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Establishing Tax Fairness for the Middle Class

WHEREAS preferential tax treatment for the most affluent has made Canadian taxes
significantly less progressive over the past quarter-century so that the richest 10% of Canadians
now claim an average $20,500 a year in tax exemptions – $6,000 more than in 1992 – while
below average income Canadians receive $30 to $80 less;

WHEREAS Budget 2017 was supported by an extensive study of tax expenditures, it did not
close any tax loopholes that unfairly and overwhelmingly benefit the richest Canadians who have
large capital gains and pay tax on only 50% of this income, while middle class Canadians have
few capital gains and taxed on 100% of their wage income;

WHEREAS support for taxing capital income on the same basis as employment income dates
back to the Carter Commission of the 1960s, the 50% capital gains tax reduction was made in
2000 thereby depriving the government of billions of dollars and delaying the balancing of the
Budget;

WHEREAS a Canadian Tax Journal study found that the top 1% of individual taxpayers
receive 87% of the benefit of the capital gains deduction;

WHEREAS the cost of allowing this preferential treatment of capital gains increased by 1,415%
since 1992 will result in lost tax revenues exceeding $6 Billion in 2018 alone;

BE IT RESOLVED that the Liberal Party of Canada urge the Government of Canada to ensure
that all future amendments to the Income Tax Act restore fairness to personal income taxes;

BE IT FURTHER RESOLVED that capital gains to individuals should be taxed at the same
rate as wage income.

VANCOUVER QUADRA

Contact: Joe Gilling
gillingjoe62@gmail.com

 


References

1. Peer reviewed publication of the Canadian Tax Foundation. The article presents how tax preferences may affect the progressivity, finding most tax expenditures are estimated to
be top-end progressive except, those involving capital income and stock options.

a. Brian B. Murphy, Michael R. Veall and Michael C. Wolfson (2015) “Top-End Progressivity and Federal Tax Preferences in Canada: Estimates from Personal Income Tax Data”, Canadian Tax Journal/Revue Fiscale Canadienne, Vol. 63, No. 3.

2. Analysis by the Canadian Centre for Policy Alternatives

a. David Macdonald (2017) “Preferential Treatment: The History and Cost of Tax Exemptions, Credits, and Loopholes in Canada”, Canadian Centre for Policy Alternatives, ISBN 978-1- 77125-345- 1.

3. An article questioning neoliberalism as it affects taxation.

a. Andrej Litvinjenko (2017) “Trumpism and the economic failure of neoliberalism” Policy Options, January 2017.

4. Analysis from the Broadbent Institute.

a. Andrew Jackson (2016) “Federal tax review must target loopholes for wealthy, boost fiscal capacity”, The Broadbent Institute Blog, August 16, 2016.

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