The Middle Class is on Life Support - Creator's Corner Newsletter #26

Hey Reader!

Federal budget season is coming, and here’s the uncomfortable truth: unless policy changes, the middle class is on life support.

We keep hearing “tax cuts” in the headlines, but let's not kid ourselves: "tariffs" aren't tax cuts. Under the pretext that the government will now earn revenue from trades with other countries, tariffs are seeping into added consumer cost. Tariffs shift government revenue from domestic taxpayers to foreign trade, but the hidden cost is that middle-class households end up paying more. Why? Because they have both the ability and the tendency to spend. The wealthy (this is the top 1%) have the ability but not the tendency. The poor have the tendency but not the ability. That leaves the middle class holding the bag.

Raising taxes doesn’t solve it either. The wealthy know how to leverage and even rewrite (legally, through lobbying) the tax code. Depreciation, corporations, opportunity zones, estate freezes… these vehicles in the Canadian and U.S jurisdiction mean they can grow and protect wealth while reducing their tax burden.

How does a government save the middle class? And beyond that, restore parity amongst the three classes? It starts with changing focus from taxing "work" to taxing "wealth". Increasing tax rates through policy are flawed in their design to touch wealth (because wealth isn't income). The result is that the middle class funds the government (having taken the position of the poor, which were the first to take the brunt).

Without change, we’re heading for a future with two classes; the ultra-rich and everyone else.

Tax planning isn't a science. It's common sense, and my goal is to simplify it one piece of content at a time.