Transcript: Does Taxation Have to be Taxing? | Jan 22, 2018

Steve sits in the studio. He's slim, clean-shaven, in his fifties, with short curly brown hair. He's wearing a gray suit, pale pink shirt, and lilac tie.

A caption on screen reads "Does taxation have to be taxing? @spaikin, @theagenda."

Steve says LAST SUMMER AS THE
FEDERAL GOVERNMENT SHOPPED
AROUND ITS SMALL BUSINESS TAX
REFORM AGENDA, PHRASES SUCH AS
"INCOME SPRINKLING"AND "MARGINAL
EFFECTIVE TAX RATE" WERE
SPLASHED ABOUT AS POINTS OF
CONTENTION.
AND IF THAT SEEMED A BIT OPAQUE,
IT'S JUST PART AND PARCEL OF
WHAT MANY SEE AS AN OVERLY
COMPLICATED TAX SYSTEM.
WITH THE U.S. ABRUPTLY
OVERHAULING ITS TAX CODE LATE
LAST YEAR, IS IT TIME FOR CANADA
TO RE-ADJUST AS WELL?
JOINING US NOW TO CONSIDER THAT:
IN CALGARY, ALBERTA:
LINDSAY TEDDS, VISITING
PROFESSOR IN THE SCHOOL OF
PUBLIC POLICY AT THE UNIVERSITY OF CALGARY...

Lindsay is in her forties, with chin-length ashy blond hair. She's wearing a black blazer over a green blouse.

Steve continues AND HERE IN OUR STUDIO:
BRUCE BALL, VICE PRESIDENT OF
TAXATION FOR THE CHARTERED
PROFESSIONAL ACCOUNTANTS OF CANADA...

Bruce is in his fifties, clean-shaven, with short wavy white hair. He's wearing glasses, a gray suit, blue gingham shirt, and checkered burgundy tie.

Steve continues AND AMIN MAWANI, HE IS ASSOCIATE
PROFESSOR OF ACCOUNTING AT YORK
UNIVERSITY'S SCHULICH SCHOOL OF BUSINESS.

Amin is in his fifties, clean-shaven, with short brown hair. He's wearing glasses, a gray suit, white shirt, and checked blue tie.

Steve continues IT'S GOOD TO SEE YOU TWO
GENTLEMEN I THINK FOR THE FIRST
TIME HERE ON OUR PROGRAM.
LINDSAY, GOOD TO HAVE YOU ON AGAIN.
YOU'VE BEEN ON NUMEROUS TIMES IN
THE PAST.
LET ME DO A COUPLE OF ITEMS OF
BUSINESS BEFORE WE GET STARTED.
WE'RE GOING TO SORT OF TAKE A
LOOK AT THIS FROM A PERSONAL,
AND THEN A CORPORATE, AND THEN A
SYSTEM-WIDE STANDPOINT, SO WE'LL
SORT OF TAKE THAT PATH DURING
THE COURSE OF OUR DISCUSSION,
AND WE DO ALSO WANT TO SAY FOR
THE RECORD, YOU'RE FROM CPA
CANADA.
YOUR PROVINCIAL SISTER
ORGANIZATION IS A SPONSOR OF
THIS PROGRAM, SO WE JUST THROW
THAT OUT THERE FOR EVERYBODY TO
KNOW.
NOW, WITH THAT, HERE'S JOHN IVISON WRITING...

A quote appears on screen, under the title "Ontario's fiscal update." The quote reads "The provincial update revealed that personal income tax revenues in the c
country's largest province were downgraded to come in nearly 2 billion dollars lower than forecast in the spring budget, despite an upgrade in projected economic growth.
No explanation was offered for this unusual set of circumstances –tax revenues should rise in a growing economy- but the suspicion is that high-earning Canadians are fed up seeing more than 50 cents on every dollar they earn over 200000 dollars taken by the taxman.
In short, they are behaving exactly as all the studies on the subject predicted they would –they are increasingly engaged in what is known euphemistically as 'tax planning.'"
Quoted from John Ivison, National Post. November 20, 2017.

Steve says OKAY.
LINDSAY, START US OFF HERE.
IS THAT WHAT'S GOING ON HERE?

The caption changes to "Lindsay Tedds. University of Calgary."
Then, it changes again to "Let's get personal."

Lindsay says WE ACTUALLY
ARE SEEING THE EXACT SAME
RESULTS COMING OUT OF THE
NUMBERS FROM BRITISH COLUMBIA
AND ALBERTA ALONG WITH ONTARIO.
SO WHAT WE HAVE TO THINK ABOUT
IS WHEN WE HAVE TAX CHANGES,
WE'RE GOING TO HAVE SHORT-TERM
SHIFTS, AND WE'VE ACTUALLY SEEN
THIS BEFORE.
AS MARGINAL TAX RATES ARE
INCREASING, INDIVIDUALS WHO CAN
SHIFT THEIR MONEY INTO A LOW TAX
REGIME DO SO.
WE'RE STILL TRYING TO FIGURE
OUT, THOUGH, WHETHER OR NOT THIS
IS A TEMPORARY SHIFT OR A
PERMANENT SHIFT.

Steve says AMIN, HOW DO YOU SEE IT?

The caption changes to "Amin Mawani. York University."

Amin says SOME OF IT
MIGHT BE DUE TO PEOPLE
ANTICIPATING THE HIGHER TAXES
THAN THEIR INCOME IN A PREVIOUS
PERIOD.
SO ONE PERIOD MAY NOT TELL US
THAT MUCH.

Steve says WE NEED TO SEE A
COUPLE OF MORE PERIODS TO KNOW
FOR SURE.

Amin says THAT'S RIGHT.

Steve says BRUCE?

The caption changes to "Bruce Ball. Chartered Professional Accountants of Canada."

Bruce says I AGREE WITH THAT.
I TOOK A QUICK LOOK AT SOME
NUMBERS AND IT LOOKS LIKE THE
PREVIOUS YEAR WAS A LITTLE
HIGHER THAN THEY THOUGHT AS
WELL.
I CAN SAY FOR SURE THAT A LOT OF
TAXPAYERS AND ADVISORS WERE
LOOKING AT WAYS TO TRY TO
MOVE... A VERY SIMPLE THING,
MOVE INCOME BACK FROM 2016 TO
2015 BEFORE THE RATES WENT UP.
THERE WAS A LOT OF THAT GOING
ON.
WE KNEW ABOUT A MONTH AHEAD I
THINK THAT THE CHANGES WERE
COMING FOR SURE AND A LOT OF
PEOPLE WERE TAKING STEPS TO SORT
OF BACK OFF ON DEDUCTIONS OR
BRING INCOME IN EARLY.

Steve says LINDSAY, DOES THAT
SUGGEST THEN THAT THE ATTEMPT TO
REALIZE MORE REVENUE BY RAISING
PERSONAL INCOME TAXES, AS
GOVERNMENTS DO FROM TIME TO
TIME, FAILED?

Lindsay says WELL, WE
KNOW THAT IT HAS CAUSED A DENT
IN THE 2016 REVENUES.
AGAIN, WE DON'T KNOW WHETHER OR
NOT THIS IS A PERMANENT OR A
TEMPORARY SHIFT.
WE CAN LOOK BACK THROUGHOUT THE
DATA, AND WHEN WE DID TAX REFORM
IN THE '80s, WE SAW A
TEMPORARY SHIFT.
SO THERE'S SOME EVIDENCE TO
SUGGEST THAT THIS IS JUST A
ONE-YEAR THING.
BUT WE DO ACTUALLY HAVE TO BE
CONCERNED ABOUT THE ABILITY OF
HIGH INCOME INDIVIDUALS BEING
ABLE TO TAX-PLAN THEIR WAY OUT
OF THE POLICY INTENT OF THE TAX
RATES THAT ARE BEING BROUGHT IN.

Steve says WE HAVE TO BE
CONCERNED ABOUT THAT, WHY?

Lindsay says BECAUSE WE'RE TRYING TO
ACHIEVE A NUMBER OF DIFFERENT
THINGS WITH OUR TAX POLICY.
ONE OF THE THINGS THAT WE'RE
TRYING TO ADDRESS IS INCOME
INEQUALITY.
THE INDIVIDUALS WHO ARE BEST
ABLE TO TAX-PLAN ARE THOSE
INDIVIDUALS WHO WE ARE SEEING
HAVING INCREASED GROSS IN THEIR
INCOME AND THE INDIVIDUALS AT
THE BOTTOM ARE NOT SEEING THAT
SAME GROWTH.
SO WE ARE TALKING ABOUT TAX
POLICY AS PART OF WHAT I THINK
IN ONTARIO HAS BEEN COINED AN
INCLUSIVE GROWTH STRATEGY.

Steve says I DO REMEMBER...
THIS HAS GOT TO BE GOING BACK 30
YEARS NOW, BRUCE, THAT THE
FINANCE MINISTER OF THE DAY,
MICHAEL WILSON FEDERALLY SAID
THE PROBLEM WITH CANADA IS THERE
JUST AREN'T ENOUGH SUPER-RICH
PEOPLE TO TAX.
IS IT FAIR TO SAY THAT IF YOU
WANT TO GO AFTER THE WELL-OFF IN
THIS COUNTRY, THEY HAVE AVENUES
BY WHICH TO SHELTER INCOME THAT
OTHERS DON'T HAVE, AND
THEREFORE, THE POLICY ON THE
FACE OF IT JUST ISN'T GOING TO WORK?

Bruce says I THINK THAT'S
PART OF IT.
I THINK PART OF IT IS PROBABLY
THE NATURE OF THEIR AFFAIRS
THOUGH AS WELL.
THEY TEND TO HAVE MORE
COMPLICATED, I GUESS, SITUATIONS
GENERALLY.
THEY MAY HAVE CORPORATIONS AND
OTHER INTERESTS WHERE THEY HAVE
MORE FLEXIBILITY AS WELL.
YOU KNOW, I ACTUALLY... THE
DEPARTMENT OF FINANCE FEDERALLY
REACHED OUT TO A NUMBER OF
PEOPLE JUST TO ASK THEM, YOU
KNOW, WHAT ARE THE LIKELY
RESPONSES TO THE PRIVATE COMPANY
CHANGES?
SO THEY WANTED TO GET AN IDEA
JUST GENERALLY WHAT PEOPLE WERE
GOING TO DO.
I THINK YOU DO HAVE MORE
FLEXIBILITY, THOUGH.
I'D AGREE WITH LINDSAY, IT MIGHT
BE SHORT TERM, SOME OF IT AS
WELL.
SOME OF THE PLANNING MAY HAVE
BEEN AGAIN TO ADVANCE MONEY THAT
THEY WERE GOING TO TAKE OUT THE
NEXT FEW YEARS ANYWAY SO...

Steve says LET ME FOLLOW UP
WITH THIS.
I DO REMEMBER IN THE LAST
FEDERAL ELECTION CAMPAIGN BACK
IN 2015, WAS IT 15 ALREADY,
2015?
THOMAS MULCAIR, THE LEADER OF
THE NDP, SAID ONCE YOU GET
PERSONAL INCOME TAX RATES OVER
50 percent, IT GETS WHAT HE CALLED
CONFISCATORY AND PEOPLE ARE
GOING TO TRY TO PAY THE LEAST
AMOUNT AS POSSIBLE?

Amin says GOVERNMENTS
SHOULD TRY TO KEEP IT BELOW 50,
PERHAPS, 49.5 AND SO ON, IN CASE
THERE IS SOME.
CERTAINLY I HAVE NOT SEEN ANY
STUDIES THAT COMPLIANCE OR LACK
OF COMPLIANCE DRAMATICALLY
INCREASES AFTER THAT NUMBER.

Steve says LET ME FIND OUT FROM
LINDSAY.
DO YOU KNOW OF ANYTHING THAT
SAYS 50 percent IS SOMEHOW A MAGIC
NUMBER AND ONCE YOU RAISE THE
INCOME TAX RATES ABOVE THAT, IT
GETS CONFISCATORY AND PEOPLE
START AVOIDING TAXATION AS MUCH
AS POSSIBLE?

Lindsay says THE ORIGIN
OF THAT COMMENT IS ACTUALLY IN
THE CARTER COMMISSION, WHICH IS
THE COMMISSION THAT WE FORMED IN
THE '60s TO DO COMPREHENSIVE
TAX REFORM, AND IT WAS BASICALLY
SOLELY OFF OF A FEELING.
WE THINK IT IS A PSYCHOLOGICAL
BARRIER.
SINCE THEN, OF COURSE, THERE'S
BEEN A LOT MORE WORK DONE BY
ECONOMISTS AND OTHERS TRYING TO
LOOK AT THE BEHAVIOURAL EFFECTS
ASSOCIATED WITH TAX REFORM.
WE DO HAVE AN INTERESTING STUDY
THAT KEVIN MILLIGAN IS A
CO-AUTHOR ON THAT LOOKS AT
WHETHER OR NOT IT MATTERS
WHETHER THE HIGH TAX RATES AS A
RESULT OF FEDERAL REFORM OR
PROVINCIAL REFORM.
AND THE HIGHER THE PROVINCIAL
TAXES ARE, WE ACTUALLY DO SEE A
LITTLE MORE MOBILITY, WHEREAS
WHEN THE MAJORITY OF THAT TAX IS
COMING FROM THE FEDERAL
GOVERNMENT, WE DON'T SEE AS MUCH MOBILITY.

Steve says IN WHICH CASE, HOW
EITHER EASY OR DIFFICULT IS IT
FOR THOSE WHO ARE EXTREMELY
WELL-OFF TO MANAGE THEIR AFFAIRS
TO AVOID PAYING HIGHER INCOME
TAXES IF THEY WANT TO DO THAT?

The caption changes to "Lindsay Tedds, @ LindsayTedds."

Lindsay says WELL, I THINK WHAT WE'RE
ACTUALLY SEEING IS MOST OF THESE
BEHAVIOURAL CHANGES ARE DUE TO
THE RESULT OF CORPORATE TAX
PLANNING, INCORPORATING IN
ALBERTA AS OPPOSED TO ONTARIO,
TO EFFECT THESE TAX CHANGES.

The caption changes to "Connect with us: @theagenda, TVO.org, Facebook, YouTube, Periscope, Instagram."

Steve says LET ME FOLLOW UP ON
THAT.
BECAUSE OF COURSE THERE WAS A
HUGE KERFUFFLE LAST YEAR FOR
SEVERAL MONTHS OVER THE FEDERAL
GOVERNMENT'S ATTEMPTS TO, AS WE
SUGGESTED IN THE OPENING, CUT
DOWN ON THE INCOME SPRINKLING
THAT GOES ON, YOU KNOW, SORT OF
GO AFTER THESE CORPORATIONS
WHERE INDIVIDUALS HAVE
INCORPORATED, LIKE FARMERS OR
DOCTORS OR WHATEVER.
OBVIOUSLY THE FEDERAL GOVERNMENT
WANTED MORE REVENUE.
OBVIOUSLY, FARMERS, DOCTORS,
ETC., WERE TRYING TO RESIST
PAYING HIGHER TAXATION.
WHAT'S YOUR VIEW ON THE RIGHT
POLICY PRESCRIPTION IN THAT CASE?

Bruce says YEAH.
IT'S ACTUALLY A COMPLICATED ISSUE.
THE ONE THING I'D SAY AT THE
BEGINNING, THE GOVERNMENT
FOCUSED ON THREE DIFFERENT
AREAS.
THERE WERE LEGITIMATE TAX POLICY
ISSUES TO LOOK AT IN EACH OF
THEM.
I THINK PART OF THE REASON WHY
IT BECAME SUCH A SIGNIFICANT
MEDIA EVENT AND PEOPLE WERE
TALKING ABOUT IT, THOUGH, IS
THAT WE WOULD HAVE LIKED TO HAVE
SEEN THE GOVERNMENT ACTUALLY
CONSULT ON IT.
SO SAY WE HAVE THIS PROBLEM WE
THINK IN THE TAX SYSTEM...

Steve says YOU'RE SAYING THEY DIDN'T?

Bruce says WELL, THEY SAID THEY WERE
GOING TO, AND THEN WHAT HAPPENED
WAS WE HAD DETAILED LEGISLATION
FOR TWO OUT OF THE THREE PARTS
AND THEN A FAIRLY DETAILED PLAN
ON THE THIRD PART.
SO WE WOULD HAVE LIKED TO HAVE
SEEN THEM COME OUT AND SAY WE
THINK THERE ARE LEGITIMATE
ISSUES HERE AND WHAT'S THE BEST
WAY TO DEAL WITH THEM?
I THINK THAT'S WHY THE THING
WENT SIDEWAYS ON THEM LAST YEAR.

Steve says DON'T TALK TO ME
ABOUT THE POLITICS BUT THE
ACTUAL POLICY.
IS IT A GOOD IDEA TO CUT BACK ON
THE INCOME SPRINKLING?
IS IT A GOOD IDEA TO CHIP AWAY
AT INDIVIDUALS THAT INCORPORATE
TO AVOID TAX?

Amin says EVERY TIME YOU
IMPOSE LOWER TAXES, IF YOU GO
AROUND AND DO SOMETHING LIKE SET
UP A CORPORATION, HIRE AN
ACCOUNTANT OR LAWYER, ALL THOSE
ARE DEAD WEIGHT COSTS TO
SOCIETY.
IT WOULD BE BEST TO BE DONE
WITHOUT THOSE THINGS.
IDEALLY YOU WANT TO GO AHEAD AS
IF YOU WERE IN A WORLD WITHOUT
TAXES AND THEN YOU'RE TAXED...
YOU DON'T DO ANYTHING DIFFERENT
FOR TAX PLANNING.
SO ACCOUNTANTS AND LAWYERS ARE
IN SOME WAYS A DEADWEIGHT COST
TO SOCIETY AND IN SOME WAYS YOU
CAN MINIMIZE IT.
SO THE INCOME SPRINKLING WAS A
BIT... I MEAN, CORPORATIONS...
THIS IS ALL, AGAIN, TO DO WITH
INDIVIDUAL INCOME TAX.

Steve says I GUESS I'M TRYING
TO FIND OUT, DO YOU THINK THE
GOVERNMENT WAS ON THE RIGHT
TRACK TRYING TO CUT DOWN ON
THESE KINDS OF LEGAL TAX
AVOIDANCE MEASURES?

Amin says I THINK THEY WERE.
ON THE INCOME SPRINKLING SIDE,
THE ARGUMENTS WERE YOU'RE NOT
RETAINING THOSE FUNDS IN THE
CORPORATION, SO YOU'RE ONLY...
YOU'RE DISTRIBUTING IT TO YOUR
FAMILY MEMBERS AS DIVIDENDS, SO
YOU'RE NOT REINVESTING IN THE
CORPORATION.
SO IT WAS MOSTLY TAX MOTIVATED.
SO ONE CAN ARGUE THAT
GOVERNMENTS SHOULD DO SOMETHING
ABOUT IT IN THE INTERESTS OF
NEUTRALITY OR EQUITY ACROSS
DIFFERENT TAXPAYERS.
SOMEONE WHO CAN INCORPORATE AND
SOMEONE WHO CANNOT.

Bruce says THAT'S KIND OF
WHY WE WANTED THEM TO CONSULT A
BIT, BECAUSE THERE WERE ISSUES
THERE.
BUT THE FLIP SIDE IS THAT THESE
PEOPLE, A LOT OF THEM WORKED IN
THE BUSINESS AS WELL.
SO THEY WERE RECEIVING
DIVIDENDS, THEY WERE
CONTRIBUTING.
AND THE ORIGINAL MECHANISM, AND
THEY'VE AMENDED IT SOMEWHAT, BUT
THE CORE ISSUES ARE STILL KIND
OF PRESENT, IS THAT YOU'D HAVE
TO SORT OF EVALUATE THE VALUE
THAT THEY ADD TO THE BUSINESS
AND COMPARE IT TO THE DIVIDEND.
I THINK WE'D AGREE THERE WERE
ISSUES THERE TO DEAL WITH, BUT
THAT'S WHY WE WOULD HAVE LIKED
TO HAVE SEEN A CONSULTATION TO
COME UP WITH A WAY TO DO IT THAT
MAKES SENSE FROM BOTH FAIRNESS
AND SIMPLICITY AND COMPLIANCE.

Steve says I'M NOT SURE, BUT I
THINK HE JUST CALLED YOU DEAD WEIGHT.

Amin says I'M AN ACCOUNTANT TOO.

Steve says YOU'RE TAKING A SHOT
AT YOURSELF AS WELL.
LINDSAY, CAN YOU WEIGH IN ON THIS?
WHAT'S THE ADVISABILITY OF THE
GOVERNMENT'S ATTEMPT TO CUT DOWN
ON WHAT HAS BEEN HERETOFORE
LEGAL TAX AVOIDANCE?

Lindsay says FIRST I'LL
AGREE THAT THE CONSULTATIONS ON
THIS WERE TERRIBLE.
THEY WERE HORRIBLY DONE.
AND I THINK THE DEPARTMENT OF
FINANCE AND THE GOVERNMENT OF
CANADA HAVE LEARNED A LOT FROM
THAT PROCESS, ABOUT HOW TO
COMMUNICATE WITH ORDINARY
CANADIANS ABOUT COMPLEX TAX
REFORM.
BUT IN TERMS OF WHAT THEY WERE
TRYING TO ACCOMPLISH, THERE IS
IN FACT SOME UNDERLYING
RATIONALE THERE.
WE HAVE AN INCOME TAX SYSTEM
THAT, LIKE IT OR NOT, IS BASED
ON THE INDIVIDUAL, NOT THE
HOUSEHOLD.
AND SO INDIVIDUALS WITH THESE
PRIVATE CORPORATIONS WERE ABLE
TO SKIRT AROUND THAT NOTION, AND
BY INCOME-SPLITTING, REDUCING
THEIR OVERALL TAX BURDEN, AND
THIS WASN'T AVAILABLE TO OTHER
INDIVIDUALS.
SO INDIVIDUALS WHO ARE QUITE
BULLY ON INCOME-SPLITTING ARE
ACTUALLY QUITE SUPPORTIVE OF
MOVING OUR SYSTEM FROM AN
INDIVIDUAL SYSTEM TO A
HOUSEHOLD-BASED SYSTEM.
BUT THERE ARE REAL CONSEQUENCES
OF DOING SO, AND MOST OF THE
CONSEQUENCES FALL ON WOMEN, WHO
ARE THE SECONDARY EARNERS, WHO
UNDER A HOUSEHOLD SYSTEM WOULD
THEN FACE HIGHER MARGINAL TAX
RATES AS SOON AS THEY ENTER THE
WORK FORCE.
SO WE DO HAVE TO HAVE VERY SOLID
CONVERSATIONS ABOUT OUR SYSTEM,
OUR BENCHMARK SYSTEM, AND THAT
IS WHY A LOT OF US, THROUGH THIS
PROCESS, STARTED CALLING FOR
COMPREHENSIVE TAX REFORM.

Steve says JUST BEFORE WE GO TO
COMPREHENSIVE TAX REFORM, I DO
WANT TO FOLLOW UP WITH YOU,
LINDSAY, ON SOMETHING WE HEAR
ALL THE TIME, WHICH IS THAT IF
YOU RAISE PERSONAL INCOME TAX
RATES TOO HIGH, PEOPLE WILL
SIMPLY LEAVE THE COUNTRY.
DO YOU HAVE ANY EVIDENCE THAT
THAT'S IN FACT THE CASE?

Lindsay says WE DID A LOT OF STUDIES BACK
IN THE '90s WHEN WE WERE
EXPERIENCING BRAIN DRAIN.
THERE IS VERY LITTLE EVIDENCE
THAT IT'S TAX RATES THAT DRIVE IT.
EXCHANGE RATES, OPPORTUNITY, AND
PARTICULARLY WITH THE DOCTORS,
IT WAS THE UNDERINVESTMENT IN
HEALTH CARE IN CANADA THAT
CAUSED A LOT OF THEM TO FLEE.
SO WHILE THERE IS SOME PEOPLE
WHO DO RESPOND TO THE TAXES,
OVERALL IT IS NOT A KEY DRIVER
IN INDIVIDUALS LEAVING THE COUNTRY.

Steve says ANYTHING TO ADD ON
THAT, AMIN?

Amin says YEAH.
OUR HIGHER CANADIAN TAX RATES DO
BUY US UNIVERSAL HEALTH CARE,
GOOD TRANSIT SYSTEM,
INFRASTRUCTURE, EDUCATED WORK
FORCE, PROVEN ABILITY TO ATTRACT
IMMIGRANTS AND SO ON.
ALL OF THOSE THINGS ARE
VALUABLE.
THERE ARE LOTS OF PEOPLE MOVING
IN FROM COUNTRIES THAT HAVE
LOWER TAX RATES THAN US AND
THEY'RE MOVING TO OUR COUNTRY
AND NOT TO THE U.S.

Steve says LET ME, BRUCE,
FOLLOW UP WITH YOU, COMING RIGHT
OUT OF THAT REMARK.
WHICH IS, IF OUR HIGH TAX...
HIGHER THAN THE AMERICAN TAX
RATES, DO PAY FOR MEDICARE, DO
PAY FOR TRANSIT, OUR HEALTH CARE
SYSTEM, GOOD EDUCATION SYSTEM,
ALL OF THOSE THINGS WE LIKE,
SHOULD IT STILL BE THE GOAL OF
EVERY CITIZEN OF THIS COUNTRY TO
PAY AS LITTLE TAX AS POSSIBLE?

Bruce says MM-HMM.
YEAH, IT'S A GOOD QUESTION.
ACTUALLY MAYBE A QUICK THING ON
THE LAST POINT TOO.
I CAN'T SAY THAT PEOPLE ARE
LEAVING CANADA, BUT WE CERTAINLY
ARE HEARING A LOT MORE TALK
ABOUT PEOPLE ASKING WHAT'S
INVOLVED ON THAT QUESTION ANYWAY.

Steve says THERE'S A BIG
DIFFERENCE BETWEEN TALK AND...

Bruce says THERE IS, WHEN IT COMES TIME
TO PULL THE TRIGGER AND I'M SURE
YOU LOOK AT ALL THOSE DIFFERENT
THINGS.
IN TERMS OF THE TAX PLANNING
PART, THAT'S AN INTERESTING
DISCUSSION FROM THE POINT OF
VIEW, EVERYBODY'S VIEW ON TAXES
IS A LITTLE BIT DIFFERENT TOO.
PERSONALLY, I THINK THE BEST
STATE OF AFFAIRS IS A
STRAIGHT-FORWARD TAX SYSTEM
WHERE IT'S CLEAR WHAT YOUR
OBLIGATIONS ARE SO IT'S
CONSISTENT FROM PERSON TO
PERSON.

Steve says DO WE HAVE THAT?

Bruce says WE COULD DO BETTER.
I THINK THAT WOULD BE PART OF A
REVIEW AS WELL, TO SEE, ARE
THERE AREAS THAT COULD BE MORE
STRAIGHTFORWARD, THAT SORT OF
THING, CLEARER, SIMPLER, MORE
SIMPLE TO DEAL WITH?

Steve says OKAY.
THAT IS THE PERSONAL TAXATION
PART OF OUR DISCUSSION.
LET'S NOW MOVE OVER TO THE
CORPORATE TAXATION PART OF OUR
DISCUSSION, AND LINDSAY, I'LL
START WITH YOU AGAIN BECAUSE OF
COURSE THE AMERICAN CONGRESS,
JUST BEFORE YEAR END, PASSED
PROBABLY THE MOST SIGNIFICANT
TAX REFORM, CORPORATE TAX
REFORM, IN ONE OR TWO
GENERATIONS.
AND SOME PEOPLE ARE SUGGESTING
WITH THESE NEW LOWER TAX RATES
IN THE STATES THAT CANADA AND,
WELL, MANY PROVINCES ARE GOING
TO HAVE TO FOLLOW SUIT OR WE RUN
THE RISK OF BEING UNCOMPETITIVE
AND LOSING JOBS AND BUSINESS.
WHAT'S YOUR VIEW ON THAT?

The caption changes to "Taxing local in a global economy."

Lindsay says WELL, I
MEAN, ONE OF THE THINGS WITH THE
U.S. TAX REFORM IS NOT ALL OF
THE MEASURES ARE PERMANENT.
A NUMBER OF THEM SUNSET.
SO LIKE ON THE CORPORATE TAX
SIDE, ONE OF THE KEY MEASURES IS
OF COURSE BUSINESSES BEING ABLE
TO FULL-EXPENSE THEIR EXPENSES.
AND THAT ACTUALLY HAS A SUNSET
DATE.
SO I THINK IF CANADA IS GOING TO
RESPOND TO THIS TAX REFORM, WE
HAVE TO MAKE SURE WE UNDERSTAND
THE DIFFERENCE BETWEEN WHAT'S
PERMANENT AND WHAT'S TEMPORARY.
AND, SURE, CORPORATE TAX RATES
THEMSELVES ARE PERMANENT...
WELL, I MEAN, ANYBODY CAN COME
ALONG AND CHANGE THEM, BUT THEY
DON'T HAVE A SUNSET DATE.
AND THEY'RE SIMILAR TO THE TAX
RATES WE HAVE COMBINED FEDERALLY
AND PROVINCIALLY, AND I THINK
THAT INSTEAD OF COMPETING ON TAX
RATES, WE ACTUALLY NEED TO BE
COMPETING ON OTHER SIDES OF
THINGS AND LOOKING AT THE BURDEN
ON BUSINESSES THROUGH
REGULATIONS AND OTHER MEASURES,
NOT NECESSARILY ON TAX RATES.

Steve says SO IF YOU WERE
CALLING THE SHOTS, SAY IN THE
PREMIER'S OFFICE OR THE PRIME
MINISTER'S OFFICE, AM I HEARING
THIS RIGHT, YOU WOULD TELL THEM
DON'T SWEAT THE TAX RATE STUFF
TOO MUCH BUT DEFINITELY GET YOUR
RED TAPE AND REGULATIONS DOWN?

Lindsay says THAT WOULD BE MY FIRST
RECOMMENDATION, ABSOLUTELY.

Steve says AMIN, HOW MUCH
PRESSURE IS THERE ON OUR
GOVERNMENTS TO FOLLOW SUIT AND
REDUCE CORPORATE TAX
SIGNIFICANTLY AS THE AMERICANS JUST HAVE?

Amin says WE ARE NOW
ROUGHLY EQUAL TO THE TAX RATES.
WE HAD A 14-POINT ADVANTAGE FOR
QUITE A NUMBER OF YEARS.
WE DID NOT SEE TOO MANY U.S.
COMPANIES MOVING DOWN HERE.
NOW THAT WE'RE AT PAR, THERE
WILL BE SOME PRESSURE, NO DOUBT,
LOSING OUR 14-POINT COMPARATIVE
ADVANTAGE.
WE HAVE TO, AGAIN, GO BACK AND
EMPHASIZE OUR STRENGTHS: A MUCH
MORE EDUCATED WORK FORCE,
TRANSIT, INFRASTRUCTURE, HEALTH
CARE, AND ALL THAT.
I THINK, YEAH, AT THE MARGIN, WE
MIGHT WANT TO MAKE SOME OF OUR
TAX DEPRECIATION MORE GENEROUS
SO PEOPLE WHO WANT TO INVEST,
COMPANIES WHO WANT TO INVEST IN
NEW EQUIPMENT CAN WRITE IT OFF
MUCH FASTER THAN OTHERWISE,
WHICH IS WHAT THE U.S. HAS DONE
AS WELL.
BUT THAT ONLY HELPS EXISTING
BUSINESSES.
FOR START-UPS, THE BIG ISSUE
MIGHT BE: WHAT HAPPENS WHEN YOU
HAVE LOSSES?
MAYBE MORE GENEROUS ABILITY TO
USE UP LOSSES AGAINST OTHER
INCOME BECAUSE YOU WANT TO
BASICALLY GIVE AN IMPACT ON THE
DOWNSIDE OF YOUR BUSINESS TURNS
OUT TO FAIL.
TAX RATES... LOWER TAX RATES
ONLY GIVE YOU RELIEF WHEN YOU
MAKE THE PROFITS.
WHEN YOU MAKE THE LOSSES, YOU
WANT SOME OTHER MECHANISM, AND
THAT INCENTS YOU TO TAKE SOME RISK.

Steve says BRUCE, LET'S JUST
PUT SOME REAL NUMBERS ON THIS.
I THINK THE AMERICAN... IF YOU
COMBINE THE NATIONAL AND THE
STATE CORPORATE TAX RATES, YOU
ARE UP AROUND... WHAT?
35 percent OR SOMETHING LIKE THAT
BEFORE TAX REFORM CAME IN?

Bruce says IT DOES VARY
QUITE A BIT.
YEAH, IT WENT FROM 35 DOWN TO 21
FEDERAL, AND THEN YOU HAVE TO
ADD THE STATE PART IN TOO.

Amin says IN THE U.S.

Bruce says IN THE U.S.

Steve says THAT ADVANTAGE WE
HAD, THAT GAP IS NOW GONE.

Bruce says YEAH.

Steve says HOW MUCH PRESSURE IS
THERE ON OUR GOVERNMENTS TO
MATCH WHAT THE U.S. HAS JUST DONE?

Bruce says I THINK OUTWARDLY THERE MIGHT
BE SOME.
I AGREE.
YOU HAVE TO LOOK AT RATES BUT A
NUMBER OF OTHER ISSUES TOO.
THE CAPITAL DEDUCTION, YOU KNOW,
BEING ABLE TO DEDUCT
INVESTMENTS... YOU KNOW, CAPITAL
EXPENDITURES AND THAT KIND OF
THING, THAT IS A LITTLE MORE
WORRISOME FROM THE POINT OF
VIEW, THAT'S SOMETHING NEW AND
IT COULD BE A SIGNIFICANT
DIFFERENCE BETWEEN CANADA AND
THE U.S.
YOU KNOW, THINGS LIKE THAT MIGHT
BE THE BIGGER ISSUE THAN THE
RATES THEMSELVES.
BUT THE OTHER THING I'D WORRY A
BIT ABOUT IN TERMS OF GOING...
YOU KNOW, JUMPING IN AND
REDUCING RATES WITHOUT DOING A
FULL REVIEW IS JUST MAKING SURE
YOU GET VALUE FOR IT AS WELL.

Steve says WHAT DOES THAT MEAN?

Bruce says THERE IS A CHANCE YOU COULD
LOWER WHAT YOU'RE BRINGING IN IN
TERMS OF TAX REVENUE AND IT
DOESN'T HAVE A SIGNIFICANT
IMPACT IN TERMS OF ATTRACTING
BUSINESSES TO CANADA OR GROWTH.
I THINK, AGAIN, WE'D BE
LOOKING... WE'RE HOPING FOR AN
INDEPENDENT REVIEW OF THE TAX
SYSTEM AND PART OF IT WILL BE
COMPARING US TO THE U.S.
ESPECIALLY BUT OTHER COUNTRIES
JUST TO MAKE SURE WE'RE COMPETITIVE.

Steve says HOLD OFF ON THAT.
WE'RE GOING TO GET TO THAT
COMING UP.
LINDSAY, WE'RE HAVING AN
ELECTION IN THIS PROVINCE IN
JUNE AND THERE'S GOING TO BE A
LOT OF PRESSURE ON ALL OF THE
POLITICAL PARTIES TO SAY WHAT
THEIR POSITION IS, EITHER ON
WHETHER THE CORPORATE TAX OUGHT
TO BE RAISED IN THE HOPES OF
REALIZING MORE REVENUE, OR
LOWERED IN THE HOPES OF BEING
MORE COMPETITIVE WITH THE UNITED
STATES.
I GUESS MY QUESTION HERE IS: DO
YOU THINK THAT PEOPLE IN
ONTARIO, OR FOR THAT MATTER
ACROSS THE COUNTRY, UNDERSTAND
THAT WHILE THESE DECISIONS MAY
BE LOCAL TO THEM, THERE IS
ACTUALLY A POTENTIAL GLOBAL SET
OF CONSEQUENCES TO WHATEVER
DECISIONS OUR POLITICAL LEADERS MAKE?

Lindsay says YOU'RE
ASKING ME IF PEOPLE REALLY
UNDERSTAND THE TAX SYSTEM.
MY ANSWER IS NO.
WE REALLY DON'T HAVE, AT AN
ORDINARY EVERYDAY LEVEL, A
DEEP-DIVE UNDERSTANDING OF HOW
ALL OF THESE THINGS INTERACT.
AND THAT IS WHY WE DO HAVE TO
MAKE SURE THAT WE LOOK VERY
CAREFULLY AT THE EVIDENCE AND
APPROACH TAX REFORM FROM AN
EVIDENCE-BASED PERSPECTIVE.
THERE ARE WAY TOO MANY MYTHS OUT
THERE ABOUT TAXES AND THE
EFFECTS ON THE ECONOMY AND
INDIVIDUALS, AND WE HAVE TO STOP
LETTING THESE MYTHS DRIVE TAX
POLICY.

Steve says WELL, LET ME FOLLOW
UP WITH YOU, LINDSAY, BECAUSE I
GUESS WHAT I'M REFERRING TO HERE
IS, THERE'S A PETITION GOING ON
ONLINE RIGHT NOW, AND MORE THAN
10,000 CANADIANS HAVE ALREADY
SIGNED IT, TO THE EXTENT THAT
YOU CAN SIGN AN ONLINE PETITION,
AND THE PETITION BASICALLY SAYS:
WE WANT YOU TO RAISE CORPORATE
TAXES.
DON'T COME AFTER US, GO AFTER
THE CORPORATIONS.
AND I WONDER IF YOU BELIEVE
THERE IS AN UNDERSTANDING AMONG
THE CITIZENS OF THE COUNTRY THAT
IT MAY BE WELL AND GOOD WE WANT
TO GO TO THE FORTUNE 500
COMPANIES IN THIS COUNTRY AND
KNOCK UP THEIR TAX RATES, BUT DO
THEY HAVE AN UNDERSTANDING OF
HOW THAT MAY RENDER THEM
UNCOMPETITIVE WHEN IT COMES TO
COMPETING AGAINST OTHER
MULTI-NATIONAL COMPANIES TO GET
BUSINESS HERE IN CANADA?

Lindsay says I THINK THE KEY THING THAT
PEOPLE DON'T UNDERSTAND ABOUT
THE CORPORATE TAX SYSTEM IS THAT
THINGS DON'T PAY TAXES.
PEOPLE PAY TAXES.
SO WHEN WE LEVY THE CORPORATE
TAX, WE HAVE TO MAKE SURE WE
KNOW WHO'S BEARING THE BURDEN.
IS IT WORKERS?
IS IT CONSUMERS?
OR IS IT THE SHAREHOLDERS?
THE INTENT OF THE CORPORATE TAX
IS ACTUALLY TO PLUG HOLES WITHIN
TAXATION OF SHAREHOLDERS.
BUT WHEN WE LOOK AT THE
EVIDENCE, WE KNOW THAT SOME OF
THAT BURDEN IS ACTUALLY FALLING
ON WORKERS AND CONSUMERS.
SO RAISING CORPORATE TAX RATES
MAY SEEM PALATABLE BECAUSE YOU
DON'T HAVE TO PAY THEM AND
THAT'S HOW WE SEEM TO ENGAGE IN
TAX REFORM, AS LONG AS IT
DOESN'T AFFECT ME, THEN IT'S
GOOD.
BUT IT DOES AFFECT YOU AS
WORKERS AND CONSUMERS AS WELL AS
WE'RE MOSTLY ALL SHAREHOLDERS
THROUGH PENSIONS AND INVESTMENTS
IN THESE CORPORATIONS.
AND SO WE HAVE TO APPROACH IT
FROM THAT PERSPECTIVE, NOT THAT,
YOU KNOW, BUSINESSES SHOULD BEAR
A BIGGER BURDEN BECAUSE WE DON'T
SEE WHERE THAT TAX INCIDENCE FALLS.

Steve says I'LL GIVE, AMIN, A
REAL-LIFE EXAMPLE.
I REMEMBER TALKING TO THE
PRESIDENT OF GENERAL ELECTRIC IN
CANADA, AND HER VIEW WAS, IF YOU
WANT TO RAISE CORPORATE TAXES,
THAT'S FINE.
BUT YOU'D BETTER REDUCE
SOMETHING ELSE IN MY COSTS OR
ELSE THERE'S NOT A CHANCE THAT
MY GE CANADA IS GOING TO BE ABLE
TO COMPETE AGAINST GE IN ANY OF
THE OTHER DOZENS OF COUNTRIES
IT'S IN AROUND THE WORLD TO GET
THAT KIND OF BUSINESS.

Amin says TRUE.
FIRST OF ALL, TAX CUTS ARE NOT
THE ONLY PART OF TAX REFORM.
THERE'S A TAX BASE.
IN THE CASE OF GE, THEY HAVE
CUSTOMERS HERE IN CANADA THAT
THEY'RE TRYING TO... YOU KNOW,
ONE OF THE THINGS WE HAVE TO
OFFSET WITH THE TAX RATES IS THE
TAX SUBSIDIES.
THERE'S A LOT OF TAX
EXPENDITURES AIMED AT
BUSINESSES.
JUST FEDERALLY ALONE, THERE'S
14 BILLION DOLLARS WORTH OF TAX
SUBSIDIES GOING TO BUSINESSES.
PROVINCIALLY, THERE'S THE SAME
AMOUNT.

Steve says HOW MUCH OF THAT
14 BILLION DOLLARS DO YOU THINK IS
ACTUALLY USEFUL?

Amin says IT'S HARD TO SAY.
WE DON'T DO PROGRAM EVALUATION.
FOR EXAMPLE, I BELIEVE R and D TAX
CREDIT IS 3.3 BILLION DOLLARS.
OFTEN THESE THINGS ARE OFFERED
THROUGH THE TAX SYSTEM AS
DEDUCTIONS OR CREDITS.
UNLIKE GOVERNMENT SPENDING,
OFTEN IT'S NOT EVALUATED ON A
YEAR-TO-YEAR BASIS TO SEE IF THE
BENEFITS EXCEED THE COST.

Steve says SOMEONE SHOULD BE
DOING THAT?

Amin says ABSOLUTELY.

Steve says IS THAT THE AUDITOR
GENERAL'S JOB OR WHAT?

Amin says YES, THE AUDITOR GENERAL HAS
RAISED THE ISSUE IT SHOULD BE
DONE MORE THOROUGHLY AND THE
PARLIAMENTARIANS SHOULD LOOK AT
IT TO SEE IF IT OUGHT TO BE
RETIRED, THERE SHOULD BE SUNSET
PROVISIONS TO SOME OF THEM.
FOR EXAMPLE, FOR THE SMALL
BUSINESSES DOING R and D, 43 CENTS
OF EVERY DOLLAR IS FUNDED BY THE GOVERNMENT.

Steve says THROUGH A TAX SUBSIDIES?

Amin says YES.
THAT REQUIRES HIGHER TAXES ON
THE OTHER SMALL BUSINESSES TO
PAY FOR THOSE WHO ARE DOING THE
R and D, AND THAT DOLLAR OF SPENDING
INCLUDES REAL R and D OUTFLOWS AS
WELL AS ACCOUNTANTS' AND
LAWYERS' FEES.
MAYBE THE REAL R and D WAS 90 CENTS
AND THE OTHER 10 CENTS WAS
ACCOUNTANTS AND LAWYERS.
IT WASN'T 43 ON THE DOLLAR BUT
90 CENTS.

Steve says MORE THAN WE THOUGHT
IT WAS.

Lindsay says IF I CAN CHIME IN.
THERE WAS A PAPER RELEASED LAST
WEEK AUTHORED BY JOHN LESTER, BY
THE SCHOOL OF PUBLIC POLICY AT
THE UNIVERSITY OF CALGARY WHO
LOOKED AT THE COST ANALYSIS OF
BUSINESS SUBSIDIES AT THE
FEDERAL LEVEL AND PROVINCES.
ONLY TWO THIRDS WERE DONE.

Steve says TO SATISFY SOME CONSTITUENCY.
YOU WANTED TO ADD?

The caption changes to "Connect with us: @theagenda, TVO.org, Facebook, YouTube, Periscope, Instagram."

Bruce says THE GOVERNMENT
DID DO AN EXPENDITURE REVIEW
EITHER LAST YEAR OR THE YEAR
BEFORE.
THAT WOULD BE SOMETHING WE'D
LIKE TO SEE AS PART OF A REVIEW,
MORE GENERAL REVIEW, JUST MAKE
SURE THESE INCENTIVES ARE
ACTUALLY WORKING, LIKE THE
PUBLIC TRANSIT ONE WAS
DISCONTINUED BECAUSE IT SEEMED
TO BE HAVING LITTLE IMPACT ON
WHAT PEOPLE DO...

Steve says THE SUBSIDY STEPHEN
HARPER BROUGHT IN AS PRIME
MINISTER TO GET PEOPLE TO RIDE
PUBLIC TRANSIT MORE.

Bruce says I THINK THAT'S IMPORTANT TO
GO LOOK AT WHETHER THESE
INCENTIVES OR EXPENDITURES ARE
DOING THEIR JOB.
IN TERMS OF THE TAX RATE, I
AGREE WITH WHAT LINDSAY WAS
SAYING IN TERMS OF IT BEING A
COST TO THE BUSINESS.
IF YOU'RE A PROFITABLE BUSINESS,
IT'S A COST ALONG WITH OTHER
THINGS.
ONE THING I'D BE WORRIED ABOUT,
TAXPAYERS MAY NOT UNDERSTAND,
AND I AGREE WITH THAT, I DOUBT
THEY UNDERSTAND THE CORPORATE
SYSTEM VERY WELL, BUT THE FLIP
SIDE IS, IF WE ENDED UP
UNDERPERFORMING IN ONTARIO IN A
COUPLE OF YEARS BECAUSE OF THE
TAX INCREASE, AGAIN THE
TAXPAYERS WOULD WANT AN ANSWER
ON THAT TOO SO...

Steve says WE'VE DONE PERSONAL
INCOME TAX RATES, WE'VE DONE
CORPORATE INCOME TAX RATES.
LET'S DO THE THIRD PART OF OUR
LITTLE THIRD-LEGGED STOOL IN THE
REMAINING MOMENTS AND THAT'S AN
ENTIRE VIEW OF THE CANADIAN TAX
SYSTEM, WHICH, LINDSAY, AS YOU
POINTED OUT, HASN'T BEEN DONE IN
A HALF A CENTURY.
THE CARTER COMMISSION TOOK IT ON
ALL THOSE YEARS AGO.
NO POLITICAL LEADER THAN DEIGNED
TO GO BACK THERE SINCE.
HOW COME?

The caption changes to "An audit of the system."

Lindsay says I THINK YOU
HAVE SEEN THE REACTIONS TO THE
CHANGES PUT FORWARD IN THE
SUMMER ON THE SMALL BUSINESS
SIDE AS TO WHETHER THIS IS A
POLITICAL HOT BUTTON.
WHEN YOU'RE TALKING ABOUT
COMPREHENSIVE TAX REFORM, YOU'RE
GOING TO BE TALKING ABOUT, YOU
KNOW, HOPEFULLY CHANGING THE
BENCHMARK SYSTEM, TALKING ABOUT
REDUCING, YOU KNOW, THESE
DEDUCTIONS AND SUBSIDIES.
AND SO IN THE END, WHAT ENDS UP
HAPPENING IS INDIVIDUALS GET
RILED UP ABOUT THEIR FAVOURITE
PART OF THE TAX SYSTEM RATHER
THAN THINKING ABOUT THE OVERALL
BENEFITS OF WHAT WE'RE TRYING TO
ACHIEVE.
SO IT IS A HOT BUTTON ITEM, AND
WE HAVE TO TALK ABOUT THINGS
THAT WE MAY NOT LIKE TO, AND WE
HAVE TO DO IT WITH A DIFFERENT
LENS.
WHILE IT IS CONTROVERSIAL AMONG
SOME GROUPS, IT ISN'T AMONG
PEOPLE LIKE MYSELF.
WHEN WE DO TAX REFORM THIS TIME,
WE HAVE TO MAKE SURE THAT WE
UNDERSTAND GENDER-BASED ANALYSIS
AS WELL AS RACIAL AND INCOME
INEQUALITY.
SO IT WILL BE A VERY DIFFERENT
KIND OF TAX REFORM, TO ENSURE
THAT EVERYBODY BENEFITS AS
OPPOSED TO JUST A SMALL SUBSET
OF SOCIETY WHO IS ABLE TO INPUT
THEMSELVES IN THESE
CONVERSATIONS.

Steve says JUST FOLLOW UP ON
THAT, IF YOU WOULD?
WHY DOES THE TAX SYSTEM CARE
ABOUT GENDER AND-OR WHETHER
YOU'RE A VISIBLE MINORITY OR NOT?

Lindsay says WELL, THE TAX SYSTEM IS
TYPICALLY SET UP BY A CERTAIN
TYPE OF INDIVIDUAL, AND THE TAX
SYSTEM FAVOURS THEIR BEHAVIOUR
OVER OTHER INDIVIDUALS'
BEHAVIOUR.
YOU KNOW, WHEN YOU LOOK AT TAX
REFORM, THAT WAS DONE IN THE '60s.
IT WAS DOMINATED BY WHITE MEN.
AND SO THEIR BEHAVIOURS ARE
PREFERRED UNDER THE TAX SYSTEM.
WE HAVE TO MAKE SURE THAT WHEN
WE ENGAGE IN PUBLIC POLICY, THAT
WE ENSURE WE UNDERSTAND
EVERYBODY'S CONTRIBUTIONS TO
SOCIETY, THAT WE UNDERSTAND THE
BURDENS AND BENEFITS THAT THEY
BEAR, AND THAT THEY ARE EVENLY
DISTRIBUTED ACROSS EVERYBODY.

Steve says LET'S SEE.
DO WE HAVE A WHITE MAN HERE WE
CAN FOLLOW UP WITH?
BRUCE, THAT WOULD BE YOU.
DO YOU THINK THE TAX CODE AT THE
MOMENT IS SORT OF, QUOTE,
UNQUOTE, FIXED TO FAVOUR WHITE
MEN OVER OTHERS?
I THINK I'M HEARING THAT FROM LINDSAY.
IS THAT ACCURATE, LINDSAY?

Lindsay says I'M SAYING THAT THE
CONTRIBUTIONS TO TAX REFORM
TYPICALLY COME FROM ONE
PARTICULAR LENS, AND ADDITIONAL
LENSES NEED TO BE APPLIED UNDER
ANY MODERN-DAY TAX REFORM.
FOR EXAMPLE, IN THE '60s, THE
MAJORITY OF WOMEN STAYED AT HOME
AND WORKED AND... STAYED AT HOME
AND WORKED WITHIN THE HOUSEHOLD.
AND NOW THE MAJORITY OF WOMEN
WORK.
WE HAVE TO MAKE SURE, WHEN WE
HAVE THESE CONVERSATIONS, WE
UNDERSTAND HOW THINGS HAVE
CHANGED AND HOW DIFFERENT PEOPLE
ARE CONTRIBUTING TO THE ECONOMY.

Steve says BRUCE?

Bruce says YEAH.
NO, I AGREE... I AGREE WITH THAT
COMMENT GENERALLY.
I GUESS OUR VIEW WOULD BE
THERE'S THREE KEY THINGS WE'D
LIKE TO SEE THE TAX SYSTEM TAKE
INTO PART AS PART OF THE REVIEW,
TRY TO MAKE IT FAIR, THAT
DISCUSSION GOES TO FAIRNESS,
PEOPLE SHOULD BE TREATED... AND
FAIR DOESN'T MEAN EXACTLY EQUAL,
BUT FAIR WHEN YOU COMPARE
SITUATIONS, AND IT NEEDS TO BE
COMPETITIVE.
THOSE WOULD BE THE THREE THINGS
WE'D BE LOOKING AT.

Steve says WOULD YOU INCLUDE
GENDER AND, YOU KNOW, VISIBLE
MINORITY STATUS AS A BENCHMARK
IN THAT FAIRNESS?

Bruce says I THINK YOU'D HAVE TO
CONSIDER THAT AS PART OF THE
PROCESS.
I AGREE WITH THE LENS ASPECT OF
IT.
YOU NEED TO STEP BACK AND MAKE
SURE IT MAKES SENSE FROM ALL
POINTS OF VIEW AND NOT JUST ONE.
I THINK THAT WAS A BIG ISSUE
ACTUALLY AROUND THE PRIVATE
COMPANY BUSINESS LAST YEAR.
THERE WAS A LOT OF DISCUSSION
AROUND JUST ONE POINT: HOW IS
THIS GOING TO AFFECT A CERTAIN
GROUP OF PEOPLE AS OPPOSED TO
SORT OF STEPPING BACK AND
SAYING, YOU KNOW, WE'RE DOING
THIS BECAUSE THERE ARE PROBLEMS
WITH THE TAX SYSTEM.
SHOULD WE STEP BACK AND SEE WHAT
MAKES SENSE?

Steve says FAIRNESS IS ONE.
WHAT WERE THE TWO OTHER THINGS?

Bruce says SIMPLICITY AND COMPETITIVENESS.
THERE ARE A NUMBER OF OTHER
ISSUES BUT THOSE ARE THE THREE
KEY ONES.
IT WAS ACTUALLY PART OF THE
SENATE FINANCE COMMITTEE REPORT
AS WELL.
WE MADE REPRESENTATIONS TO THE
SENATE AS PART OF THE PRIVATE
COMPANY CHANGES, BUT WE WERE
TALKING ABOUT A COMPREHENSIVE
REVIEW AS WELL.
THOSE WERE THE POINTS.

Steve says AMIN, IF YOU'RE
LOOKING AT A COMPREHENSIVE
REVIEW OF THE TAX SYSTEM, WHAT
ARE YOU LOOKING AT?

Amin says THERE ARE SO
MANY MOVING TAXES.
TAXES HAVE NEVER BEEN POPULAR,
BUT TAX POLICY SHOULD TAKE A
LITTLE BIT MORE TIME, JUST TO
TALK ABOUT THE LAST ONE, THE
CARTER COMMISSION ONE.
IT WAS STARTED IN 1962 UNDER
PRIME MINISTER DIEFENBAKER,
COMPLETED UNDER PRIME MINISTER
LESTER PEARSON, AND THEN
LEGISLATED UNDER PIERRE TRUDEAU
IN TEN YEARS.
IT DOESN'T MOVE FAST.
THE CHANCES ARE WE WILL BE DOING
SMALLER TAX REFORMS OR
COMPONENTS OF IT, LIKE WE DID
LAST YEAR, WHETHER SUCCESSFUL OR
NOT.
I THINK JUST TO... I'M NOT SURE
ABOUT RACIALIZED BUT THE GENDER
ONE WOULD BE EASY TO SEE.
YOU SEE, DIVIDEND SPRINKLING BY
CANADIAN SMALL COMPANIES
REQUIRES YOU TO HAVE FAMILY
MEMBERS.
WHAT IF YOU'RE SINGLE?
THEN YOU DON'T HAVE THOSE
OPPORTUNITIES THAT A PERSON WITH
A FAMILY AND NEPHEWS AND
CHILDREN HAVE.

Steve says SO YOU DON'T HAVE
THOSE OPTIONS TO SPRINKLE?

Amin says YES.
THEREFORE, YOU'RE PAYING HIGHER TAXES.
THERE'S INEQUITY.
WHAT WE NEED IS HORIZONTAL EQUITY.
PERHAPS I WOULD BE ON THE SIDE
OF ALLOWING SPRINKLING IF
ACADEMICS WERE ALLOWED TO INCORPORATE.
BUT THEY'RE NOT.
I SEE MY PHYSICIAN FRIENDS BEING
ALLOWED TO INCORPORATE BUT
ACADEMICS AREN'T.
I GET THE SAME EMPLOYMENT INCOME
WITH NO OPPORTUNITIES LIKE THAT.
THEN, OF COURSE, THERE'S
EFFICIENCY OR COMPETITIVENESS.
WE NEED TO BE COMPETITIVE WITH
OTHERS.
AND SIMPLICITY.
THE FIRST INCOME TAX ACT... WE
JUST CELEBRATED THE 100TH
ANNIVERSARY OF THE INCOME TAX
ACT IN SEPTEMBER 2017.

Steve says IS "CELEBRATED" THE
RIGHT WORD?
"OBSERVED"?

Amin says IT IS THE CORNERSTONE OF CIVILIZATION.

Steve says OKAY.

Amin says AND THE FIRST ACT WAS 11
PAGES LONG.
RIGHT NOW IT'S ABOUT THIS MUCH.
2,000 OR 3,000 PAGES.

The caption changes to "Producer: Meredith Martin, @MeredithMartin."

Steve says I HAVE TO JUMP IN, FRIENDS.
THAT'S OUR TIME, I'M AFRAID.
I'M DELIGHTED TO WELCOME YOU TO
TVO TONIGHT AND I THANK YOU FOR
YOUR CONTRIBUTIONS.
Lindsay Tedds FROM THE
UNIVERSITY OF CALGARY WHERE SHE
IS A VISITING PROFESSOR IN THE
SCHOOL OF PUBLIC POLICY AT THE
UNIVERSITY.
BRUCE BALL VICE PRESIDENT OF
TAXATION.
AMIN MAWANI, SCHULICH SCHOOL OF
BUSINESS AT YORK UNIVERSITY.
THANKS, EVERYBODY.

Lindsay says THANK YOU.

Watch: Does Taxation Have to be Taxing?