An interesting new study shows that two sectors of the Canadian economy were responsible for the majority of capital gains earned over five years, but no new jobs were added over that time. It was released by The Centre for Future Work and l’Institut de recherche et d’informations socioéconomiques.
It comes at a time of heated debate over the taxing of capital gains (profits made on the sale of assets).
The Liberal government recently made two-thirds of capital gains taxable, up from one-half. For individuals’ capital gains of $250,000 or less, the rate remains at 50 per cent. They say the tax increase is needed for priorities such as housing. Business groups and some politicians have opposed the change, arguing it will hurt innovation and business investment.
The report suggests that favourable tax treatment of capital gains helps the wealthy but not the Canadian economy. The “miscellaneous intermediation sector” (including venture capital companies and investment banks) and the real estate sector made 52.6 per cent of all corporate capital gains reported between 2018 and 2022. But during the same period, they shed nearly 5,000 jobs.
The report also found no historical correlation between capital gains taxes and business investment in machinery, equipment and intellectual property.
It’s helpful to get more information on the table as the debate rages on.
This action encourages balance in the debate on capital gains taxes. Send your thoughts and the article to business and political leaders. Let them know Canadians want the debate on tax policy to go beyond sound bites of “increased taxes” and consider the long-term impact on Canadians.
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