New Capital Gains Tax Is Life Savings Confiscation

[MrPrezident]

Capital gains in the past were never taxed at anything close to the wages / income rate. This was because there have always been problems with historical cost basis and the realization that most of the "capital gain" is just inflation and not a real gain.

When the government taxes these long-term gains in present dollars without subtracting out the inflation they are literally confiscating the net worth that people have accumulated in a family -sometimes over generations.

Hard work and conservation of family assets and memories should be encouraged - not destroyed.

It is a demented fantasy to think that this wealth theft and transfer will produce more housing. People will invest less in an asset category that they know will be stolen from them when they are old.

Inflation should be subtracted out of any second home sale and the cost basis should also be stepped up at death. The proposed capital gains tax is confiscation for any family that works hard and thinks of mult-generational progress.

This new tax is housing communism. Collectivized farms in the USSR produced less food - not more.

 

[xmontrealer]

Not to mention the effect it will have on professionals such as doctors and dentists, who usually incorporate in order to create a nest egg for their retirements.

Under the new legislation, if it is passed, personal corporations will not have the $250,000 exemption that individuals will enjoy before their taxable income rises from 50% of a capital gain to 67%.

So the 67% of capital gains in personal corporations will be from dollar 1.

 

[maurice93]

Not to mention the effect it will have on professionals such as doctors and dentists, who usually incorporate in order to create a nest egg for their retirements.

Under the new legislation, if it is passed, personal corporations will not have the $250,000 exemption that individuals will enjoy before their taxable income rises from 50% of a capital gain to 67%.

So the 67% of capital gains in personal corporations will be from dollar 1.

I don't believe that is correct. There will still be a cap gains exemption of around $1.5 million for personals with incorporated businesses, that will get increased annually based on an index. That exemption hasn't changed from before -- in fact it increased slightly.

At least that was the case with the proposal that was being pushed in April.

I guess we will find out more on Monday if this new proposal is any different.

 

[NotADcotor]

Capital gains in the past were never taxed at anything close to the wages / income rate. This was because there have always been problems with historical cost basis and the realization that most of the "capital gain" is just inflation and not a real gain.

When the government taxes these long-term gains in present dollars without subtracting out the inflation they are literally confiscating the net worth that people have accumulated in a family -sometimes over generations.

Hard work and conservation of family assets and memories should be encouraged - not destroyed.

It is a demented fantasy to think that this wealth theft and transfer will produce more housing. People will invest less in an asset category that they know will be stolen from them when they are old.

Inflation should be subtracted out of any second home sale and the cost basis should also be stepped up at death. The proposed capital gains tax is confiscation for any family that works hard and thinks of mult-generational process.

This new tax is housing communism. Collectivized farms in the USSR produced less food - not more.

Not in favor of the tax increase but

1: What you said applies to the old capital gains tax as much as the new. Going from 50% to 66% inclusion rate doesn't change the issues
2: Most of capital gain isn't inflation, most of it is real gain. If yu gain 8% and inflation is 2 percent... If most of your capital gains are inflation in the longer term, you are not investing very well.
3: Subtracting inflation from capital gains is fine in theory but the extra paperwork is pure horror show, better to have a reduced inclusion.
4: If the proposed capital gains is confiscation, why isn't the old rate.
5: I noticed you used the term communism, I don't think that word means what you think it does. But considering people through out words like Nazi, fascist, racist, genocide, transphobia willy nilly, why not join the fun.

If you are going to make the argument, do it better, plenty of meat to work with.

 

[wigglee]

Not applicable to your main residence

 

[onomatopoeia]

Most Canadians don't consider the retention of inter-generational wealth to be a sacred cow, nor a right.

Given that the beneficiaries of inter-generational wealth are frequently major sponsors of political parties, however, I don't see a Bill like this one becoming a Law quickly. It's more likely that it will still be in the debate stage when the current government falls next year, and that's the last of it we'll see for some time. One expects a proposal like this one to be tabled as a private member's Bill from someone in the NDP caucus looking for name recognition.

 

[james t kirk]

Not applicable to your main residence

You mean, "not yet"

Justin Trudeau and his lackey Christia Freeland are aiming to tax the appreciation in your savings, including your principal residence.

 

[K Douglas]

This government are robbers. Plain and simple. They are doing this partly to appease the NDP who have been propping them up. The rates of tax we are paying currently amounts to legalized theft.

 

[jalimon]

Not applicable to your main residence

Probably coming soon. Next is our cpp.

Listen we live in a world where only the rich can access the resources to avoid paying any taxes. And us as stupid as we are admire these people. They employ people they say.

So on the other side the government will come and take as much as possible from middle class because we are silent idiots who still protect the rich...

 

[lomotil]

So will the populist Poilievre if elected erase the capital gains government confiscation,,,,,,,,,, probably not,….but we can only hope.

 

[RZG]

Not applicable to your main residence

....so far.

 

[Sugarsweet905]

Not applicable to your main residence

With Ottawa being like it is now, they will likely say your new home is your main residence, and still try to collect tax on the sale of your old home.

 

[boobtoucher]

ugh, this is such a stupid take.

Remember: This is a change to how income is calculated, not a rate increase. For it to affect you, the stuff you own has to increase more than 250,000 in a year, and you have to sell it. It doesn't affect you if your income is 250,000, which, statistically it isn't.

Let's say you bought a 2nd house for $1 million. You sell it for 1,250,001. Last year, 125,000.50 (50% of 250,001) would be added to your income, and taxed at your marginal tax rate. This year, 125,000.67 will be added to your income and taxed at your marginal tax rate.

So you're an average Ontarian. You make 55,000 per year. You've sold your 2nd house, and the capital gain is 250,001. Ignoring deductions, your income last year would be 180,000.5, and this year your income would be 180,000.67.

The additional 0.17 is taxed at 41.16% (12.16% provincial, 29% federal), meaning you'd be on the hook for 0.07 (SEVEN CENTS) of additional income tax.

If your capital gain was 300,000, you pay an additional $1,200 in that year. $500k capital gain, additional $7,500.

It's not peanuts, but remember, this doesn't apply to your principal residence (only 2nd/vacation houses), and it doesn't apply to the TOTAL value of a stock you sell, only the increase. So if you invested $1 million, this wouldn't affect you until you made a 25% return, and only in non-registered accounts (rrsp is only taxed on withdrawal, and TFSA is not taxed). It also doesn't need to apply to an inherited property. If you get moms house, and sell it in the same year, there is no capital gain. if you hang on to it for 20 years as a rental, you pay the capital gain on the value increase between when you inherited it and when you sold it. But even that's beatable if you live in your other houses for a year before you sell them.

Even the newspaper articles and facebook posts coming out against this use an example of someone with a $400k annual income as the "victim".

Eat the rich.

 

[Jubee]

So will the populist Poilievre if elected erase the capital gains government confiscation

 

[Jubee]

Not in favor of the tax increase but

1: What you said applies to the old capital gains tax as much as the new. Going from 50% to 66% inclusion rate doesn't change the issues
2: Most of capital gain isn't inflation, most of it is real gain. If yu gain 8% and inflation is 2 percent... If most of your capital gains are inflation in the longer term, you are not investing very well.
3: Subtracting inflation from capital gains is fine in theory but the extra paperwork is pure horror show, better to have a reduced inclusion.
4: If the proposed capital gains is confiscation, why isn't the old rate.
5: I noticed you used the term communism, I don't think that word means what you think it does. But considering people through out words like Nazi, fascist, racist, genocide, transphobia willy nilly, why not join the fun.

If you are going to make the argument, do it better, plenty of meat to work with.

If you are going to make the argument, do it better

 

[Soccersweeper]

Capital gains were taxed at this rate for years in the past. At one point it was as high as 75% inclusion. This is nothing new. Even at 66% you still get a one third break on the inclusion rate, which is more than most people get on their income. Cry me a river. Peopke with these assets have generally benefitted more from our society than others, they should pay more of the costs.

 

[MrPrezident]

A candy bar was 5 cents US in the 1950s. It is now $1.39 US.

If your family made a small consumption sacrifice and bought a cottage at Muskoka in the 1920s and made some improvements over time much of the value of that cottage is still just the inflation.

Even small adjustments in what is taxed can be large amounts of value seized.

Some folks here should school up about the adventures of Joe Stalin and the Kulaks. The seizure of land, seeds, and produce from the Kulaks to create collective farms did not increase the food supply.

Measures to over-tax small owners of investment properties, second homes and personal services corporations will not by some magic act cause a large increase in affordable housing.

Less housing will in fact be the result. You can take from the Kulaks once, but the results will be eaten by the government.

We need to rekindle the belief that market capitalism can create new supply. You can only seize the Kulaks' farms, tools, and seed corn once.

 

[Jubee]

Dekulakization - Wikipedia

en.wikipedia.org

 

[maurice93]

This government are robbers. Plain and simple. They are doing this partly to appease the NDP who have been propping them up. The rates of tax we are paying currently amounts to legalized theft.

So were the previous Conservative Government who had a higher income tax rate on the middle tax bracket, and either had higher or the same tax bracket rates for all income under $220,000, even greater thieves?

And before you go there, yes the carbon tax is flawed, but your point was about income taxes.

 

[maurice93]

For short term capital gains Canada actually gets good treatment compared to the US for example. If anything I would target the rates on short term gains from second residences, before adjusting capital gains on longer held second residences. Flipping of properties puts a lot more pressure on housing costs when the market is (was?) on fire.

In the US short term capital gains on assets for held for one year (and in some cases up to two years) are taxed at a 100% inclusion rate. In Canada, we are getting very favourable treatment for short term capital gains (50% inclusion) as compared to interest (100%) and dividends (closer to 70% due to DTC).