Tax Rates

Marginal tax rates have come off since their highs in the 1970s.

I tend to agree with their conclusion on how the inefficient value of tax discourages entrepreneurship.

In analyzing my cash flow, my expenses represent 75% of my revenues before taxes. 40% of which goes straight to salaries (and payroll taxes) mostly inflated thanks to government regulations. Then come all the fixed costs (including property taxes and taxes I pay on rent, maintainance, insurance etc.) and realities of doing business. The way I see it, it goes towards keeping other businesses alive. The economy has to roll somehow.

Then, once I settle my operating profits come the corporate taxes. They're reasonable in my opinion, and my net profit is still healthy but to those who advocate still higher corporate taxes be careful because if they go to high it may lead a person like me to determine it's not worth the investment, time and effort.

Not good either.

Finally, the marginal income tax I pay for the salary I intend to pay myself. Personal taxes for stuff like public health, education and unemployment insurance which self-emplyed workers have no right to, and even though I'm beginning to use private practioners more and more, and plan to send my child to private school.

That's the trade off I reckon. If my business goes bad, and took advantage of the lower taxes by managing my money prudently, then I'm less of a burden on society since I can take care of myself, but it's not always the case. Some businesses just aren't profitable. Still, there's a fair argument for a self-employed worker who pays into it should be able to get help when in trouble. I know there was a debate about this last year in Parliament when politicians wanted to extend UI benefits.

I can see, and this is just guessing on my part, why politicians don't increase corporate taxes too much. Aside from possible cronyism on a bigger scale, on small businesses, they can erode our bottom line 'just like that' given the amount of hidden and not so hidden taxes we already pay. The reality is we need business.

In my case, I could probably absorb a higher rate. I won't like it - since I put my ass on the line and have employee and debt obligations. That's another thing people who call for higher taxes on business don't seem to accept, we take the risk and so should technically keep the majority of the rewards. That's your trade off in a society. I take on risk the majority of society can't or won't do. I invest, hire, spend, and pay taxes. The least they can do is leave my corporate taxes alone. Just because I make "a lot" of money doesn't entitle a person to ask the state to confiscate it - but what can you do?

Nonetheless, at about 28%  I think Quebec has struck a fair balance. I don't know how businesses in California survive.

In any event, there's something to be said of bettering society by doing your bit through taxes. Personally, I give a lot to charities. Well, gave. The last couple of years all my capital was poured into my venture. I plan to give again.
The best I can do is ask the state to not squander it. At which point we enter the Theorizing Zone and ask how much is enough for the government?

I'll post more about my experiences as we move forward. The best way to discuss it is to use real life examples. Maybe my thoughts will change altogether.