Quote:
Originally Posted by RandyHolt
On the personal side I don't think the capital gains inclusion rate is going to be a big issue save for second property sales, but on the corporate side it is going to have a larger impact.
Any successful small businesses, holding companies or incorporated professionals with investments in a corporation are going to be impacted by the new tax rates. It's right on brand with this government to do something that looks good politically but is bad tax policy.
If they wanted to change the capital gains rate, they should have just changed it to 2/3 inclusion all around. Your average individual has a hard time using all their RRSP and TFSA contribution room each year, so I'm not sure why there is any personal exemption much less $250,000 per year.
|
If you lowered it to no exemption you’d be raising taxes on all groups. Yes you’d be raising it on a small amount of income but you couldn’t say that the tax increase only affects .13% of earners. You’d also be taxing the elderly which is generally bad before an election.
In the P90 and below salary category the value is very minimal with only 2.4% of income being earned through capital gains. But if you parsed the numbers by age I would bet you’d find lots of elderly couples pulling 20% of their income out of gains on 40k per year each incomes.
Now is this good fiscal policy? Probably not as taxing all people with gains more probably makes a lot of sense especially old people with gains. But that’s not politicaly palatable.