Why tax reform blew up in Trudeau’s face

Are people mad about the federal government’s tax reform proposal because they don’t understand them? Quite the opposite. PLUS: selling shares in Eminem

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Good morning! Here’s what’s on our radar at the moment:

Why tax reform blew up in Trudeau’s face

The Liberals’ tax reform proposals have been a public relations fiasco all summer. One common explanation is that the government poorly explained its intentions in overhauling taxation for small or single-proprietor incorporated businesses. This line of thinking implies that the failure is primarily one of communication, not of the fundamental principle at hand. Not so fast, says Evelyn Jacks, a financial advisor, author and tax expert—in fact, people understand exactly what’s going on, which is why they’re so mad about it:

Canadians may not always get the tax math, but they do get tax fairness. That’s why the controversial proposals to dramatically change the taxation of private business in Canada are proving three things: tax literacy is alive and well in Canada, most people understand and value the incredible entrepreneurial spirit that drives the economic engine in this country, and the government thought these tax changes wouldn’t be a big deal. But they are.

Link: Canadian Business

Sears was the Amazon of its day

A brash upstart changing the rules of retail. Ruthless cost-cutting and economies of scale at the expense of bloated rivals and hapless vendors. Unparalleled mastery of supply-chain logistics and a fearless embrace of razor-thin profit margins. Boundless ambition to conquer new categories.

It sounds like Amazon—but long before that, it sounded like  Sears:

Sears was not content to be a one-stop-shop for durable goods. Like Amazon today, the company used its position to enter adjacent businesses. To supplement its huge auto-parts business, Sears started selling car insurance under the Allstate brand. One might say the shift from selling products to services is analogous to the creation of Amazon Web Services—or even Amazon’s television shows. Analysts have wondered, why would Amazon want to sell books, diapers, and TV? But even the company’s seemingly eccentric decisions are centered on Sears’s old expertise: becoming an inextricable part of consumers’ lives.

Link: The Atlantic

You can soon buy shares in Eminem

David Bowie was famously an innovator in business as much as music: his “Bowie bonds,” issued in 1997, allowed investors to buy a slice of the royalties to the musician’s back catalogue as a 10-year fixed-income investment. Now two producers are extending the model to the equities markets, floating a stock based on earnings from the songbook of the rapper known as Eminem. (The musician himself is not directly involved;  he has his own royalty stream.) The soon-to-be-public company, Royalty Flow, is aiming to democratize the ability of anyone involved in intellectual property production to sell their ownership stakes for cash, a process that today is highly specialized and opaque:

About 180 auctions have been held since 2011, involving music by Barry White, Taylor Swift, Wiz Khalifa and others, along with film scores and TV theme songs. In one well-publicized case, the estate of the songwriter behind “Sesame Street” tunes such as “Elmo’s World” auctioned his credits for $580,000. “There’s been smart money for a long time buying an interest in songs and recordings,” says Martin. “We’re taking the middle man out of the equation now. It’s going directly to the market, instead.” Royalty Flow aims to ultimately expand beyond Eminem and acquire rights in other music catalogs.

Link: Detroit Free Press

WATCH: Five reasons Toys “R” Us failed

Toys “R” Us declared bankruptcy last week, the victim of a series of calamities both self-inflicted and otherwise. These factors included ruthless competition on price from rivals like Amazon and Walmart, a botched e-commerce strategy, and changing consumer habits. In this short video, nine-year-old Maddy, friend of Kickstart and a savvy observer of the global retail landscape, outlines the five major factors that brought down Geoffrey the Giraffe and his gang.

Link: YouTube

Earnings reports today

Canadian publicly traded companies of note scheduled to report quarterly earnings today:

Chalice Gold Mines (CXN), Pacific Insight Electronics (PIH)

Thanks for reading! Have a truly excellent day.