Canada's Small Business Job Credit Flaws

The proposed “Small Business Job Credit” has major structural flaws that, in many cases, give firms an incentive to fire workers and cut salaries. Like my colleague Stephen Gordon, I am no fan of this proposal.
  
This “EI cliff” kicks in fairly early, as a small business with as few as 12 employees can have EI contribution costs above $15,000 per year. Those firms then face a decision: Are they close enough to the edge of the cliff that they should cut staff or wages in order to obtain the tax credit. (Full disclosure: I own such a company that is on the “wrong” side of the cliff). The way this proposed system is designed is that the maximum benefit a company can receive from firing a worker and going under the $15,000 threshold far exceeds the maximum benefit a small business can receive from hiring an additional worker:

• The maximum benefit a firm can receive from firing a worker is $2234.04.
• The maximum benefit a firm can receive from hiring a worker is  $190.52.

Although this is sold as a job credit, there is no requirement that companies hire new workers. A firm can have fewer workers and a lower payroll than they had the year before and still receive a tax credit.

A larger problem with this proposal is the discontinuity that occurs when a firm reaches $15,000 in EI payments to the government. Once a firm crosses that threshold, it goes from collecting a tax credit of $2234.04 to collecting nothing.
 Mike Moffat Articles On Canadian Business
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Broadbent Institute: Top 10% own 50% of Canada's wealth (Statistics Canada data on wealth)

Top 10% own 50% of Canada's wealth

The gap between people at the top of Canada's wealth pyramid and those at the bottom is widening and showing no signs of stopping, a major left-leaning think-tank says. 

In a report out Thursday, the Broadbent Institute looked at the most recent Statistics Canada data on wealth levels of Canadians. The data agency typically divides the country into five groups of 20% of the population, known as "quintiles" but the Broadbent Institute divided the number into deciles — 10 groups, each making up 10% of the population — for a new look at the data. 

Under that analysis, income looks to be distributed even more unevenly than previously thought. 

The report found that the top 10% of Canadians owned almost half — 47.9% — of all the assets in the country. 

The bottom half of the population, on the other hand, shares a total of 6% of the wealth. And the majority of Canadians own no financial assets at all, except any pensions they may have access to. 

Similar reports have made the claim that while the rich are, in fact, getting richer, the average person is also benefiting from wealth gains — albeit less extravagant ones. Statistics Canada's own data shows that the richest 20% of Canadians saw their net worth increase by 40.6% between 2005 and 2012 — more than any other group — while the net worth of the poorest 20 per cent was unchanged. 

The report adds fuel to the income inequality fire, noting that since 1999, all four of the poorest deciles in Canada (in other words, the poorest 40% of the country) have seen their share of total wealth decline. 

The share of total wealth for the fifth through the ninth deciles (the richest 40% to 90% of Canada) all saw their share of total wealth increase, by about one per cent each over the last decade and a half. 

The report also found that the wealth gap changes significantly across the country. The concentration of wealth for the top decile is highest in British Columbia at 56.2% and lowest in Atlantic Canada at 31.7%. 

And In all regions except Atlantic Canada, the bottom half of the population held less than 10% of all wealth.

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