Could The New Tax Hike on Top Earners Backfire?
During the election many of us were very impressed with the newly elected prime ministers goal to increase taxes on Canada’s most wealthy while reducing it for the average income earner. While this is great news and it also appears that it is going to be carried through with as one of the election platform promises, it may not be as enticing or as welcoming as what we may have initially thought.
Most of us are well aware that Canada’s top earners which is estimated to be about 1% are certainly not going to take this tax hike lying down. They have the money and resources to fight back and the ability to make decisions that could be detrimental over all in regards to the tax hike.
There are some experts that are in the analytical field that feel that this tax is going to end up costing the country more than benefiting it. What the indicators are is that these 1% tax payers are going to find other ways to avoid this increase. There is no doubt that they will be creative but keeping it within the legal umbrella.
They have options available to them and they will certainly research these carefully. They can delve into their choices for changing their income sources. They can make the decision to put off the transactions that may be taxable, and they even have the option to move to other jurisdictions where tax is lower.
All of these actions could have a rippling effect on the economics of the country. For example, if any of these 1% decide to take their business elsewhere what does this do to the employment industry? Could it mean that many Canadians will get laid off because of the company is going to move to a lower taxed country?
The experts are also concerned about the lowering of the rate for the middle class individuals. This is going to create a loss and it is estimated that it may be coming in at $4.9 billion. The problem is here is that we all know that the tax money goes to paying for many of the benefits and amenities that we enjoy as Canadian, and if we are cutting back the budget to cover these then what is going to suffer because of it. So the question is, are we going to win on one hand but lose on the other?
The experts that are coming up with all of these concerns feel that there should be other ways generated to raise revenue rather than attacking the 1% top earners. They are saying that one of the options that could be available would be to change the small business tax deduction to make it more lucrative for younger firms as an incentive. As the average taxpayer you personally have to give this some personal thought as to what your feelings are on this, but also have to realize that there are many different circumstances that need to be taken into consideration.