Tax reform would be a lot easier if governments were not so voracious. So we should ponder why they are

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Apparently federal Finance Minister Bill Morneau intends to persevere in increasing taxes on professionals with personal corporations following ritual public consultations. After all, he needs the money.

In fact there are reasonable arguments in favour of reducing the tax advantages of CCPCs (Canadian-Controlled Private Corporations). Supposedly they help compensate professionals for additional risks and lack of benefits. But why should we want to do so?

Canadians are free to pursue a living as they see fit, at least in theory. And genuinely competitive market economies reward those who create more value at less cost. Why would we deliberately divert resources via the state to those of our fellows who make certain decisions, including incurring more risk or using more inputs?

Here of course I make an argument for sweeping tax reform to eliminate virtually all preferences and loopholes. And of course it relies upon a simplifying assumption that government is, as Locke conceived it, an essentially transparent mechanism whereby citizens secure things that cannot be provided privately, like national defence, and raise sufficient tax revenue to cover their cost. But that assumption is increasingly untenable.

Good Read…

See Also:

(1) Public sector one-percenters are safe, but regular small biz owners take the hit


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