In its 2024 federal budget, the Trudeau government proposed steps that would help equalize the tax rates between the richest Canadians who primarily make their money from passive income, and working people who earn a paycheque. These proposed changes to how capital gains are taxed would only require the richest 0.13 per cent of Canadians to pay more, alongside help to address exploding housing costs.
Despite the narrow scope of this change, it (predictably) generated outrage among some of my wealthy peers alongside those who seem ready to go to battle to ensure that the very rich continue paying less tax than working people as a per cent of taxes on income.
It’s not an option available to most people, and yet while working people are taxed on their full paycheque, only 50 per cent of capital gains are currently taxed. I may pay a higher dollar amount compared with some working people, but I pay a much lower rate, even compared to high earning doctors, lawyers and engineers.
Why should I pay a lower rate just because I was lucky enough to have money to invest, and why should someone who actually works for a living have to pay a higher one?
As you move up the wealth and income scale, you come across fewer and fewer people who are making most, or sometimes any, of their money from a paycheque. Instead, the rich invest in the stock market, property and other ways to keep their wealth growing. As such, they have enjoyed lower tax rates for decades.
Meta recently announced the layoff of 11,000 people. This resulted in a 20 per cent increase in their stock price, and a dividend issued to shareholders. I own stock in Meta. If I sell that stock and realize capital gains, I will have directly benefited from an already profitable company that has just negatively impacted the lives of thousands of people.
At the very least, I should be paying the same per cent of tax on those gains as former employees would have paid on their salaries.
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The thesis is so obvious, probably true for any country at any point in history.