The federal election campaign has entered its final month with much of the debate now focused on the economy.
The three major party leaders put their plans before the public in last week’s debate, with Prime Minister Harper arguing Canada needs what his government has been doing, low taxes and balanced budgets.
However, Liberal Leader Justin Trudeau favours going in the opposite direction, with red numbers rather than black ones, arguing the economy needs a boost which he would provide, by boosting spending, and putting the budget back into deficit for three years.
For his part Opposition Leader Tom Mulcair is sticking with traditional socialist economics, vowing to raise corporate taxes, and arguing that having the wealthy pay for increased government spending will protect low and middle income Canadians from any additional tax burden.
The NDP would recoup $500 million a year from wealthier Canadians by ending what it calls “unfair” stock option loopholes, but one of the countries leading tax policy experts, says that will likely end up being revenue neutral.
“I actually support the NDP position of taxing fully stock options at the personal level but you’d have to give this corporate tax deduction otherwise people just abandon stock options and go to other forms of compensation where you do get a corporate tax deduction.”
Doctor Jack Mintz says since the New Democrat plan would also lower small business taxes many wealthy people would likely choose to create small businesses.
“You can create a small business because you can avoid paying higher taxes on your income because the corporate tax rates are low enough that it gives you the benefit. In particular if you can get your income out in the form of capital gains from the small business you’re actually much better off than if you had just taken wages and salary”
As for the two percent corporate tax hike, Dr. Mintz says there are a number of ways lower income Canadians will be impacted…
“Who actually ends up baring it is that businesses have to either pass forward the corporate tax increase and higher consumer prices domestically, or they have to either fire or pay workers less.”
Doctor Mintz, the President’s Fellow at the University of Calgary, School of Public Policy, predicts the NDP plan would result, in 150,000 lost jobs, lower wages, and higher consumer prices, all hitting lower income earners the hardest.