An unfortunate theme being presented by our current government and somewhat augmented by the recent release of the Panama documents, is this notion that everyone with wealth is not paying their “fair share”. The Honorable Mr. Trudeau often mentions that the rich need to pay their “fair share” implying that the rich have been skirting their responsibility to do just that.
Now, along comes the issue of the Panama documents, and its related stories, and one is led to believe that the rich are all out their hiding their wealth and purposely trying not to pay their “fair share”. This in my view is irresponsible and prejudicial. Judging from our client mix I can assure that individuals that would be classified as rich are paying their “fair share” and more.
This is not an easy side of the argument to be on. Everyone wants to be Robin Hood. I totally get that -but, lost in all of this is the realization that for the most part the wealthy are not only paying their fair share they are also taking risks that result in job creation and all the economic spin-offs associated with that.
Our current federal government likes to think that they are forward thinking and are looking for new solutions. Playing Robin Hood is old news. It is time to shift our attention from nickel and dime tax changes to making Canada the perfect place for investment and growth. Let’s start to attract and keep the people and organizations that are going to transform the world. Let’s become super hospitable to the bright and energetic. Let’s pair them up with this massive amount of money we have decided to spend over the next 3-4 years and start the process of transforming Canada into the go-to place for everyone interested in being successful.
There are a multitude of studies that indicate the ill effects of over-taxation. The ability to move around the world is no longer an issue. Our planet has become very small. Forward thinking individuals have the ability to take their capital, their ideas, and their capacity for risk to the most hospital environment. Let’s strive to be that environment. The majority of Canadians recognize just how fortunate we are (perhaps not in January). Let’s not lose another star to some other destination, let’s keep the ones we have and attract similar individuals and institutions from other locations.
The statistics related to taxation in Canada and other countries of the world do not support the notion that the “rich” are not paying their fair share. I appreciate that this is a difficult area to adequately analyse as we all may have a different view on who is rich and what is fair. Notwithstanding that, if we analyse the data presented by Jamie Golombek of the Financial Post in his article published in 2013 we can conclude that the top 10% of Canadian income earners pay approximately 55% of the total taxes. The bottom 50% of Canadian income earners pay approximately 4%. In the USA the top 10% pay 71% of all taxes and the bottom 50% contribute 2.4%.
I do not wish to imply that this should be something different. I simply wish to point out that the notion of “unfairness” is not founded. I will concede that there is an element of illegality always associated with the world of tax and it is very difficult to police. However, this is the area that deserves attention and we need to develop a system that catches this activity and prosecutes accordingly. Raising the tax burden on hard working Canadians under the guise that they are not paying their “fair share” is not the solution.
Micheal Burch, CPA, CA, CFP