Trump's win should force Trudeau to make Canada more tax competitive, but don't count on it
Like many Canadians, I was glued to the non-stop coverage of the election results in the United States last week, with my tax brain going into overdrive thinking about how Canada would respond to a high-tax-loving Kamala Harris win versus a low-tax-high-tariff Donald Trump win, which ultimately came to pass.
Despite doomsday predictions about what Trump 2.0 will mean for Canada, the short story is that we’ve seen part of this screenplay before. During his first tenure, there was a massive package of U.S. tax cuts and reform rolled out in 2017, including significant corporate tax reform, personal tax cuts and estate tax changes.
Many Canadians, including me, were rightly concerned that Canada’s economy would struggle mightily and lose ground from a competitive perspective. Good leadership requires proactively surveying the landscape and making bold, thoughtful decisions based upon conclusions drawn from such analysis. It also requires responding thoughtfully to competitors and/or threats.
Accordingly, many were waiting for our federal government to provide good leadership and to respond quickly and thoughtfully to ensure our competitive landscape would not be dangerously eroded when Trump’s tax reforms were announced and implemented in 2017. Instead, then finance minister Bill Morneau continuously repeated that Canada would not respond in a “knee-jerk” reaction.
Eleven months later, the Department of Finance responded in a non-knee-jerk fashion. It was a pathetic response to major tax competition.
“Eleven months since the U.S. released and effectuated historical tax reform (and 11 months of listening to the Canadian Department of Finance’s standard speaking point stating that they will not respond to U.S. tax reform in a
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