Canadian Tax Burden

 All governments impose fiscal burdens on economic activity through taxation and legislation; however, these burdens are supposed to be outweighed by the benefits they bring. For example, the social services and infrastructure provided by a government are supposed to be as effective and more economical than the parallel services that would otherwise be provided by the private sector. Ideally, this should encourage business, but if the economic pursuits of institutions and individuals are stymied by taxes, it can inhibit economic growth. For example, some suggest that Canada’s carbon tax could discourage business, while others suggest it could create jobs. The Fraser Institute believes Canadian businesses will become less competitive as a result of higher energy costs. Canada’s Rising Personal Tax Rates and Falling Tax Competitiveness finds that Canadian workers across the income spectrum—and across the country—pay significantly higher personal income taxes than their American counterparts. With regard to economic freedom, Canada ranked eighth in the world. This is according to the Heritage Foundation’s Index of Economic Freedom. Based on the economic system outlined in Adam Smith’s seminal work The Wealth of Nations, the index aims to measure whether each nation’s tax structure and laws stymie or promote the economic freedom of institutions and individuals using 12 factors that they divide into four key markers: Rule of law. Property rights (physical and intellection property rights and protection), the power/quality of the courts (access to, decisions of the courts), and government integrity (transparency and level of corruption). Government size. Tax system, GDP/debt, and government spending. Regulatory efficiency. Business freedoms (fees, costs, licensing, and regulations), labour freedom (min. wage, regulations for hours), and monetary freedom (inflation/price controls). Market openness. Investment and financial freedoms. These markers are used to determine whether economic freedom is achieving its three key outcomes: the creation of healthier societies, cleaner environments, greater per capita wealth, human development, democracy, and poverty elimination, the establishment of an environment that welcomes ambitious, aspiring, enterprising, and highly qualified individuals, and the encouragement of private sector investments into research and development, production and manufacturing operations. The purpose of the current assignment it to determine whether or not Canada’s current tax system and legislation are an economic burden, with a particular focus on Canada’s manufacturing sector. In short, you will answer the following question: to what degree does Canada’s tax system and legislation promote or inhibit economic growth? Your introduction will establish your topic, outline your paper, and introduce your thesis. Your body paragraphs will analyze Canada’s tax system and legislation through the four markers listed above. You will use this analysis to determine whether Canada is achieving the three outcomes stated above. This discussion will include references to individual and corporate income tax rates, as well as indirect taxes, sales, carbon and excise taxes, as well as tariffs and value-added taxes (Canadian HST). Once this is complete, you will discuss the strengths and limitations of Canada’s tax system and legislation. Then you will state your conclusion while providing a summary of your key points in your conclusion. You are welcome to draw on Adam Smith’s work specifically as this may help build your argument, but you are not required to do so.