future is here

The complex history of tax policy in Canada since Confederation has a number of important landmarks that show how Canada has struggled to build a more efficient tax structure. Canadians have periodically reviewed their tax systems, sometimes making dramatic changes over the years.
In the years following Confederation, politicians who tried to combine a limited knowledge of tax policy issues with their perception of political sensitivities largely initiated tax changes. In the federal government, the Department of Finance gradually took on a central role of shaping Canadian tax policy, a step that was greatly aided by the appointment of Clifford Clark, an economist, as deputy minister. Clark came to office in 1932, at a time when most of the employees of the department were engaged in counting redeemed coupons clipped from government bonds. He began to apply economic analysis to the formulation of tax policy, and to improve the comprehension of fiscal issues. He was in good part responsible for the remarkable job of financing Canada’s spending during the war years, when government expenditures soared but inflation was kept well under control.
Perhaps the next landmark was the Report of the Royal Commission on Taxation in 1966, known as the Carter report after its chairman, Kenneth Carter. The report was a comprehensive survey of the total tax structure in Canada, and contained recommendations for a complete change in this structure.
The Carter report adopted the basic approach that “a buck is a buck”—that all additions to personal wealth (command over goods and services) rank as income, and should be taxed as such. The report therefore proposed that not only earned income and the return on investments (including capital gains) but also bequests and gifts be taxed as income. The reports also recommended a complete (and complex) integration of personal and corporate income, so that income earned by companies would be taxed at the personal rates of its shareholders. The report also recommended lower tax rates that could be achieved because of the broader base.
Some commentators complained that the report was antibusiness, because it advocated the end of a number of business incentives and special treatments. However, it was careful to point out that business per se is not a separate source of revenue for governments: taxes on businesses must inevitably be passed on to others through lower wages to labour, lower prices for other inputs, lower returns on capital, or higher prices to customers. In the end, only people bear taxes.
While some of the report’s recommendations were acted on, many others were not. However, the discussion and research of the committee has served to illuminate tax policy in Canada and elsewhere.
A further landmark of sorts was the budget introduced by Finance Minister MacEachen in 1981, which proposed major revisions in the tax system, including most notably reduced