Commentary
Prime Minister Justin Trudeau and the Liberals unveiled the federal budget last week. Most Canadians had already braced themselves for yet another disastrous round of government interference, tax hikes, and wasteful spending. David Dodge, a former Governor of the Bank of Canada, even
told CTV News Channel’s “Power Play” this would “likely to be the worst budget” since 1982 “in the sense of pointing us in the wrong direction as to how we go about raising the incomes of Canadians and actually making Canadians feel better over the medium term.”
Dodge’s analysis was right on the money. We don’t have to look much further than Ottawa’s decision to target capital gains, a policy that will be detrimental to not just wealthy Canadians, but all Canadians.
In Section 8.1 of Budget 2024, the Liberals
announced their intention “to increase the inclusion rate on capital gains realized annually above $250,000 by individuals and on all capital gains realized by corporations and trusts from one-half to two-thirds.”
The Liberals naturally tried to brush away any concerns related to the capital gains tax hike. “Only 0.13 per cent of Canadians with an average income of $1.4 million are expected to pay more personal income tax on their capital gains in any given year,” they mentioned in the same budgetary section. A small number of items that would have affected most Canadians remained exempt, including the sale of principal residences.
What was the point of this exercise? Finance Minister Chrystia Freeland dropped the poker face and
revealed her hand after tabling this atrocious budget. “We are making Canada’s tax system more fair by ensuring that the very wealthiest pay their fair share.”
Ah, yes. A type of “soak the rich” policy that’s worked wonders for left-leaning parties and leaders. While it’s long been historically popular to target wealthy individuals and corporations, this specific term dates back to the Revenue Act of 1935
under then-U.S. Democratic president Franklin D. Roosevelt. His administration introduced a wealth tax that would take up to 75 percent of the total income of Americans earning over US$1 million annually. While Democrats viewed it as progressive taxation, most
interpreted it as soaking the rich.
This is, in effect, what the Trudeau Liberals are doing.
They’re not going to clean the dirty lens they’ve consistently used with high taxation and massive public spending. Budget 2024
includes an increase of $52.9 billion in new government expenditures (of which $39.2 billion in net-new), with the federal deficit sitting at $39.8 billion for 2024-25. Rather than acknowledging that smaller government, lower taxes and fiscal prudence might do some good for our economy and struggling individuals and families, the Liberals will unfairly tax wealthy Canadians in the name of what they call tax fairness.
Except it’s not.
Adjusting the tax levy from 50 percent to 66.7 percent on profits for capital gains over $250,000 for individuals, trusts, and corporations doesn’t just hurt roughly 0.13 percent of the Canadian population. It hurts the other 99.87 percent of Canadians, too.
Targeting capital gains is a clear sign the Liberals have little to no respect for individuals and companies that are profitable and contribute to Canada’s overall economic engine. Higher taxes and lower take-home pay increases the state’s role in our daily lives, reduces economic liberty and freedom for people from all walks of life, minimizes the impact of free markets and private enterprise—and cripples the economy. This type of statist mentality and economic decline affects individuals, existing businesses, and new business opportunities at home and from abroad.
That’s why Bill Morneau, a former finance minister in Trudeau’s government, correctly
spoke out against the capital gains tax hike. “This was very clearly something that, while I was there, we resisted. We resisted it for a very specific reason - we were concerned about the growth of the country,” he said at a post-budget Q&A session with the accounting firm KPMG. In his view, it’s “clearly a negative to our long-term goal, which is growth in the economy, productive growth and investments.” Regardless of Morneau’s wealth and financial
status, his analysis is completely valid.
Moreover, it could lead to another brain drain in Canada before long. Achieving new or greater financial success in a country with a regressive left-leaning government that regularly frowns upon the very nature of success would be nearly impossible. This could cause an exodus of individuals and companies to countries that reject statism and champion lower individual and corporate taxes.
It appears that Trudeau and his Liberal government don’t pay much attention to sensible economic thinking. They prefer to pick policies of low-hanging fruit like hiking capital gains and soaking the rich. Hence, Canadians of all income levels will continue to suffer personally and financially.
Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.
