The Canadian Press NDP leadership candidates Niki Ashton, left, Guy Caron, second left, and Charlie Angus, via video conference, take part in a Facebook Live town hall hosted by the Canadian Nurses Association in Ottawa on, Sep. 6, 2017.

A federal NDP leadership hopeful says Liberal proposals to reform small business taxes are akin to "trying to kill a fly with a hammer," while most of his rivals suggest they back the ideas on principle.

At a town hall event hosted by the Canadian Nurses Association Wednesday, the leadership race's four candidates were asked about proposed changes that have outraged advocacy groups such as the Canadian Federation of Independent Business and Canadian Medical Association, as well as privately incorporated farmers and other professionals.

Finance Minister Bill Morneau appears committed to scrapping three loopholes often enjoyed by small business owners who incorporate their companies in order to pay lower taxes: so-called "income sprinkling" to family members, the conversion of private income into capital gains, and the use of passive investment portfolios.

'Catching the good with the bad'

Quebec MP Guy Caron focused on the "income splitting element" of the proposed reforms.

"I do believe that we need to address the issue of aggressive tax avoidance. That's being done in that matter," he said. "But it's not in all cases."

Caron said many doctors incorporate because they act like small businesses, which includes being responsible for paying staff and office expenditures.

But "in some of the cases, they enjoy those benefits without really being a small business," he said.

"The way that the federal government addresses it right now, I do believe, is trying to kill a fly with a hammer in the sense that we are going to be... reaching many sectors of society and catching the good with the bad. And that's not the approach that we should be looking at."

Caron says he wants a more fundamental rethink of the tax system that will truly close loopholes. Caron has already unveiled a number of policies that he thinks will help crack down on tax evasion.