From: AlanBaggett@volcanomail.com   
      
   In Canada, the concept of 'tax fairness' is meaningless: Neil Macdonald   :CRA   
   SOTW   
      
    The finance minister might as well be talking about tax 'niceness'   
      
   By Neil Macdonald, CBC News   
      
   If I had Finance Minister Bill Morneau's money, I'd buy a first-class ticket   
   to Paris, then find the nearest Porsche dealership, acquire a loaded Carrera,   
   drive straight to that villa in Provence he owns through a shell company, and   
   send a note back to    
   Prime Minister Justin Trudeau and the Canadian public tendering my resignation   
   and wishing everyone the very best in the years to come. Canadians would never   
   hear from me again.   
      
   Instead, Morneau puts up with a remarkable dose of ridicule, almost daily, for   
   being wealthy. He now seems ready to punish himself financially, a price   
   Canadians evidently demand from rich people who want to enter public service.   
   (Serving in cabinet is    
   apparently such an enormous privilege that ministers are expected to surrender   
   their holdings to a trustee who may or may not ruin them financially while   
   they're working long hours for a salary that's tiny relative to what some of   
   them were making in the    
   private sector).   
      
   Morneau is now even promising to donate new profits from part of his stock   
   portfolio to charity. He's effectively offering to pay for his job, if only he   
   can stay on as the government's biggest whipping boy.   
      
   Why he would want to do that is a matter for psychologists.   
      
   Pushing 'tax fairness'   
   But he's also willing to trot around the country repeating nonsensical talking   
   points concocted in Trudeau's central messaging department, banging on about   
   making wealthy Canadians "pay their fair share," and how the government is   
   committed to "tax    
   fairness," as though such a thing exists.   
      
   The reality is this: our tax system is so distorted by politically motivated   
   exceptions and giveaways that the concept of fairness is meaningless. Morneau   
   might as well be talking about tax "niceness."   
      
   One need only consult the government's own accounting of all its giveaways to   
   see how politically skewed successive governments have rendered it.   
      
   The latest report on federal tax expenditures details 182 credits, deductions   
   and exemptions for 2015, totaling $117 billion. In other words, Ottawa is   
   giving away roughly half the money it brings in from income taxes and the GST.   
      
   The logging tax credit. The deduction for clergy residence. The deduction for   
   tradespersons' tool expenses. The expensing of advertising costs. The   
   non-taxation of registered charities. Et cetera, et cetera, all the way up to   
   massive breaks like    
   exemptions of the profits on selling your home (which advantages homeowners),   
   the child tax benefit (which advantages parents), RRSPs (a disproportionate   
   advantage for medium-income earners) and the exemption for registered pension   
   plans (which advantage    
   employees lucky enough to have pensions at all).   
      
   And each break represents a revenue loss that other taxpayers have to make up.   
      
   "It's an awful lot of money," says Sahir Khan, one of the economic detectives   
   at the University of Ottawa's Institute for Fiscal Studies and Democracy.   
   "It's kind of a big deal. And all these measures do not undergo the normal   
   level of parliamentary    
   scrutiny that other kinds of government spending receive."   
      
   Tracking exemptions and deductions   
   Furthermore, says Khan, the $117 billion figure is probably low. The   
   Department of Finance, he says, actually has no idea of what some of the   
   exemptions and deductions are costing the taxpaying public.   
      
   Each of the breaks, of course, was written into the tax code to further some   
   government's idea of a noble objective, usually meaning something that   
   benefitted its particular voter base. (In the case of our current government,   
   that means the middle- and    
   lower-income Canadians it invariably describes as "hard-working," as opposed   
   to higher-income citizens it basically characterizes as non-hard-working tax   
   avoiders).   
      
   And once created, each break becomes sacred. Each creates a sort of cognitive   
   dissonance: my tax breaks are normal and completely fair, but everyone else's   
   are reversible, if need be, to reach systemic fairness.   
      
   That thinking applies to everyone.   
      
   No doubt Bill Morneau considers the income trusts and numbered accounts he   
   uses to minimize his personal tax exposure to be fair, even as he talks about   
   the need to eliminate measures unfairly used by, say, doctors or other   
   high-income entrepreneurs.   
      
   As tax policy expert Vern Krishna puts it: "Mr. Trudeau is not going to tell   
   you that when he gets his rather substantial parliamentary pension, he will be   
   able to split it with his wife to reduce his tax exposure."   
      
   "All decisions concerning taxation," says Krishna, "are political. Every tax   
   break detracts from fairness."   
      
   Given that, is there any way to measure our system's fairness, which Morneau   
   and Trudeau say needs to be made more fair?   
      
   One way is to look at "progressivity." Western nations have accepted that the   
   rich should not just pay more, but should pay a great deal more – a greater   
   percentage of their income than those further down the income scale.   
      
   Well, according to the Organization for Economic Cooperation and Development,   
   Canada is already more progressive than a long list of countries, including   
   Japan, Switzerland, Austria, France, Spain, Norway, Italy and the United   
   States.   
      
   The Fraser Institute puts it another way: "55.6 per cent of all federal,   
   provincial, and local taxes are paid by the top 20 per cent of income-earning   
   families, while this same group earns 49.1 per cent of the country's total   
   income."   
      
   As for the "one-percenters" the government is now targeting, they already   
   contribute about the same amount of taxes as the entire bottom half of   
   Canadian taxpayers.   
      
   In fact, once government transfers like tax credits and refunds are taken into   
   account, the lowest 40 per cent of earners pay no taxes at all, and are   
   actually enriched by the government, while the top 20 per cent part with about   
   34 per cent of their    
   income.   
      
   Yes, yes, I know, damned statistics. But I prefer them to demagoguery, which   
   is what we are hearing at the moment from Bill Morneau and Justin Trudeau,   
   whose real problem is controlling their urge to spend public money.   
      
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