Small business owners aren’t Canada’s rich
Just like Canadian workers, the vast majority of Canada’s small business owners are firmly entrenched in the middle class, according to the latest small business profile from the Canadian Federation of Independent Business (CFIB).
Data from Statistics Canada show that two-thirds of Canadian small business owners are earning less than $73,000, and employers earning less than $40,000 outnumber those earning more than $250,000 by four to one. The findings refute the notion that a large percentage of small business owners are the wealthy using small businesses to dodge taxes, and make the case to reinstate the promised small businesses tax rate reduction eliminated in March’s federal budget.
“The notion that most small business owners are rich, or part of the ‘one per cent’, is pure fiction,” said CFIB president Dan Kelly. “The simple truth is Canada’s small business owners are overwhelmingly middle class. They are your mechanic, accountant, hair dresser and landscaper, just trying to earn a living doing something they love.”
The profile also shows that small business owners are much more likely to work longer hours than employees. More than 40 per cent of small business owners work 50-plus hours a week. Only six per cent of employees are in the same category.
“Part of the reason small business owners don’t take home huge salaries or dividends is because they reinvest any profits back into their business and their employees through training programs, salary increases, new hires, or equipment purchases. Having a low small business tax rate helps them to do just that,” added Ted Mallett, CFIB chief economist. “It helps them grow and keep Canada’s economic engine running.”
Despite popular misconceptions, the small business tax rate does not encourage businesses to stay small. Very few businesses earn even close to the $500,000 threshold – that would introduce them to a higher business tax bracket. In fact, 85 per cent of small businesses could double their net earnings and still not be exposed to the higher rate.
— Canadian Federation of Independent Business