exceptions) your most productive, active, intelligent citizens. You don't want to create an environment where they're not welcome.

Kim Campbell "an election is no time to discuss serious issues."

^^^^
One of my favourite lines from any election ever.

[bobby Jones]

Re: Justin on small business owners

Professional corporations were brought in to level the playing field with every other corporation. Prior to these rules, a plumber, roofer, manufacture had the ability to structure its shareholdings as they saw fit. Lawyers, physicians, accountants, dentists did not and paid top tax individual tax rates if their income was high whereas other businesses had the ability to defer inside their corporation.

You could level the playing field in two ways: Give professionals the same ability as all other businesses as they did, or overhaul the entire corporate tax regime. I know some on here prefer the second option but, that is major major major changes to the tax system and we can argue all day long as to the ramifications.

As an FYI, "kiddie tax" was brought in @ 12 years ago to eliminate income splitting with minor children through dividends thus eliminating any real benefit. Non-minor children however can receive dividends and potentially low or no income tax.

However.......

1. There is low or no tax to non-working or low income earning young adult children such as those in College/University/Low paying employment

2. Remember though that dividends are paid with after tax income from the corporation. One @ $100 of corporate income @ $15.50 has been paid in tax before little Johnny gets his dividend. So any dividends are not tax free to the system only to Johnny. Mom and dad's corp still paid some tax.

So is there a benefit? - yeah, probably in the short term until little Johnny graduates and starts earning real income. Is it major? not really.

Having said all that and as one who does a fair number of tax returns for professionals, the average physician spends more than they make. They do not defer any money via their corporation and in the end they pay the highest tax rate anyway. I do not think there is any serious leakage out of the tax system based on my anecdotal experience. I have a few good little tax planning Docs but, they are few ad far between.

This might be a solution looking for a problem. A simple change if this really offends you - change the kiddie tax age from 18 to 21 or 24 or ?. this will eliminate most of this planning.

[Bluefan75]

Re: Justin on small business owners

He's also threatening the 1%.

I suspect there's some overlap between the 1% and those professionals, so I'm not sure that it adds up to all that much.

In a democracy, you have to appeal to some groups more than others.

“A democracy is always temporary in nature;
it simply cannot exist as a permanent form of government.
A democracy will continue to exist up until the time that voters discover
that they can vote themselves generous gifts from the public treasury.
From that moment on, the majority always votes for the candidates
who promise the most benefits from the public treasury,
with the result that every democracy will finally collapse
due to loose fiscal policy, which is always followed by a dictatorship”

[Emtee]

Re: Justin on small business owners

Well, JT just lost the vote of most professionals (dentists, lawyers, doctors, etc.).

and thus starts the exodus of highly educated people south of the border. You know, the ones we've educated here. JT stop listening to your boneheaded handlers.

[dmcdam]

Re: Justin on small business owners

and thus starts the exodus of highly educated people south of the border. You know, the ones we've educated here. JT stop listening to your boneheaded handlers.

So you mean if we enforce the tax law as it's actually written and not allow them to cheat the system out of millions of dollars, this will drive away our professionals?

[Pimento Cheese]

Re: Justin on small business owners

“A democracy is always temporary in nature;
it simply cannot exist as a permanent form of government.
A democracy will continue to exist up until the time that voters discover
that they can vote themselves generous gifts from the public treasury.
From that moment on, the majority always votes for the candidates
who promise the most benefits from the public treasury,
with the result that every democracy will finally collapse
due to loose fiscal policy, which is always followed by a dictatorship”

That quote is from the 18th century, I believe. Any evidence in the 200+ years since that democracies are more prone to economic collapse than dictatorships, oligarchies, etc.? How many democracies have financially collapsed and been replaced by dictatorships? (And how many dictatorships have collapsed and been replaced by democracies?) I mean, they're nice pretty words and all and appeal to the conservative crowd that thinks "well, it just makes sense!", but like a lot of things that sound good to those who want to believe them, I'm not sure history has proven this quote to be correct. Perhaps the quote is more akin to fear-mongering than common-sense.

There's certainly a large part of me that believes that the biggest problem with democracy is that the majority of people don't make informed choices and therefore we can never truly do a proper "hire" of a government, but the suggestion that democracies are somehow more prone to spend, spend, spend is deeply flawed and fails to explain why Canada hasn't opted for an NDP dynasty. In short, if the quote were true, would the Conservatives have ever been in power in the first place? The quote also fails to anticipate communist dictatorships.

[spazzdla]

Re: Justin on small business owners

“A democracy is always temporary in nature;
it simply cannot exist as a permanent form of government.
A democracy will continue to exist up until the time that voters discover
that they can vote themselves generous gifts from the public treasury.
From that moment on, the majority always votes for the candidates
who promise the most benefits from the public treasury,
with the result that every democracy will finally collapse
due to loose fiscal policy, which is always followed by a dictatorship”

We seem to be right on course for this. The fact about .1% of the population has any sort of grasp on what money is bad bad news.. bad news.