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The United Kingdom applies a 10 per cent corporate tax rate on profits from patented intellectual property through its Patent Box regime, compared to a standard rate of 25 per cent. Thirteen European Union members have similar regimes. And Estonia — ranked first on the Tax Foundation’s International Tax Competitiveness Index for 12 consecutive years — taxes corporate income only when distributed, not when reinvested.

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All those ideas are worthy of consideration.

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Instead, Canada’s competitive position on tax is poor. Our combined federal-provincial corporate rate of 23 per cent to 27 per cent, depending on the province, is broadly comparable to high-tax U.S. states, but meaningfully higher than the 21 per cent available in zero-tax jurisdictions such as Texas and Washington, among the fastest-growing AI employment hubs in North America.

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It’s also far above Ireland’s 12.5 per cent, which is why so much tech IP ends up there. A promised Canadian patent box was absent from the last budget, the spring economic update and the AI strategy.

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The picture is equally concerning on the personal side.

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Canada’s top combined federal-provincial marginal rate reaches 53.53 per cent in Ontario and is similar in many other provinces, with the federal top rate of 33 per cent kicking in at $258,482. The equivalent top rate in the U.S. doesn’t apply until income exceeds US$768,700 for a married couple.

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For the talent Canada needs most — people earning $300,000 to $600,000 in a sector where that compensation is routine — our tax system is a billboard that reads, “Leave. Or stay away.”

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The founder’s exit math compounds the problem. Canada’s lifetime capital gains exemption (LCGE) for qualifying small business shares stands at almost $1.3 million in 2026, while the U.S. exclusion reaches US$15 million. That 11-fold gap shapes where founders incorporate, where companies scale and whether Canada captures any of the wealth its researchers create.

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As a further example, if the government is prepared to make a $10-million capital gains exemption permanent for employee ownership trust transfers — a regime that is structurally ineffective — then the existing exemption is simply not a serious number for founders in the AI era.

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Absorbing the fiscal cost of a gesture almost no entrepreneur will ever use while refusing to move the one lever almost every entrepreneur can plan for is not a tax policy judgment, it is a political one.

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The overall tax tools Canada needs to assist in achieving the AI race include a lower general corporate rate, which could make the patent box idea moot if it were a meaningful reduction, significant reductions in top personal rates, capital gains deferral opportunities, an LCGE expanded to at least $5 million, ideally matching the US$15-million exemption in the U.S., and overall comprehensive tax review and reform.

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Canada’s AI strategy is long on words, safety frameworks and consultation, and so obviously designed to achieve political objectives rather than economic ones.

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My grade school teachers had a simple standard: did you explore the topic from all important angles and produce logical comments, alternatives and solutions to the issue at hand? If I had submitted this AI strategy for grading, my teachers would have told me to go back to the definition of strategy and try again rather than produce a political brochure.