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ALWAYS CONSULT YOUR INVESTMENT PROFESSIONAL BEFORE MAKING ANY INVESTMENT DECISION

September 11, 2017 | The Pot

Garth Turner

A best-selling Canadian author of 14 books on economic trends, real estate, the financial crisis, personal finance strategies, taxation and politics. Nationally-known speaker and lecturer on macroeconomics, the housing market and investment techniques. He is a licensed Investment Advisor with a fee-based, no-commission Toronto-based practice serving clients across Canada.

Welcome to the lobster pot. Here no lid is required. Ambitious crustaceans are dragged down when they try to rise up by the ‘fairness’ and ‘equality’ lobsters. So everyone ends up as dinner.

Yesterday dentist June spoke out about the ‘divide-and-conquer’ strategy being used by Ottawa as it readies a giant tax hammer on small business. It’s working. By casting the self-employed as tax cheats, profiting at the expenses of employees, the feds have demonized two million self-employed little lobsters, 70% of whom earn less than $200,000 and account for 50% of all jobs. What have been perfectly legal and accepted accounting practices for decades are now called ‘loopholes.’ The meme has spread like a virus, that incorporated people are thieves.

Five days ago doctors were startled that the Canadian Nurses Association sided with T2. Said the nurses: “We support the aim to achieve federal tax policy that treats all sources of income similarly and equitably, based on principles of social justice.” In other words, the nurse lobsters want the doctor lobsters to be salaried just like them.

Fair’s fair, right?

Well, maybe not always. If everyone worked similarly, was roughly equal in ability and training, and faced the same risks, that might be okay. But Maxim thinks not.

In this blog’s final installment (for this week) on this thorny but pivotal topic, here are the thoughts of a doc blog dog. As you read it, ask simple questions: what’s our federal government trying to accomplish? Is this war demonizing the self-employed plus incorporated professionals like IT dudes, docs and donut franchise owners accomplishing anything? And do you really want to ever visit a pissed-off proctologist?

Well, here’s M. For the record.

Love your blog and follow it daily, including reading the comment section… so I guess I’m writing and hoping that you’ll publish these comments to enlighten some of the readers who just don’t get it. I’d like to address the topic of doctor-specific business risk, especially in light of the Canadian Nurses Association public stance on supporting the tax changes. (Way to go Trudeau and nurses, to divide up the country).

Here are some real-life examples for those readers who asked:

A doctor sees a patient in the hospital and enters medical orders for the nurses and other healthcare staff to follow (e.g. drug prescription, blood work, imaging tests, protocols, etc.). The nurse on duty forgets to administer the drug, or worse, overdoses the patient. The doctor then spends the rest of the night, even the whole week, trying to rectifying this life threatening mistake. Meanwhile, the salaried nurse goes home to sleep at the end of her shift.

And the spouse of the doctor is fuming because s/he has become a single parent for the week as the partner is too busy looking after the sick patient to look after the kids.

A doctor sees a patient who does not have health coverage (e.g. out-of-country traveler, illegal alien, fraudulent or expired provincial coverage). The doctor doesn’t get paid, and you’ll be surprised how often this happens. Meanwhile, the salaried nurse and secretary will still get paid. They’ll even accumulate vacation days.

A doctor gets sick and can’t see patients. Not only will no revenue come in, they have to scramble to arrange coverage, all the while paying the secretary to rearrange and rebook all the patients. Meanwhile, the salaried staff just has to pick up the phone, call in sick, and get paid for lying in bed. And that’s assuming they weren’t playing hookie.

For doctors who are paid fee for service, if you are a specialist for example, you might see a follow-up patient in 15 min and a new patient in 30 min. New grads often take double that time. But when a doctor encounters a complicated case (which happens every week), they have to spend extra time, often the entire evening that night and several days thereafter, researching medical journals, knowledge bases, consulting colleagues, ordering labs, etc. This is all unpaid work. Meanwhile, imagine if a doctor was paid a salary like a nurse. Would tax payers like to pay doctors time-and-a-half for their overtime?

When there a computer problem, the salaried staff calls their IT department, but will be paid while they wait for the problem to be resolved. A doctor who owns their own clinic, will be unable to function if they can’t access their EMR (electronic medical records) to retrieve lab results, etc. The doctor, the business owner, becomes the IT department. Every minute of outage is an extra minute of unpaid stressful work. The nurse and secretary goes home at the end of their shift.

Uh-oh… six months after the incident above where the nurse overdosed a patient, the patient dies from complications. The family sues the hospital and the doctor. The doctor now has a huge administrative burden of documenting the incident, talking to lawyers, and possibly going to court. And losing the case. (Which is why malpractice insurance is so expensive). Meanwhile, what will happen to the nurse? A reprimand on their file?

These are just a small sample of doctor specific risks. As a small business owner myself, I haven’t even talked about the scenarios when staff calls in sick, the landlords change their lease terms, employees quit on you, your store front (or office) encounters theft, vandalism, fires, floods. Or governments changing legislation, negatively impacting your business…

The point then, is that a dollar earned by a business is far less than a dollar earned by a salaried employee with benefits. A small business owner comes with significantly more risk and stress. More often than not, s/has to work 25-50% more hours for an equivalent salaried position.

Only the naïve and the ignorant will think this won’t have ramifications.

BTW, people forget that the provincial governments ENCOURAGED doctors to incorporate for all the legal tax benefits, in return for doctors accepting lower fees. Maybe the federal government will get more in tax revenue, but be prepared for higher provincial medical costs when doctors demand for fair compensation of risks, expenses, and ‘overtime’. I believe the nurses to be flat out wrong.

Maxim

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September 11th, 2017

Posted In: The Greater Fool

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