Various schemes for taxing the wealthy in the preparatory stage of the election in the midst of a weak economic recovery
In the 44th federal elections on September 20, political parties pushed out economic plans and promises, and the wealthy are once again becoming a punching bag given the type of tax system proposed. According to analysts, such promises can appeal to the masses and win votes, but they come with many flaws and difficulty in implementation.
But one tax, the wealth tax, is particularly inappropriate, says Jack Mints, a Fellow of the University of Calgary’s School of Public Policy and one of Canada’s leading tax experts.
The NDP proposes that people with wealth over $ 10 million pay a 1% wealth tax. However, the 115-page commitment document does not provide any further details.
“It’s an absolutely strange policy to recommend,” Mints told The Epoch Times.
People are already paying taxes on income generated from wealth, such as dividends, capital gains and interest, he added.
For interest income, the inflation-adjusted rate of return is already negative, and wealth tax becomes like double taxation.
“In other words, we are imposing a wealth tax on people who do not even earn income. [that wealth]”Mints said.
NS Canadian Taxpayer Federation Although the (CTF) opposes the wealth tax and states that it is complicated to manage and has a negative impact on the economy, the organization understands the politics behind the wealth tax.
“Canada’s federal wealth tax outlook has wide-ranging political appeal potential. By definition, 99% of Canadians are outside the country’s top percentile of wealth, and these voters. Politicians can be rewarded if they can reduce their debt burden and convince far wealthier people to pay, “said the accountant. Neil Winnockle, a CTF report released in February entitled “Why Wealth Taxes Hurt Canadians”.
Measuring all forms of wealth itself is a difficult endeavor. For example, what is the value of a painting? What is the value of a farm, especially if you have been in the family for 100 years?
“Taxing wealth is exponentially complex,” Winokur said.
July, Parliamentary Budget Officer (PBO) Perform a one-time tax on extreme wealth based on a proposal to introduce a 3% tax on assets over $ 10 million and a 5% tax on assets over $ 20 million. Estimated the profit from imposing.
PBO is for people facing a tax rate of 3%, 15% of their wealth is likely to be evaded or evaded by tax evasion and tax evasion techniques, and for people facing a tax rate of 5% , Almost 20% of their wealth is evaded or evaded. Federal spending observers said it was not reasonable not to expect such a behavioral reaction to the wealth tax, and “there is a high degree of uncertainty about the true reaction to the imposition of this tax.”
Philip Cross, a senior fellow at the Fraser Institute, already has a very progressive tax system in Canada. January 2020 study About taxation on the rich.
“The top 10% of income tax filers pay more than half of all income taxes,” said Cross, adding that their relative tax burden was the highest in records dating back to 1982.
Canada is still in the midst of an economic recovery, but its deficits and debt have reached record levels, which usually leads to tax increases.
NS PBO The budget deficit in 2020-21 is estimated to be $ 334.7 billion, but is projected to plummet to $ 138.2 billion in 2021-22.
One of the problems with record debt levels is interest rate costs. The PBO forecasts that cumulative debt and rising interest rates will almost double from 2020-21 levels to reach $ 37.6 billion in 2025-26.
NS NDP Implementing a 1% wealth tax, raising capital gains inclusion from 50% to 75%, and raising the maximum federal tax rate as part of an economic plan 33 percent to 35 percent..
Mr Mintz said raising the capital gains tax has several benefits from a tax policy perspective in that it better matches the current dividend rate. However, he added that increasing the capital tax gain rate is particularly harmful when inflation remains rising.
“Of course, that would have a negative impact on entrepreneurship and would have a very significant impact on many older people in the population saving money for retirement,” Mintz said.
NS liberal We raised taxes on the wealthiest 1%, but the 2021 budget did not include additional taxes on the wealthiest.
“I think the liberals want to raise the capital gains tax rate themselves,” Mintz said.
NS conservatives They do not include personal income tax increases in their recovery plans and instead offer many tax credits.
The NDP did not respond to the Epoch Times request for details of the tax bill.
“It’s not time to raise taxes. We are still in the midst of health restrictions and a very disturbing economic recovery,” Mintz said.