A job-killing tax hike is expected in Trudeau's budget

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There will be no middle-class tax increase in Tuesday's budget, but we expect the tax hike to hit the middle class. The Trudeau government has signaled for weeks that the tax hikes are coming to combat massive spending increases, and they don't just plan to tax the middle class.

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Instead, based on demands from the NDP and Trudeau's junior coalition partner, Jagmeet Singh, we will see tax increases on high-income earners and corporations.

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Singh, who seems more likely to run the government than Trudeau these days — to dictate key policy decisions — has been calling for an “excess income tax” for some time. It's unclear what such a tax would actually look like, but the New Democrats bragged to Radio Canada, the CBC's French affiliate, about the corporate tax hike this week.

The source, who spoke on condition of anonymity, said the NDP wants the corporate tax rate to rise from the current 15% to 22%, calling it critical to a fairer society.

“We can gradually close half of the gap over the next few years. If we get to 18%, that means $9 billion more in the coffers,” an unnamed NDP source told Rad Kahn.

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That's why Rad Kahn wrote what you'll see on Tuesday, “A budget written in orange ink.” That's a great line, especially when you consider that the Trudeau Liberals are taking tax advice from the economically illiterate Singh NDP.

Canada's corporate tax rate was once 28%, but in 2000, then-Prime Minister Jean Chrétien began lowering it to 22%. When Stephen Harper took office in 2006, he reduced it to the current 15%.

While critics claim it makes the government poorer, the opposite has happened, with corporate income tax revenues either holding steady or increasing every year. A 2018 study by the Montreal Economic Institute adjusted detailed corporate tax revenues to 2017 dollars using inflation and found significant declines except in years of recession.

This is because lower tax rates make Canada more attractive for doing business. More companies investing in equipment and jobs here means more economic activity and more revenue for the government.

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Low tax rates make Canada an attractive destination for foreign investment. Raising the corporate tax rate to 22%, as desired by the NDP, would put Canada's corporate tax rate higher than that of the United States.

For more than a century, both Liberal and Conservative governments have maintained a low corporate tax rate as a key economic policy to attract investment in Canada.

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Now that we have a defacto NDP government, maybe that's out the window. Many people have called Justin Trudeau a socialist for years, but his decision to embrace the NDP's economic policies lends some credence to those claims.

So it was funny to hear Trudeau speak to the Canadian Chamber of Commerce on Monday and warn Canadians about taking too much money out of their paycheques.

“When too much take-home income goes to housing costs, that's money that's not being spent on the broader economy, money that's not being invested in starting small businesses, money that isn't stimulating or stimulating our economy,” Trudeau said.

It's great to hear Trudeau applaud the economy on housing costs, but why isn't he doing the same on taxation?

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If he raises taxes on high-income earners, they will eat less, hurting chefs, waiters and restaurant owners. They are cutting back on what they order, hurting Canadians who try to deliver food as a second job.

They can cut back on household services provided by small businesses, from landscaping to security services.

This also applies to businesses facing high tax pressures.

Leasing will freeze, and capital spending on equipment and productivity will slow. New investments by foreign firms are interrupted or diverted.

Trudeau presents his budget as something to cure what ails us. Instead, it can make things much worse.

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