Several years ago, one of those weird bits of trivia struck me. Alan Greenspan, chairman of the Federal Reserve in the United States from 1987 to 2007, de facto chief economist and banker of the world, apparently derived a great deal from book, Atlas Shrugged, by Ayn Rand. He eventually became a friend and collaborator of Rand and was deeply tied to her philosophy of objectivism.
I’ve never got around to reading it, but it’s likely the next on my audiobook listening list. The publisher’s summary on Audible.com says, “In defense of those greatest of human qualities that have made civilization possible, one man sets out to show what would happen to the world if all the heroes of innovation and industry went on strike. Is he a destroyer or a liberator?”
Obviously there’s more to it, but the gist, from what I gather, questions what would happen if the people who are the prime doers in society said, “To hell with it!” and buggered off.
I spend much of each week talking to entrepreneurs and professionals. I can tell you from many of my conversations in recent weeks, along with reading in mainstream and social media, that is precisely the feeling that many entrepreneurs and professionals in Canada are feeling right now, in the face of Prime Minister Trudeau’s proposed tax changes to Canadian private corporations.
Getting the “rich” to pay a little more, in the name of fairness, lends itself to a lot of questions about fairness, itself.
Yes, there are tax advantages to incorporating. Yes, people who do incorporate tend to make more money, if they are successful in business. But there is no guarantee of success, and indeed, many ultimately fail.
Take this Facebook post that crossed my screen today: it laid out a grid of benefits employees get, but entrepreneurs do not. I realize not everyone gets all these benefits, but most wage/salary employees do have access to most of them.
Those benefits include: minimum wage, overtime pay, paid vacation, employment insurance, maternity benefits, employer contribution to Canada Pension Plan, health benefits, employment standards, consistent pay heques, pension contributions, paid sick days and employee stock options.
Entrepreneurs do have the privilege of losing their personal assets and, for the time being, income splitting. But that income splitting will disappear with the changes. The accounting costs to file taxes will go much higher. Taxation rates will go from high to confiscatory on investment income and capital gains.
Looking at the list above, it makes one wonder why anyone would want to go into business?
That’s the general trend of the discussion. These people take enormous risks to be in business. In doing so, they employ many people whose own risks in life are largely diminished. So why are they now being punished?
Our daughter, Katrina, is constantly asking about different possible career paths. She is very cognizant that she is in Grade 8, and the class choices she makes in Grade 10 will have a profound impact on her future. I keep explaining to her the various different trades and professions, but I also point out a consistent message: the people who get ahead the furthest, from my experience, are the people who own their own business.
And it’s not just the people running the trucking firms or retail stores. A doctor or dentist’s practice is, in fact, their own business. So is a law firm in many cases. Ditto for many plumbers, farmers, and electricians. For everyone else who works in the private sector, but is not a business owner themselves, their job is primarily to make money for the people who own those businesses. That receptionist at the doctor’s office is there to ensure the doctor can continue to see patients, and bill for those treatments.
So what would happen to Canadian society if, after these proposed tax changes take affect, a huge swath of the Canadian small business and professional class, just said, “To hell with it?”
Most of them don’t have that luxury of mobility. They can’t just relocate their business elsewhere, be it farming, retail or legal. But some can – particularly medical professionals. Doctors and dentists could easily pick up and find work south of the border. Poof! Years and years of work trying to build up the number of doctors in this country could erode like a sand castle in the path of a hurricane storm surge.
Faced with Trudeau’s proposed changes, a great many Canadian business people are questioning if they should shrug, too. And if they do, we are in serious trouble.
Brian Zinchuk is editor of Pipeline News. He can be reached at brian.zinchuk@sasktel.net.
