Canada's capital gains tax increase comes into effect on June 25. Andrew Chang breaks down some misleading claims about the changes coming from both sides of...
Very good video overall, except I don’t think he made it clear initially that there’s a primary residence exception on capital gains tax, so people might be confused that this tax will affect them when it won’t. Similarly, the 1¼ million lifetime small business sale exemption should have been introduced earlier, imho.
Like, the example could have been a $2.6 million small business sale instead, then it would actually compare the old $1 million exemption with the new $1.25 exemption, and the old 50% incision rate with the new 50->66% inclusion rate to get a more accurate “apples-to-apples” comparison.
Napkin math:
Old capital gains tax: about 1 million is exempt, so paying 50% capital gains on remaining 1.6 million is 800K income, at 53% is about 424K tax.
New capital gains tax: 1.25M is exempt, so include 50% capital gains on next 250K, then 66% on the remaining 1.1M. Total capital gains income is 851K. 53% tax on 851K is only $27K more, for $452K, which is a 6.6% increase.
Vs. getting increased services over your entire lifetime from the ultra wealthy paying closer to their fair share? Even a small business owner selling a $2.6MM business comes out way ahead.
Also, do we really want to give doctors a pass for incorporating to shelter their income against income tax for their entire lives then say that’s a problem when they’re asked to pay closer to their actual fair share income tax when they retire? Really?
And we’re worried about people selling their multimillion dollar vacation properties paying more tax?
Anyway, I get the video is trying to be “balanced”, and it’s close, but it’s still biased toward the ultra wealthy.
It’s really, really difficult to get small business owners to see how they personally benefit from social goods. They spend too much time grinding and struggling during the establishment phase. I think it’s something of a traumatizing experience.
Like, trying to get those who primarily sell to working class folks to see how raising the minimum wage actually benefits them, because it means that all of their customers have more money to spend is nigh impossible. All they see is that they’ll have to raise prices, and it makes them even more hostile toward their employees.
And the kicker is, they have no reason to trust in any of the social benefits, because we’ve lived in a society that bas spent the last 45 years dismantling them. And one of our two parties that actually makes government now explicitly runs on destroying social services of every kind.
Like, trying to get those who primarily sell to working class folks to see how raising the minimum wage actually benefits them, because it means that all of their customers have more money to spend is nigh impossible. All they see is that they’ll have to raise prices, and it makes them even more hostile toward their employees.
Yeah this argument never really made sense to me. Unless your product’s only input cost is labour (which I can’t think of a single job that would apply to, let alone close to minimum wage job) your costs should only have to go up by a fraction of the minimum wage increase. This would leave a minimum wage worker/customer better off after buying your product than they would have if it was cheaper.
Very good video overall, except I don’t think he made it clear initially that there’s a primary residence exception on capital gains tax, so people might be confused that this tax will affect them when it won’t. Similarly, the 1¼ million lifetime small business sale exemption should have been introduced earlier, imho.
Like, the example could have been a $2.6 million small business sale instead, then it would actually compare the old $1 million exemption with the new $1.25 exemption, and the old 50% incision rate with the new 50->66% inclusion rate to get a more accurate “apples-to-apples” comparison.
Napkin math:
Old capital gains tax: about 1 million is exempt, so paying 50% capital gains on remaining 1.6 million is 800K income, at 53% is about 424K tax.
New capital gains tax: 1.25M is exempt, so include 50% capital gains on next 250K, then 66% on the remaining 1.1M. Total capital gains income is 851K. 53% tax on 851K is only $27K more, for $452K, which is a 6.6% increase.
Vs. getting increased services over your entire lifetime from the ultra wealthy paying closer to their fair share? Even a small business owner selling a $2.6MM business comes out way ahead.
Also, do we really want to give doctors a pass for incorporating to shelter their income against income tax for their entire lives then say that’s a problem when they’re asked to pay closer to their actual fair share income tax when they retire? Really?
And we’re worried about people selling their multimillion dollar vacation properties paying more tax?
Anyway, I get the video is trying to be “balanced”, and it’s close, but it’s still biased toward the ultra wealthy.
It’s really, really difficult to get small business owners to see how they personally benefit from social goods. They spend too much time grinding and struggling during the establishment phase. I think it’s something of a traumatizing experience.
Like, trying to get those who primarily sell to working class folks to see how raising the minimum wage actually benefits them, because it means that all of their customers have more money to spend is nigh impossible. All they see is that they’ll have to raise prices, and it makes them even more hostile toward their employees.
And the kicker is, they have no reason to trust in any of the social benefits, because we’ve lived in a society that bas spent the last 45 years dismantling them. And one of our two parties that actually makes government now explicitly runs on destroying social services of every kind.
Yeah this argument never really made sense to me. Unless your product’s only input cost is labour (which I can’t think of a single job that would apply to, let alone close to minimum wage job) your costs should only have to go up by a fraction of the minimum wage increase. This would leave a minimum wage worker/customer better off after buying your product than they would have if it was cheaper.