Increasing our standard of living requires a different way of thinking, writes Peter Watson.
Canadians can have a higher standard of living if we learn to take a broader perspective on economic issues. Our current thinking tends to be polarized.
Most working people have a job. Their pay cheque is based on formal education, industry training and experience, their own personal intelligence, general ability, and work ethic.
Some people own a business. They are the risktakers who often have all their financial assets invested in the business and in many cases have personal loans to finance it.
Both workers and business owners contribute greatly to our economic prosperity.
Now I am going to ask us to make a policy decision. How can we provide job security and financial benefits to all those in Ontario?
The key is jobs. Jobs provide a pay cheque for citizens and tax revenue for government. Our challenge is to support jobs and have an economic environment that encourages the creation of more jobs.
One option is to lower income taxes for businesses that become financially successful. Business owners might expand their current business or start another business.
Some current employees might leave their job to start a business. All these outcomes lead to more jobs and when the demand for employees rises so will the employment income of its workers.
Some might say that rich business owners do not need any government handouts. Those people are correct. But what we need is more better paying jobs and for that we need more businesses.
Before we get too negative about providing tax incentives to successful business owners let’s consider reality. Many business owners earn less than if they had a job elsewhere. Many businesses fail and that can be financially devastating to the owner.
In summary, if we concentrate on encouraging businesses to be created and expanded then we have achieved our goal of providing more high-paying jobs.
Business owners and employees, we all work together.
Peter Watson, of Watson Investments MBA, CFP®, R.F.P., CIM®, FCSI offers a weekly financial planning column, Dollars & Sense. He can be contacted through www.watsoninvestments.com
