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Policy Forum: Mountains and Molehills--Effects of the Small Business Deduction

Author

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  • Ted Mallett

    (Canadian Federation of Independent Business, Toronto)

Abstract

Active debate continues on the rationale and effectiveness of government policy on the corporate tax treatment of small businesses in Canada, where lower effective rates have been in place since 1949. Those arguing against a preferential rate for small businesses cite concerns about the sheltering of high personal incomes, business growth disincentives, and general lags in national productivity growth. These arguments, however, tend to assume that problems with tax policy at the margins can be generalized to all small businesses. Although preferential treatment is not a perfect approach to supporting entrepreneurship, any induced distortions caused by lower small business tax rates are relatively minor when placed in the context of the broader goals of offsetting financing barriers and compensating for high regulatory compliance costs.

Suggested Citation

  • Ted Mallett, 2015. "Policy Forum: Mountains and Molehills--Effects of the Small Business Deduction," Canadian Tax Journal, Canadian Tax Foundation, vol. 63(3), pages 691-704.
    • Handle: RePEc:ctf:journl:v:63:y:2015:i:3:p:691-704
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    File URL: https://www.ctf.ca/EN/Publications/CTJ_Contents/2015CTJ3.aspx
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    Cited by:

    1. Chapman, Larry & McKenzie, Ken & Porter, Shawn & Tedds, Lindsay M., 2017. "Tax Policy Forum: Review of Tax Expenditures, Budget 2016," MPRA Paper 96926, University Library of Munich, Germany.

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