A Saint John-based private wealth management company says the federal government's tax proposals won't create fairness in our taxation system and takes us in the wrong direction.
Owens MacFadyen Group is presenting to the Senate Standing Committee on Finance hearings in Saint John on Thursday. The company did some analysis and found a business owner who makes a $150,000 salary will, under these changes, run out of money at age 81 and it's worse the higher your salary.
"It's hard for me to fathom that my children could do what I did, and I worked hard and I was almost equal to a salaried person and that their circumstances would be less than half of mine for the same effort. I can't fathom that that's progressive and I can't fathom that that will encourage entrepreneurship," says CEO Bob Owens.
Owens says Atlantic Canada will be particularly exposed by these tax changes because we're dominately mainly by privately owned companies.
"I spoke with a very wealthy billionaire investor...the money is exiting as we speak. And it will be billions. Because nobody is going to pay those tax rates. It's just not going to happen," says Owens.
They're recommending the passive income tax rate be changed to the same rate public companies have at 26.5% compared to between 49 and 55% for private companies. The proposed rate over $50,000 will be closer to 73%.
The company is also recommending income splitting with your spouse not be eliminated.