Tax Planning in a Questionable Future Tax Environment | Page 3 | General financial discussion | Discussion forum

Would an increase to capital gains predominantly affect wealthy people and seniors?

I know a lot of people who invest have enough room to invest in their tfsa and rrsp so i guess people who can invest above that. However i don't understand how small business owners fit in or who would primarily be invested in non registered over a tfsa and rrsp.

Scruge, that UK tax appears similar to a tax like the Ontario Land Transfer Tax paid by purchaser at time of purchase. Not at all akin to a capital gains tax imposed on a seller.

christinad said
Perhaps i'll frame my question as

Would an increase to capital gains predominantly affect higher income people and seniors?

I don't want to get into a debate as to what wealthy is.  

It would primarily affect higher net worth people who invest in the items affected by the tax outside of registered plans.

Some of these will be people with high incomes. Some of them will be seniors.

But a lot of high income people are not high net worth people because they spend a lot and have big mortgages and credit card debt. A lot of seniors have little to no discretionary funds, and they have lower incomes on average than most adults. In addition, a lot of seniors cash in their capital gains types of investments when they get old as they don't want the volatility risk at that stage of life. Depending on how they manage this transition, they could trigger a lot of cap gains over a short time and then none thereafter, which I don't think seems fair.

There are also people who "invest" but are really just gamblers but with a better sounding name. They play the market, always hoping for the big win. This activity is not necessarily related to income or age. I don't know how often they win, how often they cash in, or how often they lose and cash in. All of these things could affect their cap gains net tax.

The biggest factor might be how clever people's financial advisors and tax accountants are!

Well in general most person / family should not be buying /selling more than twice.
Once for their starter home, and then maybe upgrade cuz family grows.
The 2nd home they own, they should be in that residence for at least 20 years before they need to sell, hence no need to worry about the tax anyway. And the tax free gain for the seniors help fund their retirement years too.
And if someone just want to flip houses every few years, yeah make them pay the tax when they make money on it.
I can see real estate agents and mortgage sales people would also seriously oppose the tax, as its in human nature to oppose changes that are going to negatively affect the individual.
We will never see such thing as a equitable tax to all. People complain about flat tax saying the rich not paid enuf, the rich complain about progressive tax saying they pay too much....

What can the government do that's fair then? I was thinking they could roll back the changes to the tax brackets the government made 1-2 years ago. As i recall from the media they only saved people something like 100/year anyway. The government won't want to do something that makes their previous choice look foolish though.

Yes, a general tax hike would work. I estimated earlier that an 8.4% increase would be enough to service $2 trillion of new debt with a 1.2% interest rate.

5% GST would become 5.42%. That 20.5% middle tax bracket would become 22.22%. The 33% bracket would become 35.77%.

Someone need to foot the bill for this crisis, sales tax is a good way to do so with as little distortion to the economy as possible. However, sales tax is actually a regressive tax as low income individuals spend a greater portion of their income.

If we are going to increase sales tax, it is best to also increase sales tax rebate for the low income individuals. In the meantime, in light of the situation describe by Bill, it is best to put a head tax on anyone that cross the boarder by land between US and Canada, so we can get our "sales tax" back. (Except for those that travel between Canada and Point Roberts, Northwest Angle, and Saint Pierre and Miquelon.)

As members previously mentioned, I think it is a good idea to reduce the starting threshold for OAS clawback, people that have more than 70000 CAD a year as income when they retire does not require this level of assistance from the government (I am bias here because I am young).

I also believe we should have clawback of OAS and GIS on anyone that are very asset rich. It is a choice to live in a 2 million dollars mansion with only 24000CAD of income, other taxpayer should not foot the bill for this.

I think reintroduction of gift and will tax is also a good idea, however, the truly wealthy that have an army of lawyers and accountant will be able to conduct financial alchemy that make sure the tax man cannot get hold of their money.

More importantly, we need a line by line review of government expenses (Something that Stephen Harper have done before) to cut out the unnecessary parts, and to cut off all types of financial assistance from our governments to any government or quasi - government entities of the PRC and Russia, as they are enemy nations.

Most importantly, we need to have a regulation bonfire (large scale deregulation) to improve the productivity of our economy, so we can grow it and gain more tax out of it without increasing the tax rate. (Canada's economy also have lower productivity compare with the US, and we need to do something about it.) Consider how expensive it is to travel internally, and how expensive our telecommunication bills are, let's start with the transportation and telecommunication sector!

We also need to have a much better relationship with our first nation, as our resources extraction industries require certainty for it to be successful, but this is a giant can of worm.

pooreva said

Jon said
It is a choice to live in a 2 million dollars mention when only 24000CAD of income, other taxpayer should not foot the bill for this.

Sorry but you are wrong.
If somebody bought house 20 years ago for 250K in the 'middle of nowhere', it is not his/her fault everything around that property is build up and (s)he actually lives in the middle of nice neighborhood where houses change hand for 1.5-2 mill.
And if you have 24K income/year you can easily live in such house. Property tax will be around 10K, utilities/food 5K, 5K for unexpected emergencies and the rest is left for 'luxuries'. No need to move at all.
And how taxpayers actually 'foot the bill' for that dwelling?????????  

The dollar amount maybe a bit off, but my idea is sound.
Let say the house now worth 3 million and the person only take home 18000CAD a year with GIS and OAS included, my argument will make a better sense here.

savemoresaveoften, I agree house is a drain of financial resources, and ideally, no one should be force to do anything. But money is tight right now, and we need to spend money on things that matter more.

Have I forget to mention reverse mortgage here.... Thats a solution too.