“In short, the next time someone tells you that the rich should pay their fair share, start by asking who “the rich” really are. It’s quite possible that one day it will be you.” (Photo: 123RF)
GUEST EXPERT. Many owners of small businesses, farmland and simple duplexes had their eyes on Ottawa last week.
This emotional week began on a dramatic note, as Finance Minister Chrystia Freeland painted the portrait of a society on the verge of insurrection. Without a new tax targeting the “very rich”, the country’s wealthiest people would soon have to take refuge in secure residences and travel by plane in order to avoid popular discontent.
This colorful outing from the federal minister aimed to promote the increase in the capital gains tax inclusion rate. The minister and the defenders of this policy, including some eminent trade unionists, have gone out of their way to try to convince the good people that only the wealthiest 0.13 percent would be affected by such a measure.
But is it true? Obviously not. It’s not even on the outskirts of the truth.
The eminent professor Jack Mintz looked into the issue and eloquently dismantled the federal deception. Indeed, the choice of 0.13 percent is a political communication strategy aimed at hiding the fact that 4.3 percent of Canadians will have to pay the price for this measure once in their lives.
This is because the majority of people who declare high capital gains in a year only do so once in their life. In 2011, for example, 25,100 Canadians declared capital gains greater than $250,000. Of these, two-thirds did not report such earnings again in the following 10 years.
This is explained by the fact that these are people who favored certain types of investments over others. This is a couple who invested in a duplex and sold it when they retired, for example. Or a family selling their chalet. These are not people who will miss a meal because of this tax increase, of course, but we are far from the people who travel in private jets described by Minister Freeland.
These are therefore not the 40,000 people indicated by the federal government, but rather 1.26 million of our fellow citizens. In short, that’s 33 times more people than the government wants to tell you. This is not a stupid mistake. After all, you would quickly realize it if you had brought 33 pints of milk from the grocery store rather than one.
But the clearest indication of the true number of people who will pay for this measure is found elsewhere. It is found in the revenue column that the government believes it will be able to obtain from this measure. First of all, the government’s big money maker was clearly banking on some fire sales since the expected revenues amount to $6.7 billion for this year.
However, this amount drops by half for the following year. And in the third year, only $375 million in additional revenue remains. In other words, the government knows very well that this measure ultimately represents a brake on investment in the country. This means less private investment to modernize factories, train employees and ensure growth.
Basically, it is the standard of living of Canadians which will increase less quickly or which will stagnate even more for a very large number of our fellow citizens from all walks of life and from all income categories. In reality, this is a measure that can only harm economic and social mobility.
The cynicism of this measure and the way it is communicated by the Liberal government is therefore somewhat shocking. This is all the more disappointing since we are directly attacking what could be described as “ordinary success”, that is to say the savings made by an individual or a couple who have decided to invest in one or two plexes in order to finance their retirement. This is also the case for many Quebecers.
This federal government is therefore trying to regain some popularity by dividing us. To hear them say, it would therefore be the middle class against the ultra-rich. This is left-wing populism that is frankly dangerous for our social fabric. It’s very rarely mentioned, but the top 10 percent of the population already pays 54 percent of all taxes collected in Canada. All this even though it represents just over a third of revenues.
Anyway, the next time someone tells you that the rich should pay their fair share, start by asking who “the rich” really are. It is quite possible that one day it will be you.
Next, ask yourself what truly constitutes “a fair share”? As Toronto columnist Andrew Coyne recently pointed out, the line that separates us from outright confiscation is sometimes very thin.
