# Read Dr. Lindsay Tedds' example of how Trudeau's tax reform will work

Lindsay Tedds commented on Global News' Money page with concrete examples of Trudeau's tax reform:

Here’s a concrete example of how the math works based on an analysis provided by Lindsay Tedds, an economics professor at the University of Victoria whose research focuses on tax policy.

Imagine two Ontario families, the Smiths and the Joneses. In both households, there are two parents and two adult children under the age of 25. Mr. Smith is self-employed but not incorporated. Ms. Jones runs a small company set up as a corporation. In both families, the other spouse and the two kids are not involved in the business.

Mr. Smith and Ms. Jones bring home the same income: \$200,000 a year after expenses. But only Ms. Jones can use income sprinkling.

Mr. Smith has to pay federal and provincial tax on his \$200,000 earnings, which tallies just over \$69,000. Once you account for CPP contributions, his family’s after-tax income is just over \$125,600.

Ms. Jones must pay a \$30,000 (15 per cent) small business corporate tax on her \$200,000 profits. She then has the option of dividing the remaining \$170,000 four ways, with each family member getting \$42,500. She also pays out that money not as salaries but as dividends, which are eligible for a tax credit.

Each family member ends up paying personal tax of just under \$1,500. Multiply that by four, add the small business tax and you still get a total tax bill of only \$36,000, an average tax rate of just 18 per cent.

The Joneses take home \$164,000, or roughly \$38,400 more.

The Smiths can’t keep up.

You can read the complete article on Global News' website.