Opinion: Capital gains stubbornness shows Liberals have lost their way

financialpost.com:

By Allan Lanthier

In its budget of April 16, the federal government proposed to increase the capital gains tax, provoking howls of criticism but also reasonable suggestions from the tax, business and professional communities for improvements in the measure. On Monday, Deputy Prime Minister Chrystia Freeland gave the government’s answer: no suggestions accepted. The government will proceed without a single significant change.

The day before, Freeland had spoken in Toronto. “Do you want to live in a country where those at the very top live lives of luxury, but must do so in gated communities behind ever higher fences, using private health care and airplanes because the public sphere is so degraded and the wrath of the vast majority of their less privileged compatriots burns so hot?” she asked, in support of her tax proposal. This unhinged rhetoric and Freeland’s refusal to consider any sensible changes to what is very clearly a flawed proposal are unmistakable evidence of a government that has lost its way.

At the moment, one-half of capital gains is included in income for individuals, corporations and trusts. The government proposes to increase the inclusion rate to two-thirds effective June 25 — though for individuals only for annual gains that exceed $250,000. Gains less than $250,000 will still enjoy the inclusion rate of one-half.

Many economists believe raising taxes on capital in this way will reduce productivity and economic growth and comes at precisely the wrong time, given Canada’s sluggish economic performance over the past several years. But the government seemed hell-bent on proceeding so interested groups made three constructive suggestions.

First, the $250,000 annual limit for individuals should also apply