Anthony Furey: The Response to Feds’ Capital Gains Tax Plan Has Been Swift and Fierce

I guess that’s what happens when you try to take away people’s hard-earned money.

Prior to Wednesday’s federal budget reveal, there had already been rumours that Trudeau and Finance Minister Chrystia Freeland were planning to finance billions of dollars in more spending by raising taxes.

The spin was that they’d be taxing the rich to make sure the highest earners were paying their “fair share,” whatever that tiresome phrase means. This may have left the impression in peoples’ minds that it would only be billionaire titans of industry who would find themselves left with a few dollars less at the end of the year to the benefit of the rest of us.

The details revealed something very different though.

What Trudeau and Freeland unveiled with their capital gains tax hike was a plan to confiscate wealth from middle-class Canadians as well as to tell visionary entrepreneurs to head south and discount Canada as an inviting place to create new companies.

The official plan is to increase the capital gains tax on corporations from 50 percent to two-thirds (67 percent). For individuals, there remains a $250,000 annual exemption level but any gains above that will now be taxed at two-thirds instead of 50 percent.

Does this mean that the super elite will have to shell out a bit more? Sure. But it also means that middle-class landlords, entrepreneurs, and even doctors, among others, will be taking a hit at the end of the year and also when they wind down or sell their life’s work.

There are many middle-class Canadians who don’t have pensions and instead own one or two rental properties. Now, when they sell their second property, they will have more of their gains confiscated by government. The rules have suddenly changed in the middle of the game for them.

When it comes to entrepreneurship, there are many people who start a company or join it as an early employee and toil away for years making very little money up front with the knowledge that if they succeed they will reap the gains later on. That’s the trade-off. That’s what, for some, makes it all worthwhile.

Now, Trudeau plans to penalize them for their initiative. So much for taking risks in life and business.

A devastating open letter from the Council of Canadian Innovators reveals the outrage of the entrepreneurship and start-up ecosystem.

“You cannot tax your way to prosperity. But in the 2024 federal budget, we see a government trying to hike taxes on investment. Anybody with experience in entrepreneurship and investment can see how this will stifle growth,” the letter states.

“We are calling on the federal government to scrap this disastrous tax hike on investment, and listen to the innovators who are trying to create a more prosperous future for every generation.”

The letter is signed by over 1,000 Canadian job creators and entrepreneurs. It’s likely that among their ranks are a number of Liberal voters and even Liberal donors. They’re likely former Liberal supporters now.

It’s incredible that Trudeau thought he could get away with this and that it would be accepted. The government pushed out a number claiming that 99.97 percent of Canadians would not be affected by this capital gains rule change in any given year and that only 40,000 people would be affected by it.

Should this really be about pitting people against each other, though? Just because you aren’t paying for a tax, does that mean you support it? Canadians are also smart enough to clue in to the fact that if a successful entrepreneur feels that they’re no longer welcome in the country, that’s bad news for everyone.

It’s not the fault of entrepreneurs that Trudeau and Freeland need more money to manage the massive deficits that they created.

Perhaps the most damning of all statements against the tax changes comes from the Ontario Medical Association. “This disincentive could force existing physicians out of practice and dissuade new grads from practicing in Canada,” their release reads.

So not only will this tax change mean fewer exciting new start-ups to create jobs and grow the economy, it could also mean fewer family doctors at a time when we already have a shortage.

What terrible public policy. And what widespread opposition to it. If there’s any position that Trudeau is going to backtrack on, this is the one.