The tax bias against saving and investment is a major problem in the United States and many other nations.
According to the latest-available data from the Tax Foundation, the worst of the worst is Canada.
So how does Canada's dilettante Prime Minister respond?
By proposing a big increase in the capital gains tax.
I'm not joking. Even though Canada already has a punitive capital gains tax, Justin Trudeau wants a big increase.
Here are some excerpts from a report in the National Post by Olivia Rumbell, which focuses on how the higher tax is prodding some people to sell homes before the tax is implemented.
The new capital gains tax proposed in the Liberal budget has led to speculation that there might be a flood of cottages entering the market or a push for earlier closing dates as sellers try to avoid a hefty tax bill. "I am seeing an increase in people wanting to list their properties now that this is going into effect," s
aid Beth Groom, a broker and owner of Cape Breton Realty. The capital gains tax, if it comes into effect, would tax profits on capital gains of more than $250,000 at almost 67 per cent, up from the prior rate of 50 per cent. It would result in an increased tax bill on capital gains for some sellers. ...Groom speculated that if she was working for the buyer, she'd put in an offer for a certain amount, closing prior to the June 25 date when the capital gains tax will come into effect, communicating clearly so that the seller knows if they close before that day, they may save money.
For what it's worth, I'm not overly worried about the impact on homeowners (though it's unfair for them to be hit by an extra layer of tax).
What matters a lot for long-run prosperity is innovation and business investment. And Trudeau's class-warfare grab for money is going to discourage those things.
Given the Tax Foundation's comprehensive formula, I don't know what it will do to the overall tax rate on capital income, but it definitely will move in the wrong direction.
Why is Trudeau pushing bad policy?
Given that a previous class-warfare tax hike backfired, he should have learned.
But given his approach to fiscal policy, we shouldn't be surprised.
P.S. His views on monetary policy may be even worse.
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