Stop divisive pitch over tax reforms

This week’s return of Parliament will bring fresh opposition attacks on Finance Minister’s Bill Morneau’s proposed tax changes for corporations. So let’s be clear about how the government should not pitch its plan to Canadians.

First, please stop using the term “loopholes.” When governments create policies that permit taxpayers to shield parts of their income, it’s in the expectation that people will, in fact, use these tools. “Loopholes” connotes sneakiness.

Second, stop implying only “rich” Canadians are taking advantage of the rules around incorporation. Citizens and businesses that choose to incorporate can include not only doctors and lawyers, but also your neighbour running a freelance writing service from her home, or the guy down the block trying to start a consignment clothing operation.

Third, stop campaigning against the rich, period. Yes, lots of high-priced professionals have used the rules to keep more of their money. But “rich” should not be a four-letter word in a free economy; implying successful entrepreneurs are enemies of the people is playing low, populist, identity politics.

Fourth, stop the drivel about tax “fairness.” There are more special-interest tax benefits and boutique credits than you can shake a calculator at, each aimed at a different slice of voters, er, income earners.

And to the opposition, don’t fan classwarfare flames either. We’ve seen, south of our border, what pitting groups of people against each other can do.

Well then, what are the reasons a government might want to mop up the tax structure for corporations? Some economists argue that government has played the role of risk mitigator, buffering small businesses from economic reality. Maybe this should stop.

Likewise, perhaps Morneau’s lengthy studies convince him that special policies on income-sprinkling, passive investments and capital gains just aren’t needed as incentives to entrepreneurship. If so, make that clearer.

Another potential merit, presumably, is that the plan will raise needed money for a government with a deficit. Well, say so.

A further potential plus is that making these changes may move us a bit closer to “tax neutrality,” a concept whereby everyone’s income eventually is taxed at the same rate, and the tax system itself is no longer the reason people make their economic decisions. This would be a sound rationale.

Certain taxpayers are not inherently more evil or pure than others, and implications to the contrary aren’t worthy of Canada. Tax policy is complicated, but pitting us against each other is no way to deal with it. — Postmedia News