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August 27, 2017 | ‘Fantastically Irresponsible’

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.

 

The last time Canada brought in huge tax code changes they were researched and debated for six years. This time it’s 75 days. In the summer. When people are on holiday. Including all the MPs.

“The Liberal government’s rushed approach to push through these wide spread tax changes shows that they are either fantastically irresponsible or blatantly contemptuous towards Canadian entrepreneurs,” says Calgary accounting firm Achen Henderson. “The ‘comment’ period offered by the Liberals is one-way and, based on Mr. Morneau’s postings on his twitter feed, Canadians’ comments are being completely ignored.”

In fact when a Con MP razzed finance minister Bill Morneau for wanting to shove taxes on self-employed people as high as 73% while screwing doctors, here’s what he replied:]

 

Does it sound like his mind’s made up? You bet. And the tax changes about to come into effect could constitute one of the biggest financial con jobs in our history. That’s not just the opinion of this pathetic blog. Most tax experts and accountants studying the proposed legislation have tossed their cookies. They cannot believe any sane government would launch a wholesale attack on the risk-taking entrepreneurs who create 50% of all jobs. What the heck is Justin thinking? Or, is he?

Blog dog Jake figures he’s about to be skewered by the proposals stripping spouses of the ability to share income of the businesses they share risk in, or to build up money in his corporation since he doesn’t have a pension.

“I left a stable job with one of Canada’s largest banks – I also left behind a defined benefit pension, a means of capitalizing a book of business when I wanted to retire (funded by the bank) and a future income of $400+k a year in salary/commissions. Do you know why I did it? Because I saw a business opportunity and I did the math. I decided to take a plunge, risk my own life savings, take on a bunch of debt, work for basically nothing for 5 years to only now start to climb out of the hole because I felt like the tax structure offered enough of an incentive to take the risk.

“If I succeeded, I would be able to employ people, be proud of having done something on my own and then enjoy the long tail benefits of getting to invest my hard earned money in a tax advantaged way – kind of like an RRSP for an employee who works hard in their job and saves their money. The only difference being, I left everything behind to put it all on the line to try to succeed whereas my co-workers have just muddled along, secure in their jobs, provided they closed enough business every month. Here’s the rub though, I could have also started the business I am involved in, in California – but I decided not to because the small business tax rate and the ability to invest my profits within the corporation were enough of a carrot to cause me to stay. So, here I am – what do I do now. Frankly, if you push this through, I’m packing my bags and won’t be looking back.”

The Liberal anti-small business proposals are couched in language of “tax fairness” and of people “paying their fair share”, suggesting doctors, plumbers, lawyers, massage therapists, carpenters and IT guys who earn their money through small incorporations are ripping everyone else off. The nation’s accountants, in a rare show of spunkiness, have been rising up to prove that wrong.

In fact, a self-employed electrician making less than $70,000 through his company working for various homeowners will pay more in tax under the proposals than an employee earning an identical amount, says Achen Henderson. Worse, the business guy has no heath or dental coverage, no paid sick days, no EI, no vacation, no company pension, no matched RRSP, plus endless risk. The spouse doing his books and living in a house mortgaged to start the company – who shares equal risk – is now cast as a money-sucking leach on the system. “Amidst the Liberal government’s commitment to promote gender equality, these policies seem to devalue the role of the stay-at-home contributor to a family business. The proposals insinuate that the stay-at-home half of an entrepreneurial couple is not as important, and so shouldn’t receive the same benefits, as the ‘working’ half.”

To remind you, the Trudeau/Morneau taxes will end the ability of entrepreneurs to share income with their spouses, despite their contribution, end the ability to create a retirement fund within a corporation for people without pensions and raise to 73% the tax paid to get retained earnings out of a small business. Medical people allowed to incorporate so provincial health plans can pay them less, benefiting all taxpayers, will be a special target.

Here’s a sampling of the outrage building among accounting firms:

Horizon Chartered Accountants, Vancouver:
“Some of these proposals appear to simply be an attack on entrepreneurs and professionals who have taken years out of their lives and very significant financial risks to start and develop businesses and to get educations to allow them to earn a better income.  However, they all start earning income later and they start saving for retirement much later.  They do not have pensions, they do not have government or other benefits and they do not get Employment Insurance.  These people carry an immense amount risk and stress that employees do not and yet the Liberal Government has the stated objective of taxing them on the same basis as employees.  This group of people employs almost 50% of the population in Canada.  Their retirement savings strategies (allowing them to catch up for years spent going to school and building their businesses up) are being attacked.”

Achen Henderson Accountants, Calgary:
“The Liberal government’s rushed approach to push through these wide spread tax changes shows that they are either fantastically irresponsible or blatantly contemptuous towards Canadian entrepreneurs.

“The Trudeau government is aggressively targeting Canadian entrepreneurs under the guise of propping up the ‘middle-class’ by raising taxes on ‘wealthy Canadians’. These changes affect all Canadian entrepreneurs who are profitable, not just the ‘wealthy’ ones. Mr. Morneau has ‘wealthy Canadians’ confused with all profitable, risk-taking Canadian entrepreneurs. Even more astounding is that Mr. Morneau and Justin Trudeau clearly do not believe that Canadian entrepreneurs, doctors, and farmers (including the ‘middle-class’ ones) are contributing their ‘fair-share’ to the Canadian economy. The Liberals have created villains (entrepreneurs, doctors, and farmers) whom naïve or uninformed voters can blame for a lack of funding at the federal level. Middle-class entrepreneurs are tax cheats! A very Canadian sentiment, indeed.

Yale & Partners Accountants, Toronto
“This proposal is not aimed at the wealthiest Canadians at all. If you have a holding company with $20 million or more in investments then these proposals do not affect you at all. If you are a small business trying to earn active business income of $200,000 or less with several employees then this proposal affects you profoundly. These proposals will affect whether businesses carry on, they will affect decisions that small business owners make, and they will affect how small businesses will behave.

“The tone of these proposals is completely misguided. Private corporations definitely pay their fair share of taxes. The implications that they do not, as implied by this document, is just not accurate. It also sends the wrong message to the world about Canada and misleads the general public about the true nature of the circumstances.

“The Finance department and the Federal Liberals are incorrectly casting small business owners as wealthy tax cheats. These proposals will cost jobs for people in small business, financial services and health care. They will also reduce the incentive for corporate charity. It is clear that these proposals send a message that this government is all about taxation and greed.”

If you are inclined, you can write Bill Morneau. Here’s his email: [email protected] Say hi for me

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August 27th, 2017

Posted In: The Greater Fool

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