New 2024 federal budget | Page 5 | General financial discussion | Discussion forum

smayer97 said

Really? Where do you think the appearance of new rentals on the market come from, whether it be through new construction, or creatively dividing up existing properties, like adding a basement suite, or subdividing a large house into multiple units?  

I believe in owning vs renting for the long run is better off for any one. Landlords bidding up rental properties and renters pay high rent their working life and owns nothing at retirement does not sit well with me. If rental property capital gain are ultimately taxed at 100%, there is less incentive to pay up for rental properties, supply and demand will drive price down and benefits more people to be able to own vs rent.

As for ur other comment about $250k not a lot for selling real estate, it does not include your principal residence, it remains tax free, isnt it ?

RetirEd said
Mordko
Isn't this pretty much the same as the "stop being poor" advice given by right-wingers. I can't remember or find where it originated. Anyone? It wasn't Paris Hilton, by the way. Before the fake shirt posting.

Its not right winger vs left winger. Its about being responsible for oneself, and One chooses the amount of effort ones choose to put in, and that affects ones lifestyle, and that IS fair. Just like when in school when someone fails an exam, thats because he does not study hard enough, not that the exam is hard.
There are some that really needs others help due to their circumstances, but most can simply have a better life if they work a little harder, and not have the mindset of being taken care of by the generous social / tax system.

savemoresaveoften said

I am talking about cutting the rush of capital into bidding up rental properties, a lower rental property value = lower rent. A lower property value also means higher chance a renter can afford the mortgage vs renting.  

So, in your logic increasing taxes on X means the service provided by X will get cheaper and more readily available. Interesting.

savemoresaveoften said

What do you think will happen to stock price if all of a sudden capital gain on stock becomes 100% taxable ? You think people will bid up stock price more to cover the "added" cost of holding the capital in stock ?
  

If access to capital for mining companies is restricted in the way you describe, there will be a lot less mining and the price of raw materials will go up rather than down. Ok, its more complex because raw materials can move borders and other countries will fill in the gap (unlike rental apartments) but you get the idea.

Increasing interest rates effectively means withdrawing money from circulation in the economy. It increases the value of money. Taxation does not do that. It's a different phenomenon from imposing high taxation. High tax countries are very expensive. Have you been to Norway?

mordko said

Sally could work harder, get better qualifications to earn more or just save and invest harder. Like Sylvia Bloom, a secretary whose bequest to charities amounted to $10 mil or so.

Or she can choose to do none of these things. Free world.

Sally is unlikely to be helping anyone. Someone who pays $10K in taxes and gets $20K in benefits isn’t helping someone who pays $100K in taxes and gets zero in benefits. By targeting the latter person, the government is killing the golden goose who funds benefits for 5 Sallies. We are not exactly short of Sallies but we are very short of doctors.  

Salaried Sally, PhD (molecular biology), JD(constitutional law) derived her $1 from her salary as the CEO of a large civil rights charity. Her salary is taxed at a marginal rate of 53% and does not benefit from gains netting or inclusion rate. Thus her taxes paid are effectively helping to offset the tax benefits received by capital gains investors.

Sally has nothing against capital gains investors (she is one of them), but she is not convinced by arguments that preferential treatment of gains to the detriment of salaries is fair because capital gains investing is risky and helps build the society. She took huge risks pursuing her education and investing it in ways that benefits society. Better that all personal income is treated equally and fairly.

mordko said

Isn't this pretty much the same as the "stop being poor" advice given by right-wingers. I can't remember or find where it originated. Anyone? It wasn't Paris Hilton, by the way. Before the fake shirt posting.

No, its just that the claim that investing means “double dipping” because Sally does not invest is ludicrous. People make choices. If Sally can’t count to 10 and Jane can, Jane isn’t “double dipping”. Sally had an option to learn to count to 10 but she chose not to. She is absolutely free to make this choice, nothing’s wrong with it. Does not help others, hurts the overall society, we should incentivize learning and investing but she is free to make it and its not in any way a blemish on Jane.  

This is a straw man argument deflecting the "double dipping" charge by casting negative judgements on hard working Sally.

risk fairness said

It's not the rate, it's the preferential treatment relative to salary income for the majority of society. Fair and equal treatment of personal income regardless of source (salary, interest, capital gains) would be better.  

That is not remotely the same thing. No one is taking personal capital risk when working for wages, nor are they doing so to buy GICs or HISAs. People, pension funds, corporations and every business owner will not take capital risk unless there is sufficient aggregate and statistical reward to offset risk. That reward comes in three parts: 1) a potential reward of higher gross return on investment, 2) higher net return after tax on investment, and 3) the ability to offset capital gains with capital losses from investments gone bad.

Lower capital investment means lower productivity, lower GDP and lower overall tax revenue generation. It ultimately would lead to lower Canadian stock prices because of the reduction in the amount of capital being injected into Canadian corporations. The capital would flee to other jurisdictions with better returns. Every country has to measure its fiscal policy relative to all other jurisdictions to attract sufficient capital to sustain and grow their economies. These decisions are taken every day on a global basis by those determining where best to deploy capital.

FWIW, Canada has been failing to keep up as capital deployment has been dropping relative to other jurisdictions. The higher capital gains inclusion rate will depress that even further. This is not just additional tax on the wealthy as spun by Ottawa. It is ultimately a tax on everyone as the effects cascade down the food chain.

risk fairness said

It's not the rate, it's the preferential treatment relative to salary income for the majority of society. Fair and equal treatment of personal income regardless of source (salary, interest, capital gains) would be better.  

What you said will be fair IF it is a flat rate tax that applies to all source of income, be it salary, interest, dividend AND capital gain. Its not fair to begin with for a progressive tax structure (that i call the double taxing, which is taxing at a high relative AND absolute $ terms). The high salary income earners are more likely to also have capital gain and pay thru their noses to support the rest of Canada. They make the choice to invest/provide capital via investment, and now says its only fair to tax the return on that 100% ??

savemoresaveoften said

Imposing high taxation will have similar effect as increasing interest rate if the govt uses that money to pay down the national debt.

As for Norway being expensive, I will take ur word that it is due to taxation that results in high prices before taxation. if google says different, I will let you know.

"Because one and only thing. The absence of cheap labour. It does not matter if you are a buss driver, barista, MC Donald's employee, teacher, electrician or janitor you get payed much more in comparison to other countries."

The before tax price is high because of the above, not because cuz tax is high, therefore the price before tax is high too.

Correct me if I am wrong. Or maybe you are...  

You’ll find an explanation here, which is both simple and pleasant. The absence of cheap labour has A LOT to do with taxes.

“Socialism Sucks: Two Economists Drink Their Way Through the Unfree World”.

HermanH said
That is the current situation. However, if #3 were absent, everything would still be functional. Of course, that jurisdiction would be less attractive to investors. #3 is a nice benefit, but still an artificial one.  

It is not artificial because the more risky ventures would almost never get funded. You don't seem to understand a great number of businesses fail and few of them could attract equity capital if, with some probability, they could go bust and the investors could not write off the failures. No bank will lend debt unless there is equity 'skin in the game'. Writing off bad equity is no different than writing off bad debt. It comes with the territory everywhere in the developed world at least.

There would be no venture capital for new technology, new software, bio-medical development and a vast number of other innovative investments. How would one have started/funded the development of solar panels or EV batteries? What about the miners developing new mines? What about even land development that can fail to get past the permitting stage?

Would anyone have committed capital to the likes of Northland Power, Algonquin Power or EV manufacturers like Lion Electric and even NFI if they could not write off their equity investments if the companies fail?

Both publicly traded and private equity is littered with business failures that had what appeared to be a good business plan but failed for a variety of reasons. It is how the world works, on both a debt AND equity basis. The 3 legged stool needs 3 legs to function.

I suspect those that may be objecting the most are not equity investors in a significant way and don't understand how business capitalization works. I have no idea what else can be said to enlighten and educate. The discussion has unfortunately gotten rather repetitive.