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Hurricane Donald, Or Not, Canada Should Have Fixed These Problems Long Ago

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By Jeremy Nuttall

Jeremy Nuttall, former Toronto Star investigative reporter, argues “In recent years the U.S. has been solving problems the Canadian government wasn’t interested in.”

The nerves have been frazzled north of the border here in typical Canadian style, in the wake of the election of Donald Trump as president of ‘those’ United States. As Robin Williams famously said, Canada is like a really nice apartment over a meth lab.

And now, a significant swath of Canadians are reeling from the election of a man who has so many failings, both with his character and ethics, running the most powerful nation on Earth, with whom we share a border. It has understandably sparked a doomsday scenario in the minds of many Canadians.

But if you’re looking for a way to work out this nervous energy, here’s an idea: help put Canada’s house in order. This apartment isn’t as nice as the late Mr. Williams would have us believe.

Trump’s first term as a U.S. president saw many guardrails and civil servants prevent him from enacting his full agenda. The U.S. institutions did a decent job of mitigating damage. Oh, how nice it would be to see such gumption in the halls of power in Canada. But we don’t, and that makes this country even more susceptible than the Americans are to the whims of any nefarious would-be ruler.

In recent years, the U.S. has been solving problems the Canadian government either wasn’t interested in, didn’t know about, or, most likely, didn’t care about.

The money laundering charges against TD, taking a stand on issues related to Beijing, including foreign interference, and acting to stop slave-labor-made goods from entering the country while Ottawa did nothing are just a few examples. Say what you want about the U.S.; they forced Canada’s hand on these issues or drew attention to our country’s inaction.

But that’s likely over for now, and if you’re really worried about the perils of a Trump-style candidate ever coming to Canada, you should be aware this country has already had the kind of scandals Trump’s next presidency is predicted to bring.

What do I mean?

Foreign interference, money laundering, cronyism, and the breaking of our transparency laws are commonplace. We have an opacity problem combined with institutions less resistant to scumbaggery, and anyone with enough power and little conscience could really manipulate them if they so wished.

Examples? Sure. We can start with the government refusing to hand over all the documents as ordered by Parliament related to Sustainable Development Technology Canada. The Liberals’ refusal to give up such documents has had Ottawa in gridlock for months. Doesn’t that sound like something a Trump-style candidate would do?

We found out last month that, after Liberal Party supporters chastised “illegal CSIS leakers” for giving evidence the PMO chose to ignore to the media, Trudeau’s national security adviser and deputy minister of foreign affairs leaked information about India’s potential involvement in the assassination of a Sikh leader to one of the biggest U.S. media outlets going, The Washington Post. I haven’t seen any demands for an investigation into that.

We’ve also recently had the Greenbelt scandal in Ontario, the ArriveCAN scandal, and B.C.’s money laundering inquiry revealing how white this country can make your green. The RCMP, meanwhile, more frequently doesn’t release basic information about crimes, including the names of homicide victims (an important, though somber, matter of public record).

Then there’s the increasing liberties being taken with our systems of government by those in charge of it. Wab Kinew’s Manitoba NDP booted a lawyer out of caucus because someone in his firm—not even him—is defending Peter Nygard in his sexual assault trial. Kinew apologized after uproar from legal groups, but the move draws into question how important the right to a defense and its importance to the justice system is for that government.

Over in Alberta, Danielle Smith is making anti-vaxxers feel special by crafting legislation specifically protecting them from workplace vaccination mandates, in what is obviously a politically driven waste of public resources.

Last week, we learned the CRA apparently orchestrated a “witch hunt” to find out who dropped the dime on their false reimbursement scandal. And while we’re on the CRA, you may recall more than 230 CRA civil servants were fired earlier this year for falsely claiming CERB.

It goes on, and, as bad as all that is, what’s worse is how our political parties have, without any real opposition, politicized our civil service.

ATIPs and FOIs aren’t returned within legislated timelines as staffers thumb their noses at the media and public. There’s a sense of entitlement to use public funds and information for political advantage, and it’s just ignored by the public. Our government ministerial positions are more frequently filled with career ladder-climbers rather than seasoned professionals with a proven track record before entering politics.

Going back further, Jody Wilson-Raybould was tarnished for not toeing the line in the SNC Lavalin Scandal. Our former ambassador to China effectively took China’s side in the Meng Wanzhou detention over our biggest ally, saying it’d be “great for Canada” if the U.S. dropped its extradition case against her.

The same man, John McCallum, would later tell Chinese officials that their continued targeting of Canadian trade could lead to a Conservative government. Sure, it raised eyebrows, but nothing came of it.

This is your country, Canadians, and it’s open season. It doesn’t matter what party is in charge; these issues of accountability and politicization exist in all of them.

Don’t look for the media to save us. Many editors don’t see what the big deal is with all this. “It’s always been like this” is something I’ve heard way more times than I’d care to list from journalists in recent years.

Aside from a few bright lights or publications, Canadian media is either unwilling or incapable of really digging into some of the more serious issues like foreign interference, government corruption, and the lack of transparency.

The goodwill of the Canadian public and warm fuzzy feelings about this country help keep the status quo. If we ever have a serious threat from a Trump-like politician, this place is easy pickings.

We’d be wise to, instead of collectively shaking our heads and ranting about the decision made by the U.S. public, start making sure it can’t happen up here and make the current threats to our democracy your issues.

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Trump ‘tariffs’ threat should hasten trade liberalization among provinces

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From the Fraser Institute

By Jake Fuss and Grady Munro

To much fanfare, President-elect Donald Trump has threatened to impose a 25 per cent tariff on all imported products coming into the United States from Canada. The premiers will meet with Prime Minister Trudeau this week to discuss the situation and possible next steps. While the discussion will no doubt focus on trade with the U.S. and other countries, they should also consider trade reform within our national border.

Indeed, provinces and territories have considerable autonomy to set rules for trade with other Canadian jurisdictions. These rules (or barriers) include different inspection and labelling requirements for agricultural goods, different trucking regulations, different standards and certifications for professionals, provincial monopolies over alcohol distribution, and more.

As with international barriers, trade barriers within Canada inhibit the free flow of goods, services and labour between provinces, which reduces productivity and increases prices. In other words, Canadians pay the price for our interprovincial trade barriers. And the costs are significant. Research suggests that interprovincial trade barriers add between 7.8 per cent and 14.5 per cent to the price of goods and services including groceries and other necessities.

More broadly, according to a 2020 study published by the Fraser Institute, interprovincial trade barriers cost the Canadian economy more than $32 billion per year or approximately 1.4 per cent of GDP. According to a TD report released last month, a 10 per cent across-the-board tariff by the U.S. (and the subsequent retaliation by Canada on U.S. imports) would reduce Canada’s GDP by approximately 2.4 percentage points over two years, compared to current baseline projections. Therefore, if Canadian policymakers removed interprovincial trade barriers they could mitigate much of the economic harm caused by potential new U.S. tariffs.

What would those changes look like?

While the Canadian Free Trade Agreement (CFTA)—a 2017 agreement between the federal government and all provincial and territorial governments—was an important step toward greater trade liberalization in Canada, the Trudeau government should propose a policy of “mutual recognition” so that any item that meets the regulatory requirements of a single province or territory automatically satisfies the requirements of another.

And while the federal government should promote free trade within Canada, provincial and territorial governments should also reduce barriers. In addition to negotiating agreements among themselves (such as the New West Partnership Trade Agreement between British Columbia, Alberta, Saskatchewan and Manitoba) provinces can unilaterally eliminate self-imposed trade barriers (as Alberta did in 2019 with grazing permits for livestock and other reforms).

Trade is fundamental to economic activity, opportunity and prosperity for Canadians from coast to coast. In light of Trump’s aggressive trade posture, now more than ever the federal government and the provinces and territories should work together to remove interprovincial trade barriers to mitigate any economic damage from a hostile trade regime south of the border.

Jake Fuss

Director, Fiscal Studies, Fraser Institute
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How Taxing Unrealized Gains Has Caused an Entrepreneurial Exodus from Norway

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From hagaet the substack of Fredrik Haga, co-founder of Dune

Norway Shrugged 

Recently, my story as a Norwegian entrepreneur facing an unrealized gains wealth tax bill many ties higher than my net income went viral, amassing over 100 million views on X. A few years ago I publicly called out that this tax is both impossible-to-pay and nonsensical, but no politician would listen. So I made the difficult decision to leave my home country. I still don’t know how I was supposed to pay the tax, but I recently found myself plastered on the “Wall of Shame” at the Socialist Left Party’s offices.

In this post, I’ll delve into why there’s an entrepreneurial exodus from Norway, how we got here, and what the future might hold.

Socialist Left leader and me on the “Wall of Shame” (Dagbladet)

Norway: A real life Atlas Shrugged 

Ayn Rand’s 1957 novel Atlas Shrugged paints a vivid picture of a dystopian society where government overreach and socialist policies kill innovation and demonize entrepreneurs. In Rand’s world, working hard and taking risks is not celebrated, but looked at with suspicion. As the government tightens its grip, mandating how businesses should operate, the nation’s entrepreneurs begin to vanish and are nowhere to be found. People get poorer while the state keeps growing. Step by step the functioning of society starts to crumble. The trains first go off schedule, then start crashing and eventually stop going all together.

Present-day Norway mirrors this dystopia in unsettling ways. Taking risk with your own money, working hard and then making a profit is frowned upon. While politicians spending the people’s money on non-viable green projects, and delivering dysfunctional public services at high costs has the moral high ground. The government is spending 35 Billion NOK on offshore wind that industry experts think is financially unviable. This is about the same amount as the total wealth tax revenues. Norway spends 45% more than Sweden on health care per capita with approximately the same health outcomes. Norway has 2,5 times bigger share of the working population on sick leave than Denmark. Norway spends ~50% more than Finland on primary and secondary school with worse results.

With unshakeable ideological conviction, socialist politicians are rapidly undermining Norway’s wealth creation. They’re imposing taxes that explicitly disadvantage Norwegian business owners, and are often straight up impossible to pay. When confronted with the reality that you can’t pay taxes with money you don’t have—or that loss-making businesses can’t afford massive dividends just to cover owners’ wealth taxes—the response is vague moralism like “Those with the broadest shoulders must bear the heaviest burdens.” Any argument against any part of the system is by default invalid because there’s free health care…

Norway’s entrepreneurs are now indeed disappearing from society. In the past two years alone, a staggering 100 of Norway’s top 400 taxpayers, representing about 50% of that group’s wealth, have fled the country to protect their businesses.

Norwegian trains have for a long time been notoriously unreliable – even less reliable then in war time Ukraine! In chilling similarity to Atlas Shrugged there’ve been two train crashes, including one fatal, in the last month alone.

Tram crashing into a retail store in Oslo 29th of October 2024 (NRK)

The Unrealized Gains Wealth Tax: A Self-Inflicted Wound

Norway imposes a wealth tax that taxes unrealized gains at approximately 1% annually. Calculated on the full market value for publicly traded assets and the book value of private companies. On New Year’s Eve, whatever your net worth – including illiquid assets – is subject to this tax. It doesn’t matter if you’re running a loss-making startup with no cash flow, if your investments have tanked after the valuation date, or even if your company has gone bankrupt—you still owe the tax.

This creates a perverse scenario where business owners must extract dividends or sell shares every year just to cover their tax bill. With dividend and capital gains taxes at around 38%, you need to withdraw approximately 1.6 million NOK to pay a 1 million NOK wealth tax bill. You’re essentially paying taxes to pay taxes, draining capital from your business without any personal financial gain.

Moreover, the tax incentivizes Norwegians to take on excessive debt to reduce their taxable wealth, inflating housing prices and making the economy more fragile. While real estate and oil companies can mitigate this through debt financing, tech startups—often equity-financed and loss-making for years—are disproportionately harmed.

The Berlin Wall Exit Tax: Another Tax on Unrealized Gains

After witnessing a mass exodus of top taxpayers, the Norwegian government had a golden opportunity to reassess its policies. The wealth tax contributes less than 2% to the state budget; eliminating it and marginally increasing capital gains, corporate, or dividend taxes could have halted the entrepreneurial bleeding without affecting government budgets.

Instead, the government doubled down on what’s not working, introducing an exit tax on unrealized gains. Now, if you choose to move from Norway, you’re immediately liable to pay 38% of the total market value of your assets upon departure. It doesn’t matter if you have no liquidity, if your assets are high-risk and could plummet in value, or even if your company does fail after you leave—you still owe the tax. Previously, entrepreneurs could at least relocate if the wealth tax became too burdensome. Now, they’re incentivized to leave before they even start their businesses.

The government could have listened to the tornado of negative feedback and adjusted course, but instead, they doubled down on what’s not working. When the Berlin wall was created it was clear which side of the city had the better system… the one that didn’t have to build a wall to retain its citizens. Instead of trying to attract and retrain capital and talent by making Norway a better place for business the Norwegian government chose to build its very own Berlin Tax Wall with yet another tax on unrealized gains. Trapping not only entrepreneurs, but anyone with more than $270k of wealth wanting to move their life abroad for whatever reason…

The first 50 years: Well Managed Oil Wealth 

Norway is one of the richest countries in the world. The government does not need to send their entrepreneurs abroad with non-sensical taxes. So you may ask yourself, “Well, how did we get here?”.

In fact, the oil wealth has been amazingly well managed by the politicians for almost half a century. In 1969, Norway struck oil—a discovery that could have led to the same resource curse that plagued other nations. Instead, Norwegian politicians made two genius decisions that benefited the entire population.

  1. Genius Move 1: Taxing Oil Profits at 80%Recognizing the need for foreign expertise but unwilling to let international corporations reap all the benefits, Norway taxed oil company profits at a staggering 80%. This bold move ensured that the wealth generated from the oil benefited the Norwegian people.
  2. Genius Move 2: Establishing the Sovereign Wealth FundIn the 1990s, Norwegian politicians understood that oil is a finite volatile resource and that it would be irresponsible to spend all the oil revenue on a running basis. In an act of rare political austerity and long term thinking they created the Oil Fund, to diversify and invest surplus revenues internationally. Furthermore the “Budgetary Rule” limited annual government spending from the fund to 3%, ensuring the fund in theory goes on forever.

For two decades, politicians across the spectrum adhered to this prudent financial management, displaying an impressive level of restraint and foresight rarely seen in politics.

How Oil Wealth Led to Socialist Ideology over Wealth Creation

But success bred complacency. In theory, everybody agrees that Norway needs new post-oil industries for the long term. In practice, the abundance of oil wealth has led to a detachment from the realities of how wealth and economic growth is created. While the Norwegian politicians impressively managed to restrain themselves for about half a century the current generation are now acting as if tax money grows on trees.

Ultimately that is the paradox that has caused the current situation: because the state has so much money, it is no longer at the mercy of businesses actually being created and staying in Norway. At least as long as the oil wealth lasts.

The 2025 Election: No Fundamental Solution in Sight

It seems likely there will be a new government after the 2025 elections, as the current government is seeing record-low support in the polls. Unfortunately, even seemingly business friendly opposition parties like the Conservative Party (Høyre) and the Liberals (Venstre) are not committed to abolishing the wealth tax entirely. They propose valuing companies zero for wealth tax purposes—a good step in the right direction, but not a fundamental solution to Norway’s ongoing crisis. Unfortunately The Progress Party (Fremskrittspartiet) is the only party that wants to remove the tax completely.

The wealth tax’s mere existence continues to create absurd incentives for excessive debt and over-investment in housing, detracting from more productive investments like stocks and startups. Moreover, the possibility of future governments reinstating the wealth tax for companies keeps the harmful uncertainty for businesses very much alive.

Many European countries have recognized the harm caused by taxing unrealized gains and abandoned it. Norway’s neighbor Sweden abolished its wealth tax in 2007. Since then they’ve seen its tech sector flourish. Spotify recently surpassed Norway’s state-owned oil company, Equinor, in market capitalization. In the last 15 years Norway has gone from having 7 to now only 2 of the Nordics top 30 most valuable companies.

Norway has produced four “unicorns”. Since then we the founders of Dune and Cognite have left due to the unreasonable taxes. Oda operates domestically in Norway. All founders have left the company and are wiped out. The last one Gelato is run by a swede that would likely move if they need to raise more money.

The Extra Long Journey to Post-Oil Wealth and Welfare

In Atlas Shrugged, the entrepreneurs refuse to return to society until the oppressive system collapses entirely. I sincerely hope Norway doesn’t have to endure such a downfall before entrepreneurs can return.

Fortunately Norway has a highly educated population and a lot of capital. With oil a high tech industry has been built in Norway before. What’s lacking is the political will to encourage entrepreneurship and big ambitions, not punish it.

Trust is built in millimeters and torn down in meters. In just a few years, the trust in Norway as a viable place to build and invest has been shattered. A whole generation of entrepreneurs has been lost.

The people of Norway currently enjoy and benefit from a host of generous welfare benefits. High income with short work days, free healthcare, free daycare, free education and beyond. For this to continue in the future Norway needs massive new post-oil industries. Due to the politicians’ series of unforced errors, the journey to get there will be extra long and painful. A definitive abolishment of all taxes on unrealized capital gains is the obvious first step.

 

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