|Newsletter
Kim G C Moody’s Musings – 1-1-1 Newsletter For February 12, 2025
One Comment About Taxation – Canadians Need to Significantly Improve Their Financial Literacy
Over my lengthy career as a tax practitioner, I have advised numerous Canadians across a wide spectrum of complexity. Many have tax situations that are straight forward. However, if one becomes financially successful, has international connections / interests, involved in estate planning or enters the world of entrepreneurship, their tax situations can become complex in a hurry.
Notwithstanding, it’s been my experience that at all levels of complexity, the level of financial literacy for most Canadians is extremely weak. Having a basic level of financial literacy is, in my opinion, a must to navigate the complex society we live in, to set oneself up for an eventual and comfortable retirement and to make better and informed decisions when voting for and choosing our country’s elected leaders. I’m convinced that better choices at the ballot box would be made across the board – federal, provincial and municipal – with improved financial literacy.
Recently, I spoke at a professional event in Kelowna, BC. The night before, I went down to the bar in my hotel to get a drink to bring up to my room. As I waited for my drink, I was standing next to a couple of bar flies. One of them was rather young and the other older. The younger one said “I think when your income and wealth is $50 million or more, the tax rate should be 100%. I mean fifty million sounds like a good number…no one will be able to spend that amount in their lifetime” he said. The older fellow responded, “I agree but I think that the 100% tax rate should be restricted to capital gains”. “I agree…that makes sense,” said the younger one.
I found myself very torn, as I often do in situations like this, as to whether or not to try to help the fellows make sense of their non-sensical opinions / ideologies. One of my missions in life is to plant acorns in the area of tax and financial literacy. Such acorns can grow into the proverbial mighty oak trees. In this case, I walked away without saying a word. In hindsight, perhaps I should have chimed in to help them improve their tax and financial literacy. However, piercing the bubble of ideology is extremely challenging. It’s my experience that it’s only really effective if the partisan / ideologically driven person has a sound education in financial literacy but more importantly, they want such an education. Many do not. It’s much easier to live in an echo chamber and hope that things work out and / or your beliefs will get validated.
Building on the above, my youngest son is an aspiring entrepreneur. He has lots of good ideas. “Mom and Dad, here’s my idea…will you invest in my business?” My usual response is that we’re happy to consider such an investment but not without him having a basic education in business / financial literacy first. To his credit, he recently signed up for a business diploma program at a school in Calgary. The questions that he has been asking me recently about some of his class content along with the twinkle in his eye are inspiring. He’s learning the basics of accounting, finance, economics, marketing, entrepreneurship, tax, and other valuable topics. If he ever realizes his entrepreneurial aspirations, he’ll be much better equipped.
This leads me to the current political situation in Canada. As most know, Parliament is prorogued until March 24, 2025. In the meantime, the Liberal Party is furiously trying to crown its insider, Mark Carney, as its new leader. Mr. Carney has been directly or indirectly involved with advising the Canadian government / Liberal Party for the better part of the last 5 years. Given his impressive academic background and quasi-government positions, he is being positioned as the “savior”. Well, there’s lots to quibble about that positioning including his historical economic record.
Mr. Carney is famous for letting his strong ideology on climate matters – which are highly debatable – get in the way of sound economic plans. Many, including me, put him into the “tax and spend” category. If he had any involvement in Canada’s tax policies for the last 5 years or so, which it’s highly likely he has, then one can also take significant issue with such policies. From the ridiculous capital gains proposals (which, in an amazing and politically convenient flip-flop, he recently stated that he would drop the proposals similar to his leadership opponent, the former Finance Minister Chrystia Freeland who introduced such proposals), to the short-term rental expense prohibitions, the nutty “flipping tax” and a host of other politically motivated tax policies likely have Mr. Carney’s “blessing”. Accordingly, if he were to become leader and Prime Minister, can Canadians expect better tax and economic leadership? Doubtful.
And speaking of leadership, it’s pretty obvious that Canadians want real leadership to help navigate during this obvious time of turmoil. We can’t continue with a lame duck Prime Minister, government and prorogued Parliament. Once the new Liberal leader is elected, it would be a shame if the NDP cut a deal with the new leader to continue Parliament rather than calling an election.
Overall, it’s time for our government to show strong financial leadership including good tax and economic policies. Such examples would go a long way to paving the way for Canadians to improve their financial literacy. Governments benefit from a financially informed population through reduced social spending, a stronger economy, and likely increased tax revenues.
As the American economist and former Federal Reserve Chairman, Alan Greenspan, once said, “The number one problem in today’s generation and economy is the lack of financial literacy.”
Wholeheartedly agree. Our country’s leaders need to plant acorns to improve such financial literacy and show good stewardship and examples. The last thing we need is continued out-control-spending, divisive politics and poor tax policies in the name of warped ideology.
One Comment About Leadership – Leaders, You DO Make a Difference!
About a month ago, I received a very kind note from a former employee who let me know about her current career plans. As part of the note, she also provided some very kind comments about my leadership and the impact that I had on her and others. Obviously, receiving such a note is always nice. Instead of letting my head get too big, though, I always reflect on why and how I was able to influence such a person. I want to learn and get better so as to hopefully continue to positively influence more.
Over the years, I’ve also received negative feedback too. As a leader, it’s inevitable that you will not always have fans. When I have received negative / constructive feedback, I will do the same exercise as the above. But in those cases, I often reflect harder and longer.
Why? Because receiving positive feedback can inflate one’s ego and encourage you to keep doing things the same. Receiving the opposite feedback, however, can wound one’s ego or cause one to lash out and quickly dismiss it. It can also cause a leader to criticize the person who has provided it (“they don’t know what they’re talking about!”). I’ve certainly been guilty of that many times over my leadership career and in some cases, I think I was right to dismiss it…especially when such feedback gets very personal or attacks your character in ways that are inappropriate.
In most cases, however, constructive feedback can be very valuable for a leader to absorb so as to be brutally honest and try to learn from it.
My overall message is that you, as a leader, indeed make a difference – positive / negative – in the people you lead. Be mindful of that. Seek feedback. And when unsolicited feedback arrives on your lap, like the positive note I received last month, spend the time to reflect on it and learn valuable lessons.
Ditto for the negative feedback. It’s well worth the effort.
One Comment About Economics – My Early Observations of the U.S. DOGE Reviews
It’s early days, but I’m fascinated by some of the initial findings of the “Department of Government Efficiency” (“DOGE”) audits in the U.S. led by Elon Musk. From what I can tell, Elon appears to be using a combination of technology, engineering and basic audit techniques to ferret out waste and inefficiency in certain U.S. government departments. What he has released so far is eye-popping.
Some amateur sleuths have tried to ferret out similar Canadian findings using publicly available databases and even those findings are shocking.
The US style, DOGE, appears to me to be a very intense and deep dive into what historically should be a role that in Canada would be undertaken by the Auditor General. However, it is well known that in Canada the AG has been notoriously underfunded and its findings largely ignored by the federal government. In my view, that needs to change.
It’s also been interesting to see how vested interests, including the legacy media, have been responding to the DOGE audits and initial findings. From calling the reviews illegal, inappropriate, dangerous, etc, the bias and entrenchment show large. A recent newspaper article even suggests that the DOGE audits could undermine “economic security”. While I’m not an expert in “economic security”, I’m calling BS.
In my view, it’s high time for bloated bureaucracies of many governments around the world, like Canada, to undergo a microscopic examination. I would wholeheartedly support a Canadian version of DOGE and better yet, arm the auditor general with some teeth so as to ensure that its findings carry weight. If that requires legislative amendments, great.
In my opinion, all government departments should be subject to great scrutiny for their efficiency, costs and purported benefits. I have little sympathy or empathy with anyone who disagrees with this foundational concept.
Transparency and accountability are always good things.
Bonus Comment – Quote from the U.S. Comptroller – Gene Dodaro –
“Audits provide essential accountability and transparency over government programs. Given the current challenges facing governments and their programs, the oversight provided through auditing is more critical than ever.”
Yep, absolutely! My two cents is that there is a lot of waste in government spending. Time for detailed audits to improve transparency and accountability.
Hope you enjoyed this edition of 1-1-1…please sign up for my mailing list today.
