Too Late

It's been a bad couple of weeks for Bill Morneau. Yesterday he said he will put his considerable wealth in a blind trust. Tim Harper writes:

Morneau finally did the right thing, placing his substantial assets in a blind trust and announcing he would begin divesting his interest in the family business, Morneau Shepell.

Except this was 2017.

This should have been done a couple of years ago, because, to paraphrase Justin Trudeau, it was 2015.

If the ship of state is ever to be put on an even keel -- a proposition that appears less and less likely -- loopholes for the wealthy have to be closed. That's what Morneau said he was trying to do, even as he continued to profit from those loopholes. Nathan Cullen cut to the quick:

Here’s the nub of the conflict charge, as raised by New Democrat Nathan Cullen, an unproven allegation that nonetheless brings some smoke.

When Morneau introduced Bill C-27, legislation to make it easier for federal employees to move to a targeted benefit pension, a move which would benefit Morneau Shepell, the company’s stock went up 4.8 per cent within days, Cullen says. Morneau, he said, would have made $2 million in five days from that jump. But it’s not known that Morneau was holding or selling stock at that time.

Justin Trudeau's Liberals ran as progressives. But the Minister of Finance can't unfurl that banner. It's too late.

Image: The National Post

Eminently Sensible

There has been a lot of fury about Bill Morneau's tax changes. His failure to disclose the full story behind his French villa hasn't helped his cause. But the main problem he has faced is that his changes aren't simple enough to understand. Robin Sears recalls a conversation he had with New Zealand's former finance minister, Roger Douglas -- who introduced the developed world's first GST:

“Listen,” he told me, “our bloody income tax systems — personal and corporate — look like bloody Swiss cheese! And, by the way, so do yours. Every country has more loopholes and giveaways in its income tax system than they can count. And any finance minister who claims he can fill even half of them is either lying or stupid or both,” he added.

He went on, that with a VAT or GST he could equally tax a rich man’s mink coat purchase and a working boy’s hamburger — everyone pays. He conceded that some cheating was always possible if cash and no receipts were involved, but he added, it was a lot easier to catch a GST cheat than an income tax cheater, with the help of a good tax lawyer.

It’s not regressive, depending on what we do with the revenue, Douglas argued. He planned to take a big slice of the GST revenue and give it back to those who needed it most — and did, setting up a generous rebate structure. His pioneering was copied all over the developed world. As Douglas said that day, when you want to get a big tax reform done quickly you need to do three things: keep it simple, open and transparent.

These days citizens -- with justification -- feel that legislators are deliberately trying to pull the wool over their eyes. The Republican health care plan was cobbled together behind closed doors. Then they tried to push it through without hearings. It failed. Somebody's missing something.

Morneau shouldn't expect any tax change to slide through without tough parliamentary oversight. And, if it looks like he's playing a shell game, his proposed changes will never get off the ground.

Roger Douglas' advice was eminently sensible.

Image: thestar.com

It's All About Distraction

Linda McQuaig tells the history -- and the real story -- behind the Liberal government's attempt to close a tax loophole:

Twenty-five years ago, Brian Mulroney’s Conservative government introduced a tax change beneficial to wealthy families owning private trusts. One of the arguments used to justify the change was that it would help families with a trust support a disabled child.

The image of helping a disabled child certainly softened the image of what the government was doing — channelling hundreds of millions of dollars in tax savings to some of the wealthiest families in the country.

The amount of money that the wealthy have added to their annual incomes is staggering:

Once this invisible income — amounting to an astonishing $48 billion in 2010 — is added to their reported personal incomes, Canada’s rich are considerably richer than we’ve been led to believe.

For instance, according to commonly used data (for 2011), the average income for those in Canada’s top 1 per cent was $359,000. But once the income they held in private corporations was added, the actual average annual income of these folks was a much heftier $500,200.

The higher up the income ladder, the more popular private corporations have become. Roughly 80 per cent of the richest .01 per cent of Canadians funnel income through private corporations and the amounts involved are substantial, the study found.

The average income for those in the top .01 per cent was $4.69 million a year — an enormous income. But once the income held in their private corporations was added, the average income in this privileged group actually jumped to a stunning $8 million a year.

The Conservatives claim that they are fighting for Mom and Pop businesses and small farmers. These folks are now the disabled children of twenty-five years ago. But that line was a red herring then. And the Conservatives' argument is a red herring now.

It's all about distraction.

Image: btlonline