Good morning, Chairman and members of the finance committee. Thank you for inviting us here today.
Let there be no doubt, our economy and our businesses are facing significant headwinds. Canada's competitive landscape has dramatically changed. Canadian capital and skilled labour are leaving. Foreign investment is on a dangerous downward trend. This is not ideological. This is not partisan. This is our reality.
The mandate of this committee is a significant one. It will require meaningful consultation and bold, decisive leadership. We truly appreciate being part of this process.
Kim and I are partners with MNP. For the last 60 years, MNP has been dedicated to our clients' success. Today, we proudly serve and respond to the needs of more then 150,000 private enterprises and small businesses and 16,000 farms throughout this country. We are the third-largest tax filer in Canada.
We are here to present MNP's 10-point, made-in-Canada action plan for competitiveness and growth. These tax proposals are pragmatic, targeted and actionable today. Like all of you, MNP believes that the Canadian economy is at its strongest when middle-class families, entrepreneurs, small businesses and farmers thrive. It's important to remember that small businesses, those with fewer than 50 employees, contribute one-third of our national GDP.
We acknowledge tax competitiveness as only one factor that a business will consider when making investment decisions. However, it is a significant one that drives individual behaviour. All too often we consider the tax rate in a vacuum. Taxes paid are a result of two components. The tax rate must be considered in tandem with the computation of income, and our plan looks at both.
To address global competitiveness, reduce the combined corporate tax rate from 27% to 20%, one point lower than the U.S., and reduce the combined personal tax rate to below 50%.
Increase the top personal tax bracket. The U.S. top rate starts at $500,000, a $300,000 advantage compared with Canada. Increase taxable capital limits to account for inflation. We believe that there is a better way to encourage and support entrepreneurship and balance the risks and rewards of starting a business. The cumulative effect of the tax changes over the last five years has left private companies with less incentive to grow their businesses, or even to remain open.
To address tax barriers, simplify tax compliance for entrepreneurs and small businesses so that it is fair, predictable and certain—the tenets of sound tax policy. To increase capital investment, allow for a 100% writeoff of capital cost allowance and capital asset purchases. To foster entrepreneurship, increase the threshold for passive investments held inside small businesses. Make education more affordable for all families. Allow full tuition credit transfers to parents with children in universities, colleges and technical schools. Many families need this to send their kids to school.
Let's talk about family succession. Currently, family businesses face a bias to sell their business to a third party. This is because there is an inherent double tax on succession within a family. This double tax goes away when the business is sold outside of the family. To foster entrepreneurship, allow small business rollovers to keep private businesses within the family. Allow families to use their lifetime capital gains exemption in a bonafide succession, without harm to the next generation. There have been calls for a death tax, or an inheritance tax, by some. The fact is, Canada already has one. This tax causes hardship for many families, as taxes are levied without cash proceeds. We see many families forced to sell.
MNP's 10-point action plan is a starting point to achieve tax competitiveness. We urge this committee to recommend a made-in-Canada approach to restore our ability to compete worldwide.
Thank you for your leadership and your time.
Kim and I look forward to your questions.