(This column originally appeared in the Toronto Sun)
By: Candice Malcolm
It turns out budgets don’t balance themselves, and Justin Trudeau is learning this the hard way.
Back in 2015, when he was leader of the third-place party, Trudeau explained his vision for the Canadian economy.
“The commitment needs to be a commitment to grow the economy and the budget will balance itself,” he explained.
Sounds easy, right? If the economy grows, so too will the tax base, and the government will be able to collect more revenues with existing tax rates.
Sure, it’s a simplistic and naïve explanation — especially to anyone who has run a business and knows how difficult it can be to the keep the books balanced.
But it seemed to work for the rookie politician.
It allowed Trudeau to simultaneously promise new spending and no tax hikes on middle class Canadians, while only running “modest deficits”.
His vague economic explanations could have followed in the footsteps of the great U.S. president Ronald Reagan, who cut taxes and still saw revenues grow because of the resulting economic boom.
When the economy flourishes, you can cut taxes while also raising enough revenue for the government to pay its bills.
It’s sometimes called Reaganomics, or the Laffer curve based on economist and Reagan advisor Arthur Laffer.
Laffer’s bell curve shows once taxes exceed a certain level, revenues drop off because people stop being as productive.
What’s the point of starting a business, working hard or taking risks if the government collects the rewards?
If taxes are lowered, people make more investments and the economy grows — making it easier to balance the budget.
Unfortunately for hardworking Canadians, Trudeau is taking a different approach.
He’s blown through his proposed “modest deficits” and is racking up unthinkable debt to dump on young Canadians.
In Trudeau’s first budget, he increased federal spending by 10% in a year the economy only grew by 1%.
No wonder existing revenues can’t keep up with Trudeau’s spending spree.
The economy is growing, but not enough to match record high spending.
To make up the difference, Trudeau is now resorting to massive tax hikes — the largest in our history.
First, Trudeau introduced the carbon tax. Far from growing the economy, a new Conference Board of Canada study finds it may cause the economy to shrink by $3 billion.
Now, Trudeau is targeting small businesses.
Under the ruse of “closing a loophole,” the government is initiating a new way to tax entrepreneurs and professionals like doctors and lawyers who self-incorporate.
This tax hike disproportionately harms young female business owners.
Women who start businesses don’t qualify for EI and therefore need to put money aside for their own maternity leave — savings our feminist prime minister now wants to claw back.
Trudeau’s small business tax hike shows he doesn’t understand what it takes to start a business.
The hard work, costs and the risks only make sense if there is a reward.
But to Trudeau, these are just rich Canadians taking advantage of the system.
Recall another of Trudeau’s infamous zingers: “A large percentage of small businesses are actually just ways for wealthier Canadians to save on their taxes,” he said in 2015.
Trudeau has demonstrated time and again he...(READ MORE)