Can Tax Kill you?

With the rollout of the higher capital gains tax coming coast to coast, I have witnessed a backlash like none I have really ever seen. Normally when we see a policy change, tax change, etc. the verdict is pretty split down the middle with about half of the population in support, and half not loving the idea so much. However, with the latest change to the capital gains tax rates, it has been a backlash like I have never seen in my career.

There is about 856 reasons why this policy is bad policy, and I won’t cover them here. Almost every single economist, financial analyst, trade group, business group, Chamber of Commerce, etc. is against these changes – and for good reason. Increasing the tax rate of capital gains will kill productivity. Now, Canada already has a productivity problem, so this certainly won’t make it any better. When money is taxed away, business takes their ball and goes home. Now, I do not expect anyone to lose sleep or shed a tear for multi billion dollar businesses who have to pay more tax. Not at all. However, the capital gains tax changes will not only hurt those large, multi national billion dollar corporations – they will hurt the small business, the medium business, and almost every entrepreneur. Most importantly, it will hurt, or potentially kill start ups. Let’s say you had the next big ‘ thing’ or ‘idea’. Not a cool idea, or a trend, but let’s say you had the next Iphone type of idea. Now, would you choose to start the business in a tax friendly jurisdiction, or a tax jurisdiction that has made it abundantly clear they will tax the supreme shit out of you – all while blaming you for all the problems of the country?

Case in point: Today in Florida a new venture was rolled out in my neck of the woods – Manatee County. This new venture is a healthcare marvel that will save lives. The concept is quite simple – using drones to deliver initial medical supplies from 911 calls. Using the drone technology, the service is able to deliver things like Epi pens, defibulators, Noxalone, primary care tourniquets, and the like. When someone calls 911, these items can be dispatched and delivered to the scene of the call in about 60% less time than getting qualified medical staff through traffic. The drones stations are stationed all around the county, and can dispatch from multiple locations with urgent supplies for people in medical distress, people at car accidents, etc. On almost every fire truck I have ever come across, I have always seen a sticker along the lines of ” Seconds Save Lives”. If seconds save lives, what could minutes save, or 10 minutes save?

Now, the technology has a ways to go, and the trial period is just starting. During this time they want to work out issues, increase the items that can be delivered, and also allow for video recording. By allowing the drone to send live footage to trained medical personnel, the trained medical professionals may be able to walk helpful bystanders through how to deliver primary care until firefighters and paramedics can arrive and take over. This type of technology has the potential to really save lives, reduce deaths, and make for a better society. Sure, there will be issues, and problems, but every great technology encountered bugs when it was first rolled out.

Now, why am I rambling on about drones and fire engines and 911? Well part of it may be my ADD, however, the reason is really quite simple. I am fortunate enough to know one of the founders of the company. He is truly a great guy. I specifically asked him why he decided to launch this company, this idea, and this trial in Florida. His answer? Low taxes ,and a welcoming business environment.

Now, I am sure there were other reasons like the weather, maybe some random demographics played a part, but the main overriding principle was the taxation ( Florida has no state income tax ), the Qualified Small Business Stock ( QSBS is a US Federal tax law that allows small business startup investors to pay no capital gains tax on up to 10 million of gains. Since the start up of the business was funded by the owner, then he is the shareholder and investor as well ), and the general lower cost of taxation on living in the State of Florida ( sales tax is only 6%, gasoline tax is lower, there is no carbon tax, etc. etc. ). Now, Florida is not all sunshines and unicorns, but small businesses are starting here, growing here, and thriving here. There is a reason that Jeff Bezos has re-located to Florida. A lot of new entrepreneurs are starting their enterprises in Florida ( and Texas for that matter which also has no state income tax ).

I know quite a few entrepreneurs and business owners from Canada who have moved here, started businesses here, and are thriving here. I am one of them. When I ask any of them why they left Canada, the reason was always about the same – taxation and cost of living. I see a theme emerging.

Today was a great example of why raising taxes all the time is a bad idea – especially raising taxes on people who will be the next generation of potential billionaires. The new business was launched in Florida, will save lives Florida, and may eventually head North. Imagine if Canada was business friendly and decided to try and attract entrepreneurs instead of raising taxes? What if Canada was actually open for business? What if the red tape was cut, and businesses could actually startup and thrive in Canada? Just imagine.

Taxes are where your money goes to die. Taxes do not produce anything, they do nothing to raise productivity, and they drain society of its monetary resources. I guess my point is that by being open for business and tax friendly, there could be a lot of Floridian lives saved by a new business. So, by being the opposite of that, I guess it could be said that high taxes really could kill you!!