Good morning. We begin today with a note from The Globe's Small Business Editor Sarah Efron on the federal government's proposed tax changes:
I've spent the last few weeks staring at spreadsheets, studying the impact of the proposed tax changes to private corporations. The idea was to do an analysis of how the changes would impact four families with different income levels. Did the reforms really only target the wealthy, as the government claims? Or, as their opponents say, would the reforms cause great harm to middle class business owners?
With the help of financial experts, I looked at the impacts on the changes to income splitting, the conversion of income to capital gains, succession planning and holding passive investments inside a corporation. The analysis looked not just at the numbers, but how likely it would be for any given business owner to be subject to these tax increases.
What I learned was that these maddeningly complex reforms – layered onto a bedrock of already maddeningly complex tax law – were more narrow than I had imagined. And for the most part, they seem designed to target wealthy individuals. That's because many of the strategies the proposals are designed to discourage are really only useful if you're in a high income bracket.
However I also got a sense of why there is so much anxiety around certain areas of the proposals. The proposed changes to related-party transactions, for example, create a web of complex tax consequences that may be difficult for the government to untangle. And even though middle class businesses aren't being deliberately targeted here, there's not much for them to like either. They could face tax hikes in certain circumstances, as well as restrictions on how they manage their money. Read the full story here.
Sarah writes a weekly newsletter on small businesses, which you can subscribe to here.
This is the daily Politics Briefing newsletter, written by Chris Hannay in Ottawa and Mayaz Alam in Toronto. If you're reading this on the web or someone forwarded this email newsletter to you, you can sign up for Politics Briefing and all Globe newsletters here. Have any feedback? Let us know what you think.
Prime Minister Justin Trudeau is on his way to Mexico today as North American free-trade agreement talks continue in Washington. Mr. Trudeau meets with Mexican President Enrique Peña Nieto late in the day. Yesterday, U.S. President Donald Trump said it "will be fine" if NAFTA is cancelled. "I think Canadians are aware that the American administration, and the President, makes decisions that surprise people from time to time. And that is certainly something that we are very much aware of, and very braced for, and conscious of," Mr. Trudeau told reporters after meeting the President.
The Prime Minister took time out of his foreign trip to say, definitively, that the government will not tax employee discounts. The Canada Revenue Agency had floated the idea recently, and said yesterday there might be consultations on the proposal.
The case of a drug smuggler who is Indigenous and from a background of extreme poverty is the latest challenge to Canada's mandatory minimums.
RCMP officers screening people at an informal border crossing in Quebec were asking questions directed at their Muslim faith, the Toronto Star reports. A spokesperson for the Public Safety Minister says the questions were inappropriate and the RCMP have been directed to stop asking them.
Quebec Premier Philippe Couillard has shuffled his cabinet ahead of next year's provincial election. More than a dozen portfolios have been reassigned and the total size has increased to 30 members from 25. A new minister in charge of anglophone affairs has been named and the number of ministers under the age of 45 has doubled, both attempts to shore up the Quebec Liberal Party's support as it looks to shake off the perception that it is stale after years in power.
Mr. Trudeau writes in the international magazine Marie Claire about why he is teaching his children to be feminists.
And after Mr. Trump was elected, Mr. Trudeau's government was given a briefing book on who they'd be working with south of the border. VICE News obtained a (redacted) copy of the document, which includes information on everything ranging from political views and previous campaigns to marriages and personal wealth.
Campbell Clark (The Globe and Mail) on NAFTA: "Yet Mr. Trudeau's relentless optimism is both his preferred style and a strategy. The government-wide plan was to try to stay away from angry, tweeting Trump. Who can deny the President escalates conflicts when he feels challenged? And the nice Canadian approach is one the government has mustered in lobbying others who might influence the outcome – in Congress, state capitals and chambers of commerce across the United States."
David Parkinson (The Globe and Mail) on the Liberals' balanced budgets: "There are only so many moments in an economic cycle to get the fiscal ball rolling toward clear deficit-reduction targets; growth is unlikely to get any better than it has been this year. If the Liberals really meant what they said during the 2015 election campaign about temporary deficits and a commitment to balanced budgets, then that moment is upon them." (for subscribers)
Tony Keller (The Globe and Mail) on the plan to tax employee discounts: "The CRA already taxes major employee benefits, like a car allowance or free parking (with a few exceptions such as health and dental coverage). Aside from that, the principle of treating cash payments and in-kind benefits as equally taxable is generally upheld, at least when the perk is large and easy to spot.But when what's at issue is small, the same principle is often ignored, and understandably so. The question of where to draw the line – what's a big enough breach to be taxed and what's peripheral enough to be better off left alone – comes down to whether the benefit to society of that extra dollar in tax revenue outweighs the costs imposed on taxpayers in collecting it. That's the equation the Liberals have to consider as they refine their small-business tax proposals."
The Globe and Mail Editorial Board on the opioid crisis: "A criminal crackdown might appeal to some, but it is a distraction. The only option with a real chance of saving lives is for Ottawa and the provinces to treat the crisis as a public-health matter, and focus all their best resources on harm reduction."
Cheryl Knockwood (Open Canada) on implementing the UN's declaration on the Rights of Indigenous Peoples: "These discussions need to start within our communities to articulate a clear vision for our future, and to make plans and develop strategies to implement UNDRIP and achieve reconciliation. We need to move quickly to develop action plans that will create real change, to create healthy communities for both current and future generations. Canada needs to support and respect this Indigenous-led implementation of UNDRIP, by recognizing the aboriginal and treaty rights of each Indigenous nation."
Elizabeth Renzetti (The Globe and Mail) on abuses of authority: "It's tempting to look at the appalling and possibly criminal behaviour of high-profile men accused of sexual harassment as a kind of reverse great-man theory of history – the disgraceful-man theory of predation. When accusations of assault or harassment cases make headlines, it's often because there's a powerful man at the centre – Roger Ailes, Bill Cosby, Bill O'Reilly, and now Harvey Weinstein. But looking at this strictly as a problem perpetrated by individuals does not acknowledge that workplace harassment of women is a failure of culture and power structures, and it's ongoing. You can pull one weed and the whole garden will still be rank."
Robyn Urback (CBC) on abusers' politics: "Indeed, just as a 'traditional values' demagogue will inevitably find himself making a tearful public apology to his wife for something that just happened once — promise — so too might a well-known Hollywood champion of women's rights — say, one who participated in a recent women's march and helped endow a Rutgers faculty chair in Gloria Steinem's name — find himself apologizing for a sordid past of sequestering young women in hotel rooms and confronting them with his sweaty erection."
Spanish Prime Minister Mariano Rajoy is giving his Catalan counterpart Carles Puigdemont eight days to drop the region's bid for independence. If they don't, Mr. Rajoy says he'll suspend Catalonia's political autonomy.
Myanmar's military burnt down homes, crops and whole villages in an attempt to prevent Rohingya from returning, according to the UN's human rights office. Half a million members of the persecuted minority have been forced to flee. If you're interested in learning more about the crisis, The Globe's Nathan VanderKlippe recently reported from the Myanmar-Bangladesh border to understand how it's gotten to this point.
We still don't know why the Las Vegas shooting happened, with investigators continuing to search for a motive behind the deadliest mass shooting in modern U.S. history. But pressure is mounting for police to explain how quickly they responded to the situation.
And in case you missed it, North Korean hackers stole U.S.-South Korea military plans last year. The breached data include classified wartime contingency plans and the South Korean military's plan to take out North Korean leader Kim Jong-Un.
Mexican President Enrique Pena Nieto in The Globe and Mail on the bilateral relationship: "Canada and Mexico are going through one of the best moments of our relationship. The ties that link us, as well as the values and principles we share, make it stronger every day. This year, we celebrate 73 years of diplomatic relations, and we are witnessing a historical moment characterized by both countries' political willingness to further strengthen our ties and deepen our strategic dialogue under a renewed perspective. The current regional context demands a revitalization of the co-operation that already exists between our countries."
Konrad Yakabuski (The Globe and Mail) on Catalonia: "History is made up of strange coincidences. One of these consists of the fact that both Carles Puigdemont and Mariano Rajoy bear facial scars incurred in life-threatening car accidents. Mr. Puigdemont, the Catalonian separatist leader, covers his forehead scar with long bangs. His nemesis, the Spanish Prime Minister, has worn a beard since his own accident made shaving an ordeal. The challenge now facing these two men, who have starkly similar personalities despite their visceral political differences, is to avoid causing deeper scars among the Spanish people that would make reconciliation between the central government and its breakaway territory even harder than it has already become. If they fail, all of Europe could come crashing down."