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Bill Morneau's discussion paper proposing changes to the taxation of small businesses completely misrepresents the facts.
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By making it easier to navigate the tax rules and meet their obligations, Canadians will spend less time and less of their money on preparing their taxes, leaving more in their pockets. For Canadian businesses, productivity could improve as they spend less time, effort and capital dealing with tax compliance and red tape.
There are tax credits for putting your kids in sports or music lessons, for volunteer firefighting, for taking a bus, for fixing up your kitchen, and for joining a search and rescue team. All worthy things, sure, but expensive for taxpayers. Now we're talking about a leftovers tax credit. Where will this trend end?
By allowing households to move income from one spouse facing higher rates to the other spouse, income splitting is one way to help fix this distortion. Income splitting, however, does virtually nothing to improve economic incentives or Canada's competitiveness. Therein lies the missed opportunity.