Madam Speaker, I would like to compliment the hon. member for Témiscamingue for a very good presentation. I feel he has made some very good points, especially his suggestion-the most important of all and I implore the government to listen to it-which is to look at all the options.
On his point of progressivity, he was worried and concerned, as previous members have expressed, that a flat tax might enter into that territory and make it regressive. As an economist I would think he has read about Albert Laffer, an American economist, and the Laffer curve-not like a joke. The answer to progressivity is that currently within our system we have all these loopholes. We have different segments of taxation at the high end, different incentives, various rates and the graduated taxes. Therefore our tax rates have to be high to get the same amount of money.
Where lower in the curve, by having no tax loopholes and no exemptions, the kind that you need down here-I am not talking about personal deductions-you generate the same amount of money. As the hon. member for Témiscamingue would like to have fairness and equity, that is where the equity would come back in. It eliminates a lot of the rules, addressing his specific point on flow-through shares and how the lack of deductibility or the lack of incentive to invest would impact negatively in his riding.
An individual currently at the high end who makes these investments, who is obviously in the upper middle or upper income, is taxed at the 50 per cent rate. If their taxes were reduced to 15 per cent of income and they had 85 per cent of disposable income they could still make that investment in their ridings. The corporation, after it made its profit, could give a return on investment to that individual through dividends taxable to the individual. With the change you would have to make, the corporation would be able to deduct that dividend. The key to it all is with the corporation. The high marginal tax rate for corporations after they use up the first $200,000 of taxable
income which is tax free or taxed at a lower rate is 50 per cent. You could lower that tax rate for a corporation from 50 per cent down to 15 per cent as well.
The principle of our taxation system is that if you give a deduction that somebody has to pay the tax on it is eliminated. It takes it out of the Laffer curve and brings you back down and now you are treating dollars with more respect. You are treating real dollars and governments can then focus on just generating the revenue they need to pay for the social and economic programs that they have, subsidies, whatever it may be because you do need those. You are dealing with true dollars, after tax dollars, instead of this complicated, confusing abomination.
Basically my intervention here is to make a comment on what the hon. member had questioned about this system of a single or flat tax.
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