Tax changes more about punishment than fairness
“It’s the time to make sure this country is well-positioned to accept and integrate people of all sorts.” — Toronto Star editorial, Sept. 9, 2017.
Fine words. Unfortunately, the Trudeau government is undermining this in many ways. Let me explain.
Already this year, nearly 40,000 illegal migrants have entered Canada, in part due to Trudeau’s tweeting “Canada as an open and welcoming society.” The flow into Quebec has now dropped to 50-100 per day. About a fifth of the Haitians now in Quebec may end up in Toronto. But the flood of migrants may soon worsen.
U.S. Temporary Protection Status will soon expire for 300,000 persons originally from Haiti, El Salvador, Nicaragua, and Honduras, and in the near future from Sudan, South Sudan, Syria, Nepal, Yemen, and Somalia.
Will Trudeau also urge these groups to come here?
As emphasized by Erin O’Toole, the Liberal government has already increased personal income tax. The combined marginal tax rate exceeds 45 per cent at an income of $150,000 in seven provinces, according to Terence Corcoran. The government also cancelled the promised small business tax rate reduction. Now Bill Morneau has introduced new proposals that adversely affect incorporated small businesspeople including doctors, dentists, and lawyers. How might these tax increases affect migrants?
In most provinces, about 70 per cent of physicians are incorporated. In Ontario, this was given in exchange for a fee freeze. Thus, when Trudeau argues that “The rules that benefit the wealthy need a little tweaking,” he is proposing to violate a signed agreement between the Ontario government and its physicians. Even Former Health Minister Jane Philpott was personally incorporated until a few months ago. She likely did not regard this as unethical or unfair to other taxpayers. Now as an MP, she receives a generous benefit package that her fellow physicians can only dream about.
About two-thirds of younger family physicians are women. Female physicians would be particularly affected, as many rely on incorporation to fund maternity leave. Many work part-time, and are hardly in the top one per cent of income earners. New Health Minister Ginette Petitpas Taylor should be concerned, as from 2004-2008 she was chair of the New Brunswick Advisory Council on the Status of Women.
Morneau, with inherited wealth and a recent international HR business (including an office in the Bahamas), can hardly relate to most physicians. Most achieved their moderate financial success only through 10 to 15 years of postsecondary education, often sixfigure student loan debts, and long hours of work. They cannot compensate for increased taxes by negotiating major fee hikes with near-bankrupt provincial governments. Older MDs may retire prematurely. Some younger, mobile, frustrated ones may leave for the U.S.
About 70-80 per cent of Canadian dentists are incorporated and have more leverage. They often provide discounts to low-income groups. For example, they receive 70 per cent of their normal fee from the Interim Federal Health Program for a cleaning; for a large filling, it is only 36 per cent! Ontario lawyers receive only $109.14 to $136.43 per hour from Legal Aid.
If Morneau’s proposals become law, will migrants still be able to obtain dental care? If their refugee status claim is rejected, will they be able to find a Legal Aid lawyer to represent them? Thus migrants might be deprived of timely, medical, dental, and legal services.
A more important issue ignored by Trudeau and Morneau is providing employment for the new migrants. In December 2015, there were over 407,000 small businesses in Ontario. Some 77 per cent of all private jobs created in Canada are by small businesses. As Jim Warren has stated, Morneau ignores the risks of setting up and managing a small business. Paying equal taxes and paying fair taxes are not the same thing. As Lorne Gunter emphasizes, victims of the Liberal tax increases do not have pensions, maternity leave, vacations, sick leave and other benefits. He adds that most “one-percenters” are not just dentists and specialist doctors, but executives or senior bureaucrats, often in the public sector, with benefits.
Why risk derailing the economy by attacking small businesses? These would otherwise likely provide jobs for a number of the new migrants. Otherwise, they will remain on social assistance and act as an increased burden on taxpayers.
As Andrew Scheer stated, “This isn’t about tax fairness. (It) is about punishing people who create prosperity, who create jobs for people to enter the workforce.”
As an Ottawa Citizen editorial on Sept. 16 argued, “But ‘rich’ should not be a four-letter word in a free economy; implying that successful entrepreneurs are enemies of the people is playing the same low, populist, identity-politics game we frown on other countries for doing.”
Even the Toronto Star, in a Sept. 15 editorial, acknowledged, “… the government has effectively vilified a group of people who were simply working within the system given to them. If there is moral fault for the unfairness of the tax measures in question, it doesn’t lie with those who exploited them, but with the governments that created them.”