Quote:
Originally Posted by Mathgod
These videos talk about the American system, but the same kind of things happen in Canada too.
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I would suggest in the future adding some more text or opinion rather than just posting videos. I only watched the first one but found it to be pretty lopsided.
Do we have an issue and in Canada and the US with capital gains tax - personally I don't believe so. The intent of the reduced rate was and continues to be to promote investment in revenue generating businesses that help the economy. Similar to Canada's small business exemptions, the Income Tax Act was designed to promote the growth of business in Canada which benefits the lives of everyone.
Now, are we seeing issues with people taking advantage of principal resident exemptions? Yes, the CRA should be monitoring and auditing this heavily.
Should we increase the rate from 50% to 75% on some capital gains? You could certainly make the argument. However, bifurcating capital gains based on passive investments and active investments is a challenge even for the professionals.
Another issue I have with the first video - step up basis on tax. The video has completely ignored that upon step-up the US see's a 40% tax on estate based on the stepped up basis. This was designed to simplify the process (it is hard to get tax basis for investments decades and daces old) and was put in place to mitigate double taxation (ie. taxed on death and then taxed on disposition of the beneficiary using the old basis).
Canada does not have an estate tax. Which I believe it should and would help curb the disparity between the ultra rich. I believe the US has a $10 or $11 million exemption and anything extra is taxed at that 40% rate. Canada could have something similar in place rather than our stupid probate rules which vary greatly province by province.