Re: Fair Tax Plan Does Not Tax the Rich

Sept 11, 2017

Dear Sir / Madame;

RE: FAIR TAX PLAN DOES NOT TAX THE RICH

Mr. Morneau’s widely contentious “Fair Tax Plan” does NOTHING to tax the rich. In fact, Mr. Trudeau and many other’s that own significant assets that generate them an income will see ZERO change in their taxes. It’s the middle class small business owner that will see significant changes to the amount they hand over to government coffers at the end of the year.

In Mr. Trudeau’s election campaign he touched on capping the stock option deduction (available to only the highest of income earners), who were receiving large deductions from their taxable incomes. Somehow, this tax was not taken into consideration anywhere in Morneau’s proposal. Swept under the carpet, it seems.

Next, the richest of Canadians, through either sheer luck of being born to a wealthy family like the Trudeau’s, or through hard work and determination, own holding companies to shield their investments and be able to distribute assets and income in creative ways. However, these holding companies already pay 50% tax on this non-active income. Nothing in their world will change with the proposed legislation.

And finally, the pension and retirement income of wealthy executives remains unscathed by these proposals. When someone with a large pension retires, they have the ability to split this income with their spouse. This has significant tax advantages to the couple, especially if the spouse has little other income. This is exactly the scenario that Mr. Trudeau and his wife will face in his retirement years. He will be permitted to split retirement income with his wife. Now compare this with the small business corporation owner, who has used their corporation to amass their retirement savings. Prior to these proposed changes, this business owner and their spouse would be able to draw a dividend from the corporation, provided they were each shareholders of the corporation. This is effectively splitting their ‘pension’ income. However the proposed legislation wipes out all possibility of that, and insultingly calls them ‘tax cheats’ for wanting to do that. What a double standard that is! Our own Prime Minister is fully in his rights to do so, but the average hard working person is not. This reeks of class discrimination.

It should also be noted, that there is a huge difference already in the amount the pensioner is going to receive in their retirement years. The average Ontario police officer, or retired airline employee, when they have worked their full 30 years of required service, finishes with a pension, when valued by a pension administrator of $1.2 - $1.7 Million. It is extremely rare that we see that kind of wealth accumulated in a private corporation and available to draw as a dividend. It is more likely that it will fall in the $500k - $1 Million range, with no guarantees to return on investment. The traditional pension recipient has no risk or worries that they will have to ‘cut back’ if there are changes in the stock market.

We urge you to rethink your approach to making our tax system fairer, as these proposals so clearly do the opposite.

Yours truly,