There's a broader point that I think is absent from this debate about how the tax changes will affect behaviour, and it's completely missing from the working paper provided by the Department of Finance.
Basically it assumes there will be no behavioural response from any of the proposed tax changes, which is really contradicted by the evidence. Whether we're talking about increasing tax rates on passive investment income, or whether we're talking about increasing tax rates on professionals who are now using strategies to lower their tax burden, the paper doesn't acknowledge that there will be a response. The response can take the form of people working less as a result of the higher taxes that they will pay. It can mean professionals passing on the extra costs in the form of fees to the extent that they can to their consumers, or that there will be less investment taking place, and frankly there will be new and different forms of tax planning in response that work around the rules. We've already heard about that in this discussion.
All of those types of activities are not going to help improve Canada's economy. I think it's a key aspect of this proposed legislation that is completely missing from the debate. We need to understand that these changes will have economic consequences, and it's not in line exactly with what this government wants to do, which is grow the economy.