Tax changes cast entrepreneurs as the bad guys
‘Fairness’ forcing small companies to turn their backs on growth
In 2004 I left a big bank to start a new business.
Today we are a successful business with a team of 16 people.
I knew that there would be risks and a long process from start up. I probably spent seven years of making less money than I would have if I stayed at the bank.
We managed our way through the first couple of wobbly years, only to be hit by the market crash of 2008-09.
If we hadn’t made it through, that would have been it — there would have been no support. As a business owner, I don’t pay into nor do I qualify for employment insurance. There is no safety net. As a family with young children, we took some real risks along the way.
I’m not complaining. This is the way entrepreneurship works. You try and build something. You take some risks. If it doesn’t work, you need to figure out what’s next.
In general, most Canadians like to hear about entrepreneurs who build something successful. They know that it’s good for the economy and they tend to respect the risks that people take to make it happen. Of course, many business owners don’t make it at all, or are struggling to make it all work. We need to make sure they know the struggle will have real rewards if they can be successful. Otherwise, many will never take the risk at all.
So why is it that today I feel like the government is coming along, pointing to me and saying I’m not doing my part?
I am fully supportive of a progressive tax system, and for those who can to do more. But when I pay six-figures-plus of family taxes and then six-figures-plus of business taxes, when my tax bill is 53.5 per cent on income, on top of my house taxes, on top of HST, I start to wonder again. How am I the bad guy who is cheating the system and letting down Canada?
Now, with the most recent tax proposals for small business owners, I’m going to have to rethink the growth plans of our business. After all, if the business grows, and of every dollar of growth, more goes to the government than to my colleagues or I, then maybe growth isn’t so attractive. Having spoken to many business owners, I can tell you that many are starting to wonder the same thing. Older business owners in particular are thinking that slowing down makes a lot more sense.
Is this good for the Canadian economy? Do we want business owners to turn their back on growth? Is this what “tax fairness” will do for our country?
For those who say the One Per Cent can afford to pay more, we need to understand that there are consequences to tax rates that put more of every dollar in the government’s hands than ours. There are consequences to removing incentives from business owners to grow their businesses. In a global world, there are options for some businesses to stay in Canada or to move to another country.
I recently heard a story about a couple who moved to Sweden and opened a restaurant. The restaurant had six tables and was open five days a week from 5-9 p.m. When they were asked why they moved to Sweden, they said: “Life is easy here. We don’t have to work very hard.”
Is that what we want Canada to become? A place where taking risks isn’t rewarded? Where working very hard isn’t very smart? Where those who are financially successful are viewed as the bad guys and the financial solution to every problem?
I was taught to take responsibility for my own success or failure. I thought that was part of the Canadian culture. In 2017, I’m really feeling that culture is slipping away.
I would much rather live in a culture where all Canadians do their best to build more for themselves and their families, and ask less of government. This includes both the 99 Per Cent and the One Per Cent. The business owner and the government employee. The student and the senior.
I’m afraid that to continue on the path we are headed will eventually make Canada an economic basketcase — and that will cause pain to all Canadians.
Financial Post Ted Rechtshaffen is President and Wealth Advisor at TriDelta Financial, a boutique wealth management firm focusing on investment counselling and estate planning. tedr@tridelta.ca