Part II: The underlying problem is the differential that exists today between personal tax rates on taxable dividends as opposed to capital gains. Read this articleSurplus stripping: We need to fix Canada’s tax rules
Part I: A recently approved private member’s bill is deeply flawed and opens the floodgates to aggressive surplus stripping schemes. It should be fixed. Read this articleUPDATE: Surplus stripping and the new, costly tax loophole for intergenerational transfers
The rise of small-business incorporation is suppressing taxable incomes of rich Canadians. The growing gulf between top personal tax rates and the low rates paid by small CCPCs is driving the rise of incorporation. Read this articleAre the rich really getting poorer in Canada?
Canadian government support for small and medium-sized businesses includes tax preferences, one of which is the small business deduction. This article argues that there is little evidence supporting the efficacy of the small business deduction, that equivalent benefits are generally not available in other countries, and that the small business rate should therefore be repealed. As a result of the repeal, we could reduce the general corporate tax rate and eliminate some of the distortions and complexities in our dividend gross-up and credit rules. Read this articleCanada Should Repeal the Small Business Deduction
In the first commentary in this three-part series, I discussed the supply side of the capital market in Canada, and the personal taxation of dividends and capital gains. Here, I turn my attention to the demand side, and the corporate income tax. Specifically, I argue that replacing the current CIT with a tax on “economic rents” earned by businesses can make our tax system more efficient and equitable. Read this articleThe Taxation of Capital Income in Canada Part II: The Corporate Income Tax