A free market think tank says Trudeau's capital gains tax expansion will mainly hurt the middle class, contrary to the claims of a progressive labour institute who says the taxes will hurt the rich.A recent joint publication from IRIS and the Centre for Future Work said the highest-income 1.5% of tax-filers (those with total income over $250,000) receive 61% of individual capital gains, and 67% of tax savings from partial inclusion of capital gains. The publication for very high-income tax-filers, capital gains make up 18% of total income. For those with less than $100,000 income, capital gains make up less than 1% of total income.However, a researcher from the Montreal Economic Institute says middle-class Canadians are the main group impacted by the increase in the capital gains inclusion rate.“It is misleading to say the middle class won’t be impacted by the capital gains tax hike just because they may not claim capital gains every year,” explains Emmanuelle B. Faubert, economist at the MEI. “After all, most people selling a duplex or triplex only do so once in their life, not every single year.”Data from Statistics Canada shows that of the 25,100 taxpayers who claimed capital gains over $250,000 in 2011, two-thirds never claimed similar gains over the next 11 tax years. Only 170 of them have consistently declared such capital gains.According to calculations from economist Jack Mintz, the increase in the capital gains inclusion rate risks impacting 1.26 million Canadians over the course of their lives.The joint IRIS / Centre for Future Work study claimed capital gains increase the ratio of inequality between top and average incomes by 16%. Federal revenues were reduced by $38 billion in 2021 due to the partial inclusion of capital gains for individuals, trusts, and corporations, according to the paper."Most corporate capital gains are captured by industries that buy and sell assets, rather than undertake direct production. A growing share (over one-third) is captured by financial firms," the IRIS joint paper claimed.However, the MEI’s said such findings prominence of certain industries in reported capital gains stems from their invaluable investment in sectors across the economy. “If the financial sector declares such a large share of capital gains nationwide, it is because its investments in other sectors of our economy are growing,” explains Faubert. “And it is with the funding from real estate investors that the construction industry can get to work building new condos, apartments or single-family homes.“As Canadians rightly recognize, this tax hike will affect the middle-class and will reduce the start-up capital available to start new entrepreneurial ventures.”In a publication from this past May, the MEI explained that this tax increase would have a negative impact on entrepreneurship in Canada, reducing the capital available to start new projects.A recent MEI-Ipsos poll showed that six out of 10 Canadians fear this tax increase will have a negative impact on the Canadian economy. Seven out of 10 respondents said the tax increase would also affect the middle class.The MEI is an independent public policy think tank with offices in Montreal and Calgary. Through its publications, media appearances, and advisory services to policymakers, the MEI stimulates public policy debate and reforms based on sound economics and entrepreneurship.The Centre for Future Work is a progressive labour economics research institute based in Vancouver. Jim Stanford is Economist and Director of the Centre, and also Harold Innis Industry Professor in Economics at McMaster University in Hamilton. , The Institut de recherche et d’informations socioéconomiques (IRIS) is largely focused on Quebec’s economy and public policies.The Institut is a not-for-profit and independent organization that conducts and disseminates research on key current issues, such as the climate and environmental crises, the commodification of health and education services and the increase in inequality.
A free market think tank says Trudeau's capital gains tax expansion will mainly hurt the middle class, contrary to the claims of a progressive labour institute who says the taxes will hurt the rich.A recent joint publication from IRIS and the Centre for Future Work said the highest-income 1.5% of tax-filers (those with total income over $250,000) receive 61% of individual capital gains, and 67% of tax savings from partial inclusion of capital gains. The publication for very high-income tax-filers, capital gains make up 18% of total income. For those with less than $100,000 income, capital gains make up less than 1% of total income.However, a researcher from the Montreal Economic Institute says middle-class Canadians are the main group impacted by the increase in the capital gains inclusion rate.“It is misleading to say the middle class won’t be impacted by the capital gains tax hike just because they may not claim capital gains every year,” explains Emmanuelle B. Faubert, economist at the MEI. “After all, most people selling a duplex or triplex only do so once in their life, not every single year.”Data from Statistics Canada shows that of the 25,100 taxpayers who claimed capital gains over $250,000 in 2011, two-thirds never claimed similar gains over the next 11 tax years. Only 170 of them have consistently declared such capital gains.According to calculations from economist Jack Mintz, the increase in the capital gains inclusion rate risks impacting 1.26 million Canadians over the course of their lives.The joint IRIS / Centre for Future Work study claimed capital gains increase the ratio of inequality between top and average incomes by 16%. Federal revenues were reduced by $38 billion in 2021 due to the partial inclusion of capital gains for individuals, trusts, and corporations, according to the paper."Most corporate capital gains are captured by industries that buy and sell assets, rather than undertake direct production. A growing share (over one-third) is captured by financial firms," the IRIS joint paper claimed.However, the MEI’s said such findings prominence of certain industries in reported capital gains stems from their invaluable investment in sectors across the economy. “If the financial sector declares such a large share of capital gains nationwide, it is because its investments in other sectors of our economy are growing,” explains Faubert. “And it is with the funding from real estate investors that the construction industry can get to work building new condos, apartments or single-family homes.“As Canadians rightly recognize, this tax hike will affect the middle-class and will reduce the start-up capital available to start new entrepreneurial ventures.”In a publication from this past May, the MEI explained that this tax increase would have a negative impact on entrepreneurship in Canada, reducing the capital available to start new projects.A recent MEI-Ipsos poll showed that six out of 10 Canadians fear this tax increase will have a negative impact on the Canadian economy. Seven out of 10 respondents said the tax increase would also affect the middle class.The MEI is an independent public policy think tank with offices in Montreal and Calgary. Through its publications, media appearances, and advisory services to policymakers, the MEI stimulates public policy debate and reforms based on sound economics and entrepreneurship.The Centre for Future Work is a progressive labour economics research institute based in Vancouver. Jim Stanford is Economist and Director of the Centre, and also Harold Innis Industry Professor in Economics at McMaster University in Hamilton. , The Institut de recherche et d’informations socioéconomiques (IRIS) is largely focused on Quebec’s economy and public policies.The Institut is a not-for-profit and independent organization that conducts and disseminates research on key current issues, such as the climate and environmental crises, the commodification of health and education services and the increase in inequality.
