Roundup: Those “sexist” tax changes

Pushback on the proposed income tax changes increased in intensity, with the Canadian Medical Association launching broadsides at the policy under the rubric that it’s “sexist” and will drive doctors out of the country, while Conservatives have taken these arguments to social media, Lisa Raitt policing news aggregators and Kellie Leitch penning fundraising letters. Jane Philpott, addressing a CMA conference, assured them that they were operating under misinformation and that the goal of the changes was tax fairness – that those with spouses earning significantly less money or having adult children shouldn’t unfairly benefit from the existing system than those who don’t.

I did try to get some answers as to how this policy was “sexist,” because I’m not entirely convinced that these changes prevent people from using money in the corporation to finance parental leaves, never mind the fact that the previous government made a Very Big Deal about changing the EI system to allow self-employed people to contribute in order to finance maternity leaves – something that received very little uptake. And most of the stories that Raitt pointed to were anecdotal that didn’t point to where these policy changes were a problem – one example was a Facebook post where a dentist insisted that these current policies were what allowed her to keep up with male counterparts, which is an argument that makes no sense at all. They don’t prevent incorporation. They don’t prevent deductions of expenses or reinvestment in the business – it’s about not letting people use income sprinkling or splitting for the sole purposes of reducing their taxes. Not that it’s stopped the narratives that this hurts doctors or struggling small businesses.

And this is a salient point – in Ontario, the provincial government encouraged this kind of incorporation rather than increase what they’re paying doctors, so you can see why they’re upset that these tools are being taken away from them. Nevertheless, it also largely proves that their arguments are fairly disingenuous, especially when they insist that “it’s not about the money.” But with none of their other arguments actually panning out, it seems to be that’s exactly what it is, and it’s fine if they come out and just say it. But to put on this song and dance about how the changes are “sexist” and that it somehow disproves Trudeau’s feminism, and ignoring the stated purpose of the changes with regards to tax fairness, makes the excuses start to ring fairly hollow.

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Roundup: More tax change caterwauling

Another day, and more moaning about the proposed small business tax changes, which have now been equated to “class warfare”! Yes, a pair of tax lawyers wrote in the Financial Post yesterday about how the ability for small business owners to split their income with stay-at-home spouses was great policy because it was first proposed back in 1966. I kid you not. Fortunately, economist Kevin Milligan is back after a few days offline, and can help sort some of this out.

And then there’s this kind of silly thinking:

Government is not a business. It cannot be run like one, no matter how many times people like to chant it as a slogan. It fundamentally does not operate in the same way, nor can it ever run in even approximately the same way. The absolute fundamental principles do not translate because government has no bottom line. The sooner people grasp this, the sooner we may have more rational discussions on how to better operate government in a sane and rational manner.

Meanwhile, Andrew Coyne is unconvinced by all of the caterwauling about the proposed changes, not seeing the moral advantage that small businesspeople are apparently owed, and suggests instead that the incentives to incorporate be reduced by bringing the topline personal income tax rate and the small business rate closer together.

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Roundup: Disingenuous tax concerns

If there’s one thing that the federal government’s announced changes to small business tax rules for the purposes of closing tax avoidance loopholes has done, it’s stirred up a hornet’s nest of comments from the “Tax Bad! Hulk Smash!” crowd, who have come up with all manner of misleading talking points and crocodile tears, while interested parties (such as doctors and farmers) who have been using these loopholes to avoid paying taxes are crying poverty in the media, where there has been very little pushback from credible economists to these sob stories. Particularly galling are those who insist that the ability to engage in income splitting is somehow more virtuous because they’re small business owners, as though there hasn’t been a whole cohort of people who would love income splitting to allow their spouse to be a stay-at-home parent (which is a whole entire other public policy discussion about the value of women in the workforce).

And lo and behold, Jason Kenney decided to try to get his kicks in despite the fact that it’s a federal issue and he’s currently running in the provincial sphere. The problem? That he’s offering a completely disingenuous position.

And that’s the rub – these changes aren’t affecting struggling small business owners. They’re not affecting their ability to keep the business liquid, or to save for retirement, because those haven’t been affected (as we recall, Kevin Milligan has explained this several times). And for the “Tax Bad! Hulk Smash!” crowd to try and cast these changes in such a manner is utterly ludicrous. It’s an attempt to paint the Liberals with a brush of being job killers and high taxers, which is not what these changes are about. It’s about ensuring that people don’t avoid paying taxes by virtue of these measures, so unless they’re keen to promote other forms of tax avoidance or evasion, trying to close loopholes shouldn’t be treated as an added burden to people who are doing well for themselves.

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Roundup: Commence the negotiations

We’re still talking NAFTA? Of course, we’re still talking NAFTA, as negotiations actually get underway today, so that’s exciting. If you need any more background (on top of what’s been said for the past several days) here’s a look at why Chrystia Freeland’s list of demands – especially around local procurement and labour mobility – might be a tough sell in the States, while the proposed chapters on gender and Indigenous issues are likely to be seen as simply expressions of the Trudeau government’s values. And while there aren’t any expectations that these negotiations will be easy, given that Trump is an Uncertainty Engine, trade experts are pointing out that Canada has more leverage than we think we do.

Meanwhile, Paul Wells had plenty to say about the past couple of days:

This particular observation strikes me as so utterly unsurprising. (Seriously, MPs – you can do better):

And one more, because seriously:

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Roundup: Prepping for trade talks

Starting this week, it looks like it’s going to be all NAFTA, all the time, as trade talks get underway. Chrystia Freeland is kicking things off with a speech in Ottawa today, urging support for an overhaul, before she goes before a parliamentary committee about the government’s priorities (which I’m sure there will be a certain amount of vagueness about because I’m sure she’s not looking to negotiate in the media). While Freeland and Justin Trudeau have been making noises about labour and environmental standards of late, the red line will likely remain a dispute resolution mechanism, given our disadvantages with American litigiousness and their compliant courts.

In light of these talks, here’s a look at how the benefits are often invisible to Canadians, how populism is affecting negotiations – particularly among the Americans, and how energy could be an area where NAFTA does a great deal of good – assuming that it gets to the table this time around. Here is a look at the lead US negotiator, and how various groups back here in Ottawa are lobbying the government ahead of negotiation. And no examination of the negotiations would be complete without a reminder of previous trade talks with the US, going as far back as pre-Confederation times.

Meanwhile, John Geddes sets the stage for the talks, while Andrew Coyne makes the point that Canada’s leverage in these talks is the ability to walk away, seeing as we survived without free trade for 120 years and we can do it again.

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Roundup: Concern trolling over tax loopholes

There’s been a great deal of concern trolling going on over the past few days when it comes to the planned changes to self-incorporation to close the tax loopholes found therein. Conservative leader Andrew Scheer tweeted out another of his disingenuous messages yesterday, talking about “hiking taxes” on doctors – who are leading the concern trolling charge against this closure of self-incorporation loopholes – which is not surprising, but nevertheless not exactly the truth about what is going on.

Meanwhile, economist Kevin Milligan has been dismantling the concern trolling arguments with aplomb, so I’ll let him take it from here:

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Roundup: Ontario superballots?

One of the many challenges of Canadian democracy is our geography – especially the fact that we have so much of it. Rural and remote regions tend to have large riding boundaries, and that causes its own share of problems, particularly when you have a number or ridings larger than countries like France, and no, that’s not an exaggeration. Ontario has been in the process of redrawing their riding boundaries after the federal government did in advance of the last election – notable because Ontario largely follows the federal riding boundaries, but in the past, they split one of the giant Northern Ontario ridings into two for practical purposes. Under this new redistribution, it looks like they want to split it into four instead. Where this becomes problematic is not only the fact that it far exceeds the usual 25 percent variance in rep-by-pop weighting that the courts usually allow, but it’s being justified in giving votes to francophone and Indigenous communities in the area.

In the National Post, Chris Selley takes on this particular proposition, and makes a very good point in that we don’t have any particular basis in this country for awarding “superballots” to traditionally underserved communities as a means of reconciliation or redress. Add to that fact, that while the commission may talk a good game about better enfranchising these Indigenous communities, they traditionally have lower turnouts not only for lack of access by elections officials, but because in some of those communities, they resist taking part because they don’t see themselves as part of Canada, but as a sovereign nation within Canadian boundaries, and participating in Canadian elections would undermine that sovereignty. I’m not sure that “superballots” would change that particular consideration for them either, which could make the commission’s excuse for naught. Would that mean that in these newly created ridings that the non-Indigenous voters who do participate have their votes count that much more? Quite possibly. And while one does understand the frustration and challenges of an immense Northern riding, there are other ways to mitigate those issues, with greater allowances for offices, staff and travel considerations that the government should be ponying up for. I’m not sure that this new proposal is going to pass the Supreme Court of Canada’s smell test.

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Roundup: Urgent investigations

With more video evidence that purports to show Canadian-made LAVs being used in Saudi Arabia against their minority Shia population, Foreign Affairs minister Chrystia Freeland has ordered an “urgent investigation” of the claims. At the same time, we’re getting some pretty usual reaction from the various opposition parties and their supporters, that portray the Liberals as being wide-eyed naïfs who had no idea that these vehicles could ever be used for such purposes.

While it’s easy for the woke supporters of opposition parties to try and paint the Liberals as cynics on the issue, this ignores the very real fact that every party in the election was gung-ho about living up to this contract with the Saudis, and insisting that it would go ahead no matter what, because they wanted those jobs – particularly at the General Dynamics plant in London, ON. The fact that the opposition parties, while doing their jobs of holding government to account, are nevertheless speaking out of both sides of their mouths on this issue. It’s also easy to give facile talking points about how terrible Saudi Arabia’s human rights record is without going into the genuine strategic reasons why they’re an ally in the region, and why that complicates and adds a truckload of nuance into the relationship. And as we’ve discussed before, there is no “nice countries only” option when it comes to having an arms industry, and if you think that we can preserve those jobs without getting our hands dirty in the process, well, real life doesn’t work like that. There are trade-offs to be made, and we should be trying to have an honest discussion about it and what those trade-offs are. This chirping, like from our woke tweeter, is not an adult conversation, and does nothing to reflect the reality of the situation in any way.

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Roundup: Brown’s creepy town hall

A story out of Brockville yesterday is a bit disconcerting, where local Conservative MP Gord Brown held a town hall in the community about the Omar Khadr settlement, saying that he wanted to get people’s views because everywhere he went, it was all people would ask about. He also claimed that it “wasn’t a partisan issue,” but I would be willing to bet actual money that the way in which Brown presented the case was through a deeply partisan lens, regurgitating the party’s disingenuous talking points and legal prevarications that distort the crux of the matter. And what disturbs me the most is that listening to the reactions in the write-up of the event, it starts sounding an awful lot like a Two Mintues Hate than anything, where people recited the completely wrong tropes about Khadr’s situation and situation as it regards the rule of law. It was at least heartening that a local lawyer turned up at the event, brandishing a copy of the Charter of Rights and Freedoms and laying down the law about why there was a settlement, and it’s quite the photo that ran with the piece – but I doubt that it would change very many minds, considering the distortions that are continually spread by the partisans (on all sides, to be completely fair, given that many a Liberal partisan conveniently forgets the roles that Jean Chrétien and Paul Martin played in this). Nevertheless, the fact remains that holding a town hall on this issue is deeply creepy.

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Roundup: Disingenuous leadership promises

In the wake of the unity vote in Alberta on the weekend, there were a number of developments around the United Conservative Party yesterday morning, starting with the fact that one of the other PC leadership candidates who lost to Jason Kenney left the party, citing that it wasn’t going to be centrist enough. Meanwhile, the Wildrose house leader, Nathan Cooper, was named interim leader of the united party, while they get their Elections Alberta paperwork sorted. (Incidentally, the leadership is supposed to be decided by October 28th and the legislature not recalled until October 30th).

Brian Jean also tendered his resignation as Wildrose party leader, and made a bid for UCP leader by mid-afternoon. And that’s where some of the fun/frustration sets in.

These were two statements that Jean made, but they’re among the most problematic.  For starters, his promise on the carbon tax should be taken with a giant shaker of salt because by the time there’s an election in Alberta, there will be a federally mandated carbon price, and it would make absolutely no sense for a hypothetical Jean-led UCP government to withdraw the provincial tax only to be hit with a federal one that is designed roughly the same way – especially when the oil industry in Alberta has largely been behind the tax process because it offers them predictability and price measures that they can work with. And if Jean thinks that there will be a Scheer-led Conservative government federally who will cut the federal carbon tax, well, that sound a lot like counting chickens before they’re hatched.

The promise around equalization is even more nonsensical because there’s nothing that a referendum would actually accomplish. Equalization is a federal programme that comes out of the consolidated revenue fund. Alberta doesn’t write a cheque to Ottawa, who then turns it over to Quebec. Equalization comes out of the income taxes that everyone pays to the federal government, and is used to ensure that all provinces – especially those who don’t have a lot of revenue-generating potential – can offer roughly equal levels of services for things like healthcare. Alberta is a rich province. Its incomes are well above those in the rest of the country, and hence, they pay more income tax. That’s it. That’s how equalization works. If he thinks that he can somehow hold is breath and withhold paying, well, he’s utterly mistaken, and to promise otherwise is disingenuous, populist bilge. He can’t change the constitution either, so good luck with that. Sadly, because nobody actually explains to people how equalization works, people end up believing Jean’s nonsense.

Incidentally, Jason Kenney is expected to announce his UCP leadership bid this Saturday. Colby Cosh takes on the coming leadership contest here (and it’s a pretty cracking read).

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