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I am running for Congress in the next elections for the CNC although in Alberta. Instead of writing a single platform I want to write a series of articles on the issues of the day. The first three parts of my platform are here, here, and here.

This time I want to discuss Wages and Taxes. They’re both too high.

At least that’s what some people think, including some people who have been elected to Congress. Most workers don’t think highly of the fact that 15% of their wages is taken as Income Tax and that goes double for someone who owns a business and tries to transfer some of his profits to his own account without using the Money Market. Consumers think that the Import Tax is too high because it keeps them from buying foreign goods cheaply. Business owners on the other hand think it’s too low because there are still foreign goods in the market at prices competitive to theirs. Some people think that the minimum wage is too high; that you can reduce overall salaries if the minimum wage is reduced, making goods cheaper. Business owners agree that the top wage at most Skill Levels is too high...but there’s nothing that government can do about that. Business owners who want to export goods think that the value of the CAD in terms of Gold is too high. Jacobi thinks the price of the CAD is too low...but just a smidgen too low.

As the owner of a manufacturing business I will tell you that wages are too high, but I’m convinced that dropping the minimum wage won’t help that because the problem isn’t at the bottom, it’s at the top. And that problem isn’t something that Government can regulate. As my old grandfather used to say, “someone is worth exactly what someone else is willing to pay them,” and that’s where the problem lies; company owners have driven wages up and sometimes done so by irresponsible jumps in wages. When I look at the top three offers for SL0 workers as I write this, there is a gap of $0.27. One company has an offer of $1.85, the next has an offer of $2.00 and the top offer is $2.02. You see it at other levels as well from time to time. In this Business owners are operating irresponsibly. Anyone who has experience on eBay and seen the “sniping” process, or watched “Jeopardy” and seen the winner carefully scale the final bet so that they win by $1 will understand the way to “properly” (in my opinion) make wage offers. I would like to advocate that the government put together an information package for business owners similar to what the Ministry of Education does for new players that would include information and concepts like this. I don’t believe that this requires a “Ministry of Commerce” but I do feel that irresponsible choices in terms of wages is one of the factors driving up the cost of production and resulting in companies either going broke, going into “stasis” (like my moving ticket company), or raising prices. We may very well be heading toward a crash in the job market as companies go broke, and if this does happen I hope that business owners will learn a lesson and behave with a little more responsibility afterwards.

With regard to taxes, as everyone knows they come in three varieties – Income Tax, Import Tax, and Value Added Tax. Like most countries, Canada keeps the Value Added Tax at the minimum and focuses on Income Tax and Import Taxes. Import Taxes are used to regulate foreign based companies trying to enter the Canadian market. Currently there is discussion about increasing the Import Tax in the Food sector as foreign companies are starting to invade the Q1 Food market. I am not against this policy, but my feeling is that some foreign competition is healthy for businesses – it keeps responsible business people on their toes and intent on watching the bottom line. The right mix of foreign competition should have the effect of drawing down wages as businesses set their wages more responsibly out of fear that outgo will exceed income. But I’m not even convinced of that, since it sometimes seems that some of the people owning businesses don’t know how to read a spreadsheet of tell the difference between profit and loss (but that’s just me ranting).

The Income Tax is another case where tinkering with the status quo is being suggested. The current tax scheme is a 15% Income Tax in every sector except Grain. Some people have proposed that the Income Tax be reduced to 10% across the board, with the expectation that this would somehow lead to a decrease in wages. If someone would like to explain to me how this would happen I’d be more than happy to listen. The problem is that any demonstration case would have to occur across an entire sector – either all manufacturing Income Taxes or all construction or all land – for it to be a valid test. I’m not sure than anyone is willing to risk that sort of disruption on a “maybe.”

I have become convinced that we are facing a coming crisis in some areas of the economy that will see companies going under or prices going higher because of the irresponsibility of some managers. Government can’t really do much about that. What government is able to do is to educate business owners so that they won’t make as many mistakes in the future. Tax changes and dropping the minimum wage isn’t going to make the problem go away. Either it will go away when managers operate in a more responsible way or when a market collapse teaches people a lesson. It's often said that Government shouldn't be responsible for shoring up failing businesses, but it should have an obligation to at least help company owners operate "smarter."