First of all, when you look at the data and you see who benefits from the small business income tax reduction or from owning Canadian-controlled private corporations, many of the taxpayers—a very large share, 50% to 60%—have household income of more than $200,000. The increase in the personal tax rate on dividends, which will lead to an increase in taxes on dividends and capital gains coming out of the small business, even if you take into account such offsetting provisions as the lifetime capital gains exemption—another issue I would deal with....
When you take that into account, plus taxes on other income that you withdraw from the business, you get a very significant increase in the effective tax rate for the entrepreneur, with respect to the ownership in his or her business, just by raising the top rate. That is because so many are in the top income tax bracket. Again, when you're at $200,000—I know that many people always think of this as high income, but really, many of the entrepreneurial class are in that group—it is an issue; small business owners are going to be more heavily taxed as a result.
The original article I wrote took into account moving the corporate income tax rate—the small business rate—down from 11% to 9%, as promised in the election campaign and by the previous Harper government. That, of course, has been reversed, and now the small business rate will stay at 10.5%.
By the way, I support that change in the budget, not going further with that tax cut, because I want to go to a single corporate income tax rate and not have differential ones. However, I think that means that this personal tax hike will have an even bigger impact, as a result, on many small businesses.
One final point is that I think we really need to look at small business incentives and try to make them more effective. I think many small business owners are going to be facing potential hikes, as they have seen in property taxes, and there will probably be some payroll tax hikes down the road, if we go into CPP expansion, etc. These are issues that are going to be important for small business, but there are ways to address them better than we're doing through the small business deduction.