When taxes are no longer fun

I'm no expert on taxes. Most of us aren't, and that's what makes tax reform so difficult for the average Joe/Josephine to muddle through. 

Most of us don't even know how much taxes we pay, let alone our tax rates. Frankly, all I care about is my annual refund. Every spring it feels like I'm getting a bonus from my friends at the federal government (thanks, Justin!) This is what makes tax time so fun and exciting. 

From the sounds of it, more and more Canadians are getting in on the fun when it comes to tax relief. They include doctors, farmers, contractors – pretty much anyone who could qualify as a small business. 

It's a prudent decision to incorporate as a business, given the discrepancy in tax rates. As a small business, you'll pay a much lower tax rate (and only on your profits) than regular working people. Why pay the government up to half your personal income when you could incorporate and let your investments grow tax-free?  Why not designate your kids as employees and achieve even greater savings?

This is what some call a tax loophole. Something the federal government is trying to end, as muddled as their approach has been. It comes down to fairness, they argue. And while it won't be easy for a doctor to live with a little less (maybe foregoing that second BMW - ahem!), it might just be the right thing for government to do.

Unfortunately, the U.S. is about to move in the opposite direction. Republican leaders want to lower tax rates for the wealthiest, including the corporate tax rate that is more than double the Canadian rate (surprisingly). Since their corporate rate is as high as their personal income tax rate, it takes in more money and eliminates the issue Canada's currently dealing with.

But President Trump, along with his wealthy senators and Cabinet members, are about to solve that "problem" in a hurry. They fought to save every last penny when it came to healthcare, but when it comes to tax relief, deficits no longer matter. 

It all comes down to one's beliefs in fairness and rudimentary economics. Either you think the wealthy should pay a higher rate than the average worker, or you don't. Either you believe in the faulty, unproven theory of trickle-down economics (along with fairies and unicorns), or you don't.

As middle-income wages stagnate and the wealthiest 10% accumulate more wealth than ever before, maybe it's time to re-evaluate our tax system. Maybe after decades of cuts to Canada's corporate tax rates, it's time to admit that it's no economic panacea. Governments at all levels have been bragging about their low corporate taxes in a delusional race to the bottom. They have little to show for it but growing government debt. 

The federal government is finally awakening to the fact that if businesses don't pay their share, someone else will (like your average Joe/Josephine). 

That's when taxes become a little less fun.