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

Ted Mallett ()
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Ted Mallett: Canadian Federation of Independent Business, Toronto

Canadian Tax Journal, 2015, vol. 63, issue 3, 691-704

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.

Keywords: Small business; corporate taxes; income distribution; growth; financing; compliance (search for similar items in EconPapers)
Date: 2015
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