- Dennis Howlett highlights how the Libs are only making our tax system even less fair by overreacting to trumped-up criticism of a plan to close minor loopholes:
As the dust settles on the Trudeau government’s private corporation tax reforms, Canada seems to be falling further behind in the quest for tax fairness.- Likewise, Tony Keller discusses the terrible policy behind the Libs' attempt to change the subject from closing loopholes. And with Bill Morneau in the middle of the mess, Althia Raj reports that the Libs' defence that the Ethics Commissioner hasn't specifically said he's doing anything wrong when it comes to how policy affects his own wealth depends on her not actually bothering to check.
While the government’s decision to proceed with income-sprinkling reforms is positive, we are disappointed the capital gains reforms were dropped and find the ‘tweaks’ to the proposals for passive income to be overly generous.
If the changes to the private corporation tax rules are assessed on their own, they move Canada a slight step forward. However, the appeasement of the vocal business lobby with a further cut in the small business tax rate to 9 per cent means the government likely will lose more revenue than it gains, which will contribute further to growing inequality.
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This is not the first time the government has backed off on tax fairness reforms. The closing of the stock options loophole suffered the same fate as the private corporation tax reforms. These are black eyes for Canada’s tax system. Even the IMF has raised the concern that capital income (including profits, interest, and capital gains) is distributed more unequally than labor income.
Capital income has been rising as a share of total income over recent decades, with a lower tax rate than labour income. The IMF states that adequate taxation of capital income is needed to protect the overall progressivity of the income tax system and that more equal treatment of income from capital, as well as different forms of capital income, is critical if we want to avoid offering incentives for tax avoidance. This means getting rid of the unfair tax treatment of capital gains and stock options.
The next time the government moves forward on an agenda for tax fairness, it needs to make it part of a larger package of reforms that looks at all the unfair tax expenditures.
- Meanwhile, Jennifer Robson notes that plenty of federal policies which are supposed to help lower-income people aren't reaching their intended recipients.
- Linda McQuaig writes that the Sears pension fiasco should be a catalyst for change. And Tim Harper notes that nearly everybody aside from the Libs seems to be onside with protecting pensions.
- Finally, Sheila Block and PressProgress each examine some of Canada's persistent forms of inequality based on race.
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