Tax fight puts crass politics ahead of sound economics

Pity the lowly Canadian doctor, the Rodney Dangerfield of highly-paid professionals.

We used to think lawyers got a bad rap, what with an entire category of jokes devoted to their sleazy excuses for racking up billable hours. They’ve been replaced by doctors as the wealthy professionals Canadians love to resent. Not only have doctors come under fire for everything from extra billing to patient churning, they’re now being accused of tax avoidance.

And not just by any Joe Blow. Federal Finance Minister Bill Morneau’s move to close “loopholes” that allow owners of private corporations to reduce their tax burdens has put doctors on a war footing. The minister’s proposals don’t single out doctors for abusing the tax code, but no class of small-business owners feels as directly disrespected by Ottawa as the medical profession.

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“When the [tax] rules are used for personal benefit, they are not contributing to growing our economy,” Mr. Morneau explains in a cover letter accompanying a document outlining the proposed changes that the Finance Department released in July. “Rather, such practices can undermine confidence in our economy by giving tax advantages to a select few. We don’t think that’s fair.”

Fair? Is it fair that the proposed tax changes “could create an effective tax rate of 73 per cent on the earnings from investments held inside professional corporations,” as Ontario Medical Association president Shawn Whatley complains? Well, actually, unlike the two-thirds of Ontario doctors who are incorporated, most Canadians don’t have any earnings from investments held in professional corporations. So, yes, it might be fair to crack down on obvious abuses.

But isn’t giving doctors special tax advantages a tradeoff for the sacrifices they make to take the Hippocratic Oath? After all, haven’t they “already assumed huge debt during our education and training,” as the OMA head insists? He adds: “We have no benefits, pension or…

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