This presentation looks at trickle-down economics.

1. By: Paul
Young, CPA,
CGA
Date:
September
25, 2019
2019 Election –
Trickle Down
Economics –
September 2019

2. Paul Young - Bio
• CPA, CGA
• Financial Solutions
• SME – Business Process Changes
• SME – Risk Management
• SME – Close, Consolidate and Reporting
• SME – Public Policy
• SME – Financial Solutions
• SME – Supply Chain Management
• Academia – Advance Accounting, Public
Finance and Advanced Management
Systems
Contact information:
Paul_Young_CGA@Hotmail.com

3. Agenda
What is Trickle Down Economics?
What is the Tax code/Rules
Explanation of Corporate Taxation
Explanation of Wealth Transfer
Middle Class
Tax Cuts
Blog #1 – Trudeau and Trickle-Down Economics

4. Summary
This presentation discuss how trickle
down economics. There is allot of
misunderstanding on how income flows
from Government treasury to social
programs.
The presentation will discuss pressure
facing the middle class including
economic growth.
It is not one government policies, but
many that support economic growth.

5. What is trickle down economics
• Trickle-down economics, or “trickle-down theory,” argues for
income and capital gains tax breaks or other financial benefits to
large businesses, investors and entrepreneurs in order to
stimulate economic growth. The argument hinges on two
assumptions: all members of society benefit from growth; and
growth is most likely to come from those with the resources and
skills to increase productive output.

6. What is the
tax code
• The tax code
• Provides deductions for expenses a part of earning
income
• Provides rules for taxation, i.e. tax rates, capital
gains, dividend tax credits, etc.
• Each country has their own tax body that sets the
rules for taxation
• Some countries have flat tax rates, but high
consumption taxation (Europe/Asia)
• Some countries have progressive tax rates that
tax the top 1% at about 50%+ of their income
• Corporation report income based on GAAP
(Generally Acceptable Accounting Practices).
There are issues how both income and expenses
are reported when it comes to accounting and
taxable income. The differences are known as
both timing and permanent differences.
• Timing differences is how items are treating
different for accounting than taxation, e.g.
Warranties, Depreciation/Amortization
• Permanent differences are items that are
not allowed for taxation, but are acceptable
for accounting, e.g. only 50% of meals and
entertainment is deductible (Canada)

7. Corporate
Taxation/Planning
• Corporation earned income around the world
depending on how they are organized
• How does income move around the world?
• Companies are looking at ways to expand
their global present. Companies will deploy
FDI as part of looking for returns on
investment that will benefit their
shareholders
(http://www.investopedia.com/terms/f/fd
i.asp)
• Companies may moved R&D/Innovation to
low cost producing countries
• Companies may control the borrowing as
such may lend money to foreign entities via
intercompany loans/interest income
• Companies can re-patriate cash via the
following methods
• Intercompany dividends
• Intercompany interest
• Transfer pricing (shared services)

8. Personal Taxation
• Countries tax income, not wealth
• Countries have different tax systems
• Payroll taxation (Social Security)
• Personal Income Taxation
• The wealthiest people in the world has created wealth through investment
in business, stocks and bonds and real estate
• Income earn from investment is tax based on residency status.
• Some income is tax different, i.e. interest vs- dividends or the sales of
shares/companies/personal use property/listed property/real property
• Top 1% can pay over 50+ of their income to taxation -
https://www.youtube.com/watch?v=hWarBMfshaA

9. Top Income Earner/Canada
• @theJagmeetSingh @JustinTrudeau both
focus on the rich, but they are doing in a
way that is not truthful
• The top 1% is paying less of the federal
tax despite the Libs increase the tax rates
• There are no co-relation hiking taxes on
the rich and prosperity
• https://www.slideshare.net/paulyoungc
ga/taxing-the-top-1-and-economic-
prosperity
•

10. Top Income Earner/Canada
• Combined Provincial/Territories range 47% to 55%
• NB has highest combined Personal Income Tax in Canada
• The small group is a big source of federal revenue, contributing
more than 20 per cent of all income tax collected. Canada’s
rich may be getting a little richer, but their income growth of
1.2 per cent between 2012 and 2013 was in line with the
growth of all other tax filers.
• http://www.cbc.ca/news/canada/new-brunswick/higher-
taxes-on-rich-may-miss-revenue-targets-experts-say-1.3031842
or https://www.youtube.com/watch?v=pICUvNi95AY

11. Redistribution of Income:
Facts:
• Top 1% account for 20%
of the Federal Income
Tax
• Corporate Tax account
for 1/3 of the transfer
payments
• Equalization benefits
come from the have not
promises via royalties as
well as other revenue
sources
Source - https://www.fin.gc.ca/fedprov/mtp-eng.asp

12. GDP / Wealth Flow
Factors in play that impact wealth
distribution
• Companies invest into projects as part of
return on investment for their shareholders
• Pensions Funds like CPP investment in
companies for their return on investment
• Wealth distribution is done through transfers
to provinces to support healthcare.
• Provincial government collect tax dollars to
fund education and healthcare
GDP Growth:
• 2/3 of the economic
growth is driven by
retail Sales
• Exports are about ¼
of GDP. Canada
needs exports
• Canada needs FDI in
order to develop its
resources,
manufactured
goods, build
transportation
systems

13. Blog – Wealth Distribution
• Canada has series of programs that moved income from the federal government which are called the federal
transfers - https://www.fin.gc.ca/access/fedprov-eng.asp. The new transfer agreement ties federal transfers
to GDP - http://evidencenetwork.ca/archives/26746
•
• The new Premier John Horgan who does not support Kinder Morgan is asking the federal government more CST
money for daycare - https://www.theglobeandmail.com/news/british-columbia/bc-ndp-looks-to-federal-
government-to-help-fund-childcare-plan/article37012357/. Kinder Morgan delays are costing $73B of new
exports of oil over the next 20 years or about 3.6B/annual in export revenue for oil companies.
•
• I am all for a good debate on changing transfer policies, but not when it is strictly about give me more money.
The debate should be about how do we grow the economy. It is not by dropping carbon completely out of the
economy. https://www.slideshare.net/paulyoungcga/carbon-free-economy-canada-november-2017
•
• Source - https://www.slideshare.net/paulyoungcga/wealth-distribution-canada-november-2017

14. Canada Middle Class

15. Blog – Tax Cuts
Here is more information on Harper:
 Harper did not just focus on tax cuts including corporate tax, but also set up innovation funds and sign trade
deals to expand exports. https://www.slideshare.net/paulyoungcga/wealth-distribution-canada-corporate-
tax-july-2017. Trudeau was elected and said he will focus on clean technology, right?
https://www.liberal.ca/wp-content/uploads/2015/08/A-new-plan-for-Canadas-environment-and-
economy.pdf The problem is clean technology companies are not making money, right?
http://www.bnn.ca/awash-in-red-ink-canadian-clean-tech-struggling-despite-ottawa-s-green-goals-1.729679
 Harper created many innovation funds, sign trade agreements, expanded ports like Montreal, Prince Rupert,
etc. Harper was all about getting goods to market. More could have been done, but pipelines as well as lack
of priorities by governments including Ontario on natural resource development set Harper back -
https://www.slideshare.net/paulyoungcga/merchandise-trade-canada-july-2017
 I see nothing in proving your point that tax cuts do not work. All I see is opinion. So, I suggest provide a
source or shut up. If you realised a couple things about world it is very global now. Canada needs to be
competitive when it comes to attracting foreign capital. If you look at Harper’s policies then you will see he
did not focus on one area, but many areas like innovation, trade, FIPA, capping the growth in payroll taxes,
etc. http://ottawacitizen.com/storyline/head-of-canadas-largest-manufacturing-association-says-tories-have-
supported-the-sector or https://www.slideshare.net/paulyoungcga/manufacturing-sector-canada-june-2017
 Do you own RRSP? You have CPP deducted, right? Where does pension money go? It goes to profitable
companies, right? http://www.cbc.ca/news/business/cpp-pension-earnings-1.4243308
 You treat corporation with other distaste, but I bet you shop at grocery store, drive a car, own a cell phone,
rent/own a house, right? You would not have these luxuries without corporations.
 I see you are also talking about the bailout, right? Harper was forced into bail out.
http://www.autonews.com/article/20160907/OEM01/160909877/co-directors-tell-why-they-made-auto-
bailout-documentary
 I have explained many times about deficit and debt, but you will never read the links.
https://www.slideshare.net/paulyoungcga/federal-government-debt-canada-august-2017 or
https://www.slideshare.net/paulyoungcga/canada-cpc-and-liberals-surplus-debate
Let’s see I defend my position with facts and figures and you expressed opinion. I have even gone the extra mile to
show the flow of taxation which seems to be missing from your point, why? I have novel idea if you are going to
debate me then I suggest you provide backup to your opinion.

16. Tax Cuts / PBO
Source - https://globalnews.ca/news/1356467/tax-cuts-since-2005-net-canadians-30b-pbo/

17. LPC / Tax Cut
• Liberals eliminated tax
credits
• Liberals plan hikes to CPP
• Liberals are forcing carbon
pricing
• Liberals eliminated income
splitting
Source - https://globalnews.ca/news/3769136/taxes-middle-class-liberals/
Best Middle Class
https://www.youtube.com/watch?v=QgbHWFgmSfQ
You do not hike CPP, introduce carbon tax, remove tax credits and then say
you are supporting the middle class
https://www.theglobeandmail.com/business/commentary/article-middle-
class-increasingly-feeling-the-squeeze-oecd-report-says/ or
https://www.slideshare.net/paulyoungcga/middle-class-and-justin-trudeau
https://globalnews.ca/news/1356467/tax-cuts-since-2005-net-canadians-30b-
pbo/
“Another gift to the government in the report was that the PBO found that in
relative terms — lower income Canadians earning between $12,200 and
$23,300 benefited the most, increasing their after-tax income by four per
cent.”
Trudeau never had the answers for the middle class -
https://www.slideshare.net/paulyoungcga/middle-class-and-justin-trudeau

18. Other information/Comments:• NDP and Liberal Comments - http://www.torontosun.com/2015/08/15/trudeau-and-mulcair-selling-a-fantasy-to-the-middle-class or
http://www.cbc.ca/news/politics/trudeau-speech-chamber-commerce-1.3513939
• I hear the same comments that Harper has killed the middle class when it is has been bad provincial policies led by various provincial
government that felt social policy at all costs is the solution to run their various budgets. Here are facts/videos on the middle class -
https://www.youtube.com/watch?v=xqLDHQ-iJU8 (is this a lie? or https://www.youtube.com/watch?v=yOl37VcG89c (is this a lie? -
http://globalnews.ca/.../tax-cuts-since-2005-net.../ (is this a lie?) or http://www.slideshare.net/paulyoungcga/taxation-policies (are my
slides 8-11 wrong).
• BTW: Hiking the corporation tax to 18-22% range will add 2-8% more to cost of your iPhone, iPad, Clothes, transit passes, food, beer, wine,
etc. http://www.slideshare.net/paulyoungcga/corporation-taxation-canada-44675640.
• How about childcare: http://www.iedm.org/fr/2821-quebecs-failed-child-care-model
• Canada is one of the most admired countries in the world: http://www.ctvnews.ca/canada/canada-ranked-as-most-admired-country-in-the-
world-report-1.2470040
• Canada also has done well compared to its peers across the world - http://www.bmonesbittburns.com/economics/forecast/int/intmodel.pdf
• http://www.theglobeandmail.com/report-on-business/top-business-stories/canadians-scale-the-income-ladder-with-the-best-of-
them/article25533315/?click=sf_globefb
• Remind me again why we should change to either Mulcair or Trudeau government as the facts do not align with their policies!
http://www.torontosun.com/2015/08/15/trudeau-and-mulcair-selling-a-fantasy-to-the-middle-class
• FYI – Canada is still one of the best countries in the world - http://news.nationalpost.com/news/canada/canada-named-the-country-with-
the-best-reputation-by-global-survey-again or https://ca.news.yahoo.com/blogs/dailybrew/canada-tops-the-world-as-most-reputable-
country-021908756.html
• FYI – Taxing the richest - http://www.cbc.ca/news/canada/new-brunswick/higher-taxes-on-rich-may-miss-revenue-targets-experts-say-
1.3031842 or https://www.youtube.com/watch?v=pICUvNi95AY
• Hydro rates - http://laws-lois.justice.gc.ca/eng/const/page-4.html

19. Are there
issues with
trickle down?
• Some countries like the United States have done a poor job in
terms re-allocation of taxation to support social programs
• You cannot tax people to prosperity
• Government needs to have balance approach to tax policies
and program spending. Program spending needs to be driven
via value for money. If services can be better done by the
private sector then they should be outsourced
• Education has to be aligned to jobs opening as well as future
jobs
• There is no such thing as free ride. Someone else is paying for
your free ride -
https://www.youtube.com/watch?v=PAGqKhSw5Lg
• Some countries are better than others when it comes to
support social programs – Canada and Scandinavia -
http://www.slideshare.net/paulyoungcga/scandinavia-vs-
canada-comparison-of-social-and-economic-policies
• Canada #1 - Report: American Middle Class No Longer The
World's Richest - America's Newsroom -
https://www.youtube.com/watch?v=yOl37VcG89c

20. Blog #1 – Trudeau (Trickle Down Economics)
Source - https://vancouversun.com/news/local-news/indigenous-pipeline-protester-
chimes-in-on-prime-ministers-fundraising-speech-in-vancouver
The prime minister told attendees that
Conservatives believe in “trickle down
economics,” or the idea that giving tax breaks
and advantages to the wealthiest will create
growth that will “somehow end up helping
hardworking, ordinary Canadians.”
But he said that idea failed the previous
Conservative government, which didn’t
understand that even though there
was growth in the economy, so many average
Canadians felt it didn’t touch them.
“We got elected with a very different idea for
our economy and for Canadians,” he said.
“The idea that if you want to create growth,
it has to be for everyone, not just for a few,”
he said.
1. Harper reduced income tax rates, moved GST from 7% to 5% and introduced
tax credits. Harper’s policies put more money into taxpayer’s pocketbooks -
https://business.financialpost.com/opinion/william-watson-turns-out-the-
harper-government-was-actually-terrific-for-wage-growth
2. FDI investment in key sectors has left Canada due to Liberal failures -
https://www.slideshare.net/paulyoungcga/2019-election-fdi-foreign-direct-
investment-canada
3. The Wealthiest pay over 20% of the federal income tax. Liberals policies are
leading to a brain drain – see slide 10
(https://www.slideshare.net/paulyoungcga/2019-election-employment-
canada-april-2019)
4. Trudeau has made Canada less competitive today due to his tax and
regulatory policies - https://www.slideshare.net/paulyoungcga/2019-
election-business-competitiveness-canada-may-2019
5. Trudeau also does not seem to grasp that taxes like carbon taxation or GST
are regressive taxes - https://www.irishtimes.com/opinion/letters/carbon-
taxes-are-regressive-1.3869390. Trudeau does not seem to grasp how
taxation flows through to cost of living -
https://www.slideshare.net/paulyoungcga/art-of-taxing-pollution-canada-
environment
Harper was not perfect, but he had a better grasp of economics. It should be no
surprised as Harper has education in economics as compare to Trudeau who
education background is drama!

21. Trickle Down Economics and 2019 Election
https://thestarphoenix.com/news/politics/election-2019/john-ivison-scheers-endless-spending-promises-are-giving-the-liberals-an-easy-stick-to-beat-him-with/wcm/c6383a69-bff4-
4d80-8ba3-694b7b0a8c9b?utm_term=Autofeed&utm_medium=Social&utm_source=Facebook&fbclid=IwAR2K9ZdIcLc0sNI5b4sicy1cgzCQk-
4gU8FTI48vr7iplok4dNnX3LS8Pls#Echobox=1569378292
John Ivison: Scheer's endless spending promises are giving the Liberals an easy stick to beat him with
How so, John?
 Trudeau said economies grow from the heart, right?
 Trudeau said budget balances themselves, right?
 Trudeau has miss managed every file - https://www.youtube.com/watch?v=dyizMrTpHr0 or https://www.slideshare.net/paulyoungcga/liberal-
party-of-canada-government-record-2015-to-2019
1. There is already a $14B shortfall due to many failures of Trudeau. Trudeau is not about efficient govt. Scheer will look at w ays to streamline
govt just like Harper did during his time in office - https://www.slideshare.net/paulyoungcga/2019-election-public-sector-efficiency-canada-
july-2019
2. Scheer is about reducing regulations and eliminating regressive taxes - https://www.slideshare.net/paulyoungcga/2019-election-who-do-your-
trust-more-when-it-comes-to-tax-fairness
3. Scheer is about making Canada more competitive which would benefit FDI - https://www.slideshare.net/paulyoungcga/2019-election-gdp-and-
economy-canada-june-2019
FYI – Ivison wrote a book on Trudeau, right? So, what is Ivison game - https://www.penguinrandomhouse.ca/books/600389/trudeau-by-john-
ivison/9780771048951 Could John be promoting his book?

22. Bottomline
• Top 1% pay over 50% of the income to taxation
• Top 1% earned their wealth through investment in stocks, bonds and real
estate
• Top 1% have good accountants and lawyers as such no how to work
within the tax laws to moved income around as part of managing their
taxes
• Top 1% may take their investment elsewhere as part of managing their
wealth - http://www.statcan.gc.ca/daily-
quotidien/161017/dq161017a-eng.htm
• The role of government is set policy to encourage investment. Too much
tax and regulations do not lead to strong economic growth -
https://www.slideshare.net/paulyoungcga/2019-election-gdp-and-economy-
canada-june-2019
• Government should stop using Keynesian economics unless it is targeted on
measures that will support infrastructure spending and make a country
more competitive - https://www.slideshare.net/paulyoungcga/keynesian-
economics-july-2017
• Pensions fund by companies as part of managing their returns
• Bad policies hurt the low to middle class worst than the 1%
• Carbon Taxation will force up household spending by $1,200 to $1,500
• Hikes to CPP will impact hiring (Companies may not be able to afford
the hikes)
• Hydro rates impact both business investment as well as household
spending
• Money flows from companies through the following ways
• Dividends payout
• Capital Investment (debt, working capital or stock issuance)
• Share buyback