Make North America great again!

From the December 2018 print edition

I heard something really interesting a few weeks ago. Someone noted that the only people who can afford

Toronto-based Michael Hlinka provides business commentary to CBC Radio One and a column syndicated across the CBC network.

to have a large family these days (let’s define that as three children or more) are the very, very poor and the very, very wealthy. That hit me like a ton of bricks! I’m the father of a three-year old son and because of the relatively advanced ages of both my wife and me, we’re holding at one. If we were younger, we would certainly have another. But at that point we would call it a day, mostly for financial reasons.

This wasn’t the case when I was growing up in the 1960s. I lived in a very middle-class neighbourhood and the predominant family model was that the father worked and the mother stayed at home to raise the children. Most families on our street had at least two children, and numbers like three to five were reasonably ordinary. For a variety of reasons, North American economic society was organized to disproportionately benefit a broad group understood as the middle class—and that just isn’t the case now.

I think it explains to a great extent the election and even continued popularity of President Donald Trump. When he says “make America great again” what his critics hear is a clarion call to return to a world of racial segregation, a world where women were consciously discriminated against in the workplace, a world where gay men and women were forced to remain in the closet out of fear. But I don’t think that this is what most of his supporters hear. I think that what most Trump voters want to return to is an America where everyone broadly enjoys economic progress, not just the select few on top.

Of course that begs the question, how do you make this happen? I’ve got a couple of ideas that I’d like to run by you. And I’d like you to evaluate whether these measures would, by and large, benefit you and your friends and neighbours, because I suspect that the readers of this magazine truly are the backbone of any successful country.

By instinct, I’m a free trader. Yet at the same time, I think that important revenues could be raised by intelligent and selective tariffs on all imported goods. There would be a three-tier scale. If the opposite country were open to importing Canadian goods and services with minimal penalties, the tariff would be a nominal 5 per cent. It would be fair to expect them to reciprocate with similar tariffs. It would provide domestic producers in both countries with a slight competitive advantage, but not one large enough to be decisive. Countries that didn’t treat us perfectly fairly would be subject to 15 per cent tariffs and if a country was closed to us, it strikes me that 25 per cent tariffs would be fair.

The current income tax system is far too kind to passive income while it penalizes earned income—which makes absolutely no sense. If you’re a factory worker making $50,000 annually who picks up another $10,000 in overtime pay, you’re taxed as if you made $60,000. On the other hand, someone who inherited money and makes $60,000 in passive capital gains is taxed as if they made $30,000. This is ridiculous. A buck of income should be taxed as a buck of income and that’s that.

The income tax system should be simplified and streamlined. Make the basic annual exemption $50,000 which means that if you make $50,000 or less, not only do you not pay any income tax, there’s no need to file a return. But then for every dollar you make above that, the federal and provincial government take one-third, and you get two-thirds. This means that if you made $100,000, you’d take home $83,500 of it (or 83.5 per cent) while if you made $1,000,000, you’d take home $686,500 (or 68.7 per cent). Under this regime, no one would pay close to half of his or her income in tax and the working poor would be given an enormous break. Imagine the incentive to put in more hours if you knew that you would keep 100 per cent of it!

Finally, only a few products should be subject to sales taxes, and it should be limited to those whose consumption we want to discourage. Sin taxes on products like tobacco, alcohol and marijuana make sense and have broad public support. Taxes on gasoline raise revenue while encouraging more efficient use. It’s hard to be against that. But otherwise, stop stealing from me.

It strikes me that on both sides of the 49th parallel there is a great deal of discontent among the people who go to work early and come home late and play by the rules. This isn’t right. It’s time to make North America great again!