income tax – Finances of the Nation

The Liberals’ plan for first-time homeowners is a good start but should be more equitable

Posted on August 31, 2021 by Jennifer Robson and Michael Smart

The FHSA would cost up to $1.4 billion annually, but much of the benefit would likely go to high-income households. Changes to the proposed program would make it more fair and more likely to encourage private savings by prospective first-time homebuyers. Read this articleThe Liberals’ plan for first-time homeowners is a good start but should be more equitable→

Surplus stripping: We need to fix Canada’s tax rules

Posted on July 29, 2021 by Allan Lanthier

Department of Finance building in Ottawa.

Part II: The underlying problem is the differential that exists today between personal tax rates on taxable dividends as opposed to capital gains. Read this articleSurplus stripping: We need to fix Canada’s tax rules→

UPDATE: Surplus stripping and the new, costly tax loophole for intergenerational transfers

Posted on July 28, 2021 by Allan Lanthier

Part I: A recently approved private member’s bill is deeply flawed and opens the floodgates to aggressive surplus stripping schemes. It should be fixed. Read this articleUPDATE: Surplus stripping and the new, costly tax loophole for intergenerational transfers→

Canada should harmonize tax credits to enhance fairness and efficiency

Posted on July 26, 2021 by Robin Boadway and Katherine Cuff

Our proposal represents an incremental step in the direction of a basic income guarantee. Harmonizing the main income tax credits, making the base and tax-back rate suitably progressive, and ensuring they are all refundable would form the basis for a modest basic income. Read this articleCanada should harmonize tax credits to enhance fairness and efficiency→

Are the rich really getting poorer in Canada?

Posted on July 20, 2021 by Michael Smart

The rise of small-business incorporation is suppressing taxable incomes of rich Canadians. The growing gulf between top personal tax rates and the low rates paid by small CCPCs is driving the rise of incorporation. Read this articleAre the rich really getting poorer in Canada?→

Evidence on Behavioural Effects of Higher Capital Gains Taxes in Canada

Posted on February 25, 2021 by Adam Lavecchia and Alisa Tazhitdinova

The debate over whether to increase the tax rate hinges in part on the extent to which a higher tax rate would distort investment decisions and reduce incentives for Canadians to invest. This commentary sheds light on this debate by analyzing the effects of a tax policy change in the mid-1990s that increased the effective capital gains tax rate. They find that the new higher rate on capital gains tax had no adverse effect on cumulative adverse effects on capital gains realizations. Read this articleEvidence on Behavioural Effects of Higher Capital Gains Taxes in Canada→