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September 22, 2017 | Embarrassing

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.

Poor Bill. Hung out to dry by his prime minister and bestie. Bet he wishes he’d stayed at home in his $5 million house in tony Bennington Heights, earning seven figures running his dad’s company. But, no, he had to go into politics – where he’s being used up, day after unrelenting day.

The finance minister faced another hostile room yesterday, this one in Nova Scotia where there are more people than jobs and 75% of doctors (not enough of them, either) are incorporated because they basically have to. So federal proposals to seriously increase the tax burden on the self-employed because ‘wealthy people have to pay their fair share’ were met with eye rolls and derision. In parts of the country were rich people are rare (almost all of it) and families would benefit from more job opportunities, whacking small businesses seems strange indeed.

Recall that the proposed changes – disallowing spouses from sharing earned income even though they’re both corporate owners and investors, plus raising taxes on retained earnings to as much as 73% – are not law. Yet. We’re in a 75-day consultation period that ends a week Monday. In the meantime people who know tax law (like accounting firms) or what’s good for the economy (manufacturers, exporters, labour unions, farmers, small biz operators) are apoplectic.

Over two million small businesses and households will be affected by this. Yes, some are fancy doctors and lawyers. Some are plumbers, IT guys and Uber drivers. Seven in ten earn less than $200,000. Collectively they run businesses employing an estimated  half of the 18.4 million Canadians who work. Overwhelmingly the people Morneau is about to squish are members of the middle class.

Well, as mentioned, he’s being used up. And knows it. The ‘consultation period’ is not only absurdly short, plus crassly staged during summer when you were fishing and MPs went home, but it’s a sham. The new rules are set. The enabling legislation has been drafted. The prime minister has admitted it. T2 doesn’t actually care what anyone thinks, according to remarks he gave at the UN this week.

“We raised taxes on the wealthiest one per cent so that we could lower them for the middle class and we’re continuing to look for ways to make our tax system more fair. Right now, we have a system that encourages wealthy Canadians to use private corporations to pay a lower tax rate than middle class Canadians. That’s not fair and we’re going to fix it.”

This is false, of course. The two million small businesses to be drop-kicked are not owned by 1%ers, since 90% of them don’t earn enough to qualify, nor do they have sufficient assets. Moreover, they’ve being playing by rules in place for decades. They’re not tax cheats. Legislated Tax Act provisions are not loopholes. And lower tax rates for people who risk capital to employ others (the vast bulk of the people T2 will brutalize) are a big reason they take risk. Otherwise, we’d all just loop along and work for corporate giants and government.

Anyway, the prime minister didn’t tell the UN that Canada’s consulting about making major changes to the tax code. “We’re going to fix it,” he said. That was clear. So much for what people think.

One irony is that Justin Trudeau is a millionaire thanks to money he inherited from his famous father. The funds have been tax-sheltered in various numbered companies and trusts. He will not be impacted by these changes, although he’s rich.

The interesting point is that Pierre Trudeau also inherited much of what he passed along to his now-PM son. And where did that wealth come from?

Yes, his father.

Charles-Émile “Charley” Trudeau was a small business dude. A gas station grunt. He built a network of 30 locations around Montreal and started a loyalty program that encouraged 15,000 people to be gassing up regularly by 1932. He eventually sold the business for big bucks to an oil company, then invested the proceeds in mining companies and a baseball team (the Royals). He died prematurely, and the family fortune passed on to Pierre. Then to Justin.

Imagine. Gas station money. Now sheltered from tax in the accounts of a man his grandfather would hate, but who gladly took it.

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September 22nd, 2017

Posted In: The Greater Fool

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