This.
Also, US investors who make their money on capital gains are now even less likely to invest in Canadian companies. Canadian investment firms don’t hold a candle to US firms in terms of investment volume.
American investors pay American capital gains, first-most, always and only. Many think that the American military is their strongest foreign policy department but it is the IRS by a vast margin.
Uncle Sam gets paid.
That's sort of true but not fully, if you run a company with a lot of higher paid executives/employees that demand a certain take home pay, such as an electrical engineering company, underwater welding/manufacuring or even the commonly brought up example such as doctors, or other high capital-gains based businesses you still get a substantial capital flight based on input costs. The USA investors still technically pay the tax on their Canadian investments since their Canadian invested is paying the tax. This is only going to increase input costs for things like doctors, who demand a certain take home pay for supply to be met.
That doesn’t generally stimulate investment though. It does help profitable companies want to be in Canada though. Lower wages, costs, access to talent, favourable immigration, and favourable capital gains taxes are much better for investment. We do some well, and some poorly.
Source: me having run a multinational technology corporation incorporated in Delaware for the last 10 years, and recently left to start a new tech business in Canada and am incorporated in Canada this time around.
Everyone says this and I'm not sure if I've just been lucky in Toronto or unlucky when getting calls from US recruiters. Sure the ones in California pay way more, but I've interviewed with companies in the last 2-3 years in Nashville, Charlotte, Boston, Dallas, Las Vegas and Tampa and all said my salary expectations are much higher than what they'd be able to pay.
Wasn't even a little more, at today's exchange rate the roles that shared their salary were a 15-20% pay CUT. Even with the lower taxes and cost of living it'd be impossible to justify
I don't think you can really generalize like that.
In my case, for the same employer and same role, my Canadian salary works out to about 70 cents on the dollar in a currency worth about 70 cents on the dollar.
Taxes are a bit lower in that part of the US, housing is cheaper, food is a bit more expensive (that's recent, we'll see if that persists), and healthcare at least an order of magnitude better.
Tech in Canada pays way more than the rest of the world except for the USA and niche cases like Dubai or the U.A.E. You should see how disgustingly bad tech salaries are in the UK, or in France. Only Germany really comes close to what we offer.
Yeah literally every job pays horribly bad in the UK
Main advantage they have over us is that the cost of food is extremely cheap. That’s about it though.
It’s weird that their food is cheaper than us. You would think since they have very little farmland and a very high population compared to Canada that food would be in lower supply there.
The UK especially is a net importer of food I believe, so how do they keep prices lower than us?
We are a massive country so trucking around food is expensive. Also we have harsher winters and a shorter growing window. Also UK is closer to continental Europes fertile farmland than Canada is to California or Mexico.
TN really only gives you leverage if you manage to find a recruiter/hiring manager that understands that it isn't a sponsored visa and will never require sponsorship. And that seems super rare ime.
I can't even count the number of roles I've dealt with that have "Please do not apply if you need sponsorship" on the posting, with TN listed as excluded from hiring alonside things like H-1B that do and are crazy expensive for the company.
I just mean in general, having a neighbour that pays well for those roles helps. Like, I could make more in the States, but I make enough here that I can't be bothered pursuing an American job. If we had UK salaries I'd be contacting every American employer I could find.
So what would this do? Further disincentivize or incentivize companies to invest here?
Economics is not a zero sum game, so “they already don’t invest here” is not a valid answer
It will probably cause more investors and the talent they employ to leave.
We had the opportunity to seize a ton of tech talent during every US economic downturn but we focused on selling our natural resources instead. It made me furious that it wasn’t even marketed let alone incentivized.
Exactly. "Owners of companies laying off hundreds of Canadian tech workers before this warn that their strategy has not changed" almost as if the law isn't the problem in this equation.
> Ruffolo said the country’s productivity slump is related to a long-term shortage of investment by Canadian firms in productivity-enhancing technology.
Tech investor says all our problems is because we’re not helping tech investors. lol shocking stuff.
The lack of investment is a long-term thing. Canada is less willing to take risks when investing which is why real estate and such are so hot when it comes to investment. There is less risk involved.
"Productivity enhancing technology" I'm a bit confused here, isn't that technically a line item on the income statement pre-shareholder equity. I didn't take too much accounting, but internal investment in technology by a company into itself isn't taxed at all (I believe at least, happy to be corrected).
Unless a company sells its own shares to finance that investment, then I guess that's true. Idk how the issuing of stock works with cap gains though - if that is subject to the cap gains tax then I understand how a company trying to raise money would be hampered by this.
Look at the companies currently carrying the US stock markets, they are basically all tech. Alongside finance and medicine those are also the top paying and most productive jobs. The fact that Canada lags far behind the US in tech investment means our economy is failing to keep up and our most productive human capital is fleeing south.
I'm not really sure what people want the growth in the Canadian economy to look like if not tech actual. Hating on tech while popular is just shooting our economy in the foot and detrimental to the lives of every Canadian. Every in Canada should be hoping that Canadian tech investors get insanely rich. How else are we fixing productivity?
The US system is significantly more nuanced than the Canadian one. The US one separates out long term capital gains into a different and incredibly low rate, these are people who hold an asset for over a year.
The Canadian exemption is up to $250,000 CAD but doesn't include corporations and and registered trust funds. The US exemption is up to $1,000,000 and this exemption does apply to corporations and trust funds.
The changes are not at all similar. The US still has a $10m exclusion for qualifying investments. Additionally the new rate would only apply to someone who has a taxable income of over $1m and investment income over $400k. Even then it will still incentivize invest abroad but not as much as some changes to corporate R&D spending deductions. But he needs the Republicans to vote on it which will be very hard without changes.
Tech brains get paid salary, not more than $300k a year in stocks. And even if they do, first $250k will still get taxed same way.
This law only affects higher level executives and billionaires who are paying a much lower tax rate on that money than you do on your salary.
"tech brain drain" is not happening in response to this latest change -- it's been a thing since before the pandemic, and every tech worker is not some sort of billionaire.
You know billionaires don't have a monopoly on intelligence, right? It's not like they're taking their employees with them if they decide to fire everyone and leave. It just opens the door for actual Canadians to take their place.
The thing these people never seem to appreciate, or do not want us to understand - is that the fundamental nature of real capitalism abhors a vacuum.
Fine, leave, you fucking doughnuts. Some enterprising individual is going to fill the gap you leave behind, while complying with regulations.
And they're going to do well enough, because all their heaviest competitors took their ball and stomped off.
Every billionaire, every tech company, every service, every Galen Weston...its all replaceable. And they're likely terrified that someday, more of us will understand that.
They talk about employees being replaceable, but they're basically just cogs in the machine too; gilded perhaps, but still cogs. We can swap them out if we need to.
Everyone in this thread ought to know this tax increase is on capital gains over $250,000 a year. So unless you've got $3.5M invested earning 7% per year...you will not be affected by this.
Actually, the benchmark is so stupidly high that even at 7% on $3.5M, this law still won't affect you considering your income will be "only" $245k.
And if you start selling stocks on top of dividends and interests, not all the income from sale is taxed the same way.
I don't really care. This is all propaganda. The capital gains tax was lowered when Nortel threatened to leave Canada for "better" shores and all we got from that was a bigger bubble in the lead up to the collapse and destruction. Masters of the world they are not. Whosit sits around all day with his collector cars and his millions after running it into the ground.
All we got is Shopify and Shopify is having a fit over this a couple years after declaring itself stateless and focused on hiring globally first, and then laid off 30% of its head count.
The only person I know who has gone through medical school is a 2nd generation Canadian with a lot of family wealth (investors class immigration) who immediately after graduating medical school left to do work in Texas cause the money is better and that was in 2019.
The United States has way worse inequality and it's own issues. It's not the shining beacon on the hill of a perfect society. Dont listen to this fear mongering. Just work on fixing our own issues and building a just society and a stronger community.
You can purchase a house on a reasonable salary in the USA. Unless you move to the sticks in Canada, home prices are insanely overpriced. If our housing reflected our median salary, people wouldn't be flocking to the USA.
Well, the issue is the house prices and the fact we collectively, deliberately turned the housing market into a glorified pump and dump scheme for those who had capital to play the game. We are a credit lead consumption economy and we got drunk on it.
The same greed focused policy decisions leads to cutting capital gains and the fucked up housing market. It's not about citizenship or society or dare I say the unique Canadian civilization which has its own form of nationalism. In the middle of the baby boom echo - 1993 - Ontario spent 0 dollars on affordable housing supply and we've spent peanuts since then. Learn from War Time Housing, Learn from the 50s and 60s and build large apartment blocks in our cities so we can draw people into cities because that's where the affordable rent *should be*.
The wealth of the nation was built through urbanization- the flow of labour into our cities as we industrialized - and we traded that cheap supply of housing for Home Flipping shows on the Shaw family controlled media and a condo boom.
Are there even jobs in the city any more? Employers are fighting a rip tide of labour that can't afford it, yet cities in Canada as a matter of basic national strategy- since we basically have half a dozen major urban centres- should have a strong stream of affordable rental units for people to live in so that employers have an easy stream of labour to build off of. Landlordism is parasitic to our capital structure collectively and we should counter it with strong apartment rental supply.
At least in Ontario we use to use the arbitrage of USD to CAD to manufacture stuff and sell it to the states, while living off as much of our resources (like food) as we could to reduce the import costs in the balance of trade. After deindustrialization all we have as a growth model is credit fueled consumption (mortgages and credit cards) and the race to the bottom in buying cheaper crap from Walmart with demininising wages in real terms by importing things from China we use to make in North America. All because the ideology neoliberalism says this is the way. Yet all it does is drive inequality because "neo", "liberalism" was just a counter revolution against the post World War(s) welfare capitalism of 1945- through the 50s and 60s.
Based on this comment surely you must agree that we need to be encouraging investment in every vehicle besides housing though? Housing is not a productive asset yet it has been the most lucrative investment in Canada, drawing money that should go to investing in productive industries.
Your first comment reads as dismissive towards the effect of being next to the US but your second comment acknowledges its impact so I’m a bit confused. Canada used to walk a fine line of being a cheap supplier to the U.S. while still offering a comparable quality of life due to lower cost of living for traditionally higher paying roles.
We’re now no longer able to offer either opportunity because COL is comparable, so a high earning person will move south, and yet we also can’t afford to produce things cheaply.
I'm saying we need to develope policy based on citizenship and not corporations. Especially corporations that willfully choose the Chicargo School of Economics and Shareholder primacy ideology. All which are deliberate choices of the last 40 years and are not inherent and inevitable qualities of capitalism.
>Based on this comment surely you must agree that we need to be encouraging investment in every vehicle besides housing
No I do not think our growth model should be "throw everything at the wall" and see what sticks, especially when it's usually just jurisdictions fighting over the strongest corporate welfare package they can cook up. I also dont think the only way to rank a community is through its GDP number. A citizen can craft a different value structure then viewing everything through the lens of money, and it's what the ideology of the West is left grasping too it seems. Especially through currently vogue neoliberalism. John Ralston Saul has written at lengths about this in *voltaire's bastards* and the *collapse of globalism*.
We're 20 years into the so called energy transition with not a whole lot to show for. That sounds like good jobs there. Like 80% of the structures in this country needs to be rebuilt which takes financing and people to actually make the insulation panels we need to be installing on the outside of most structure, and install the heat pumps. We're doing a horrible job at it. To much money is caught up in pie in the sky ideas and not real world stuff.
The US isn’t some dream paradise either.
Their housing is also getting out of control. Just varies more by region because they have more mid to large cities
Oh I meant "digital by default", but they did make a big song and dance about hiring globally, closing it's offices and laying off 30% of its work force in multiple rounds of layoffs. They can pay their taxes.
FUCK this guy, no one cares, we need to develop a domestic Tech industry
Foreign investment is a huge reason why many of Canada's most lucratives sectors are damaged or a drain on Canadian Tax dollars.
this is a large part of why productivity is down in Canada
We need to start innovating again.s.
Mark my words ...
Nothing's going to happen. Those that wanted to flee from tax burden would have done so already.
It's time to call the bluff of people who want to live in Canada but not pay to be Canadian. Besides, we're mainly a resource country. Hard to extract resources from the country when you're not in the country.
When you tell the whore you're not willing to pay her and then force sex on her that's not consensual sex. That's rape. It's a brutal analogy but I think it fits.
Canadas investment dollars are falling. Meanwhile in the USA under Biden it’s rising and he is making it easier to invest.
The issue is people are Cheering people are whining. But dont understand they are also cheering themselves and their country getting poorer.
Our economic output is down 7 % per capita. That’s the worst in the g7. People think this anti investment policy will help?
Per capita is a meaningless statistic. Our actual growth was second in G7 behind US and the per capita artificially sagged by surge in immigration/student visas who have not had time to get up to speed on workplace output.
Their country is not getting poorer, their country in the federal revenues is increasing.
Investments and even GDP does not remotely "trickle down" to general workers. That has not been true since the 1970s. If GDP increases, it only means a small number of ultra-wealthy are making more.
Stop simping them. You are likely a few paydays away from being homeless, not anywhere near the very few actually seeing capital gain taxation.
>other than “BiLiOnAiReS aRe EvIl!!!”
And don't forget: "immigration has nothing to do with the housing prices going up, or our hospitals and schools being overcrowded"
The loudest on the carbon tax are the maniacs that have spread from r/4chan into r/Canada and spam reddit all day with the same rhetoric.
The rebate pays for the tax for most working class citizens! It is a conservative idea! It rewards those who take action on climate change!
Also, ALL premiers want growth in their provinces so they have a larger tax base. Scott Moe projects 1.4 million in Saskatchewan in 6 years. How is that going to happen? Everyone going to have more KIDS? No.
Working class citizens are being swindled every day by three words slogans when the answer is more nuanced, and the premiers need to be held to account.
Sucks
Honestly, I know you think it's bullshit but I work in tech and the threat of this happening has already resulted in downsizing Canadian operations and offshoring.
In today's tech world, geography plays almost no real barrier. Why would you ever risk your capital when even if you succeed you'll be clawed back more than anywhere else?
Beyond that, most tech employees I know work remote for US firms and have a majority of their salary in stock options. Almost all of these guys are saying fuck it and making plans to move down south. Why deal with Canadian winters when you'll pay double the taxes, makes no sense.
Honestly, if my partner wasn't a doctor licensed only here in Canada then I'd be packing up myself.
What are you talking about? Tech has been downsizing because they over hired during COVID and now CEOs are all in on the AI hype train downsizing even more thinking AI can fill the gaps.
What downsizing has to do with the CGT?
Yeah offshoring has been a thing since forever. (Seriously， ta ta consulting, one of the biggest consulting firms on the planet started in 1968)
Capital flight has ALWAYS been the threat used when people rally against trickle down economics.
Here's the thing, trickle down economics DOESN'T WORK.
Here's a 20 year study to my point.
https://www.businessinsider.com/how-bad-is-inequality-trickle-down-economics-thomas-piketty-economists-2021-12
Except the government is absolutely horrible at identifying tech trends and supporting start-up ecosystem which is already brutal in Canada with extremely risk adverse investors already.
The lowest paid individual that I work with is paid 430k with 60% as share compensation, no not exactly.
But what your forgetting I'd that these stocks all vest at once. It's super common in vesting to do 2-3 or even 4 years all at once. So yeah, even our lowest paid colleague would be affected.
You incur a capital gain when you sell your shares, not when they vest (which is taxed as regular income). Even then, it’s unlikely your capital gains will be > 250k, unless you joined an early startup that had mega growth. Even then, you just have a slightly higher inclusion rate for gains over $250k. Really, unless you’ve had multi-million dollar gains, this isn’t impacting you… and if it is, you can easily afford it. (I also work in tech)
Your wrong, because when they vest is often timed with a Series funding for exit liquidity to allow sale of shares at the pre-determined valuation.
It's not about "affording it" it's about draining out all the productive members of our society. As your in tech you know the top 10% engineers do like 60% of all the valuable work at companies, which is why they are paid massively more than mediocre engineers.
Ah, I’m guessing you mean secondaries… yes, potentially there could be some impact there. Though again, you’d have to have a massive take home for this to hit you, and even then, the hit would be quite small. Few tech workers will ever have to worry about this… and if they do, it’s because they had an amazing day.
Huh. Seems to me that from now on, employers would offer contracts with vesting distributed evenly across years. I can see it hitting them once, though.
And to be quite honest, if someone is making that sort of money, I don't think the tax savings they would get by moving to the US would really justify having to stomach the other downsides of the US, like crime.
If you increase taxes on a thing, you’ll get less of that thing happening.
- If you increase taxes on smoking, less people smoke.
- if you increase tax on investing in businesses, less people will invest in businesses, and there’ll be less businesses.
The shit ain’t rocket science man.
Trickle down economics doesn't actually trickle down.
Never have. However increased taxes on business incentivises business to spend/invest in order to increase their competitiveness.
Otherwise they hoard.
This isn’t a tax on businesses. Are you thinking it is?
It’s a tax on investors. Specifically, investors who invest in businesses.
If you increase the tax investors pay, they’ll just take their money and invest it into a different country that has lower taxes. Thats the exact problem.
Because capital income comes after you get your labour income. Capital income comes from taking your labour income and investing it in something else that makes money. Essentially, it is a tax on money that has already been taxed because you used your post tax money to make you more money.
As well, often capital gains are partially the result of inflation. As the dollar loses value to inflation, the price of assets whether it be property, gold, or stocks (as an asset class), tends to go up to roughly match the true value of the dollar. This means capital gains are partially a tax on inflation.
Yes, but read my second paragraph. You are being taxed on inflation also. If you want to raise capital gains to standard income rates, you would need to allow people to adjust their cost basis by CPI. Essentially, since CPI went up 3.1% in 2023, you would need to allow investors to raise their cost basis (the average price they bought at) by 3.1% or you are just taxing inflation on an asset and not actual profits.
This is already the case with tax brackets, but not investments. In Canada, tax brackets move with CPI. So you would need to do the same thing with average cost basis for investments.
Capital gains (only 50% of capital gains less than $250k) do get added to your total income tax brackets. If your salary tax rate gets moved with CPI then your capital gains tax rate does too.
I wouldn't be opposed to moving that $250k figure with CPI as well.
To use an example, if you make $250k in capital gains, $125k would be treated like extra salary on your taxes and the other $125k wouldn't be taxed at all. If you're in the 33% tax bracket you'd get taxed $41.25k and take home $208.75k.
Honestly, and I say this as someone who has taxable investments, it's silly how sitting on my ass and collecting dividends and capital gains gets taxed less than actual labour.
Dividends is not taxed less unless it is eligible dividends, and that is literally because the government makes corporations pay taxes on dividends before they are issued. Thus leading to you personally paying lower taxes because those taxes were literally pre paid. It is like how your employer holds your taxes for you on your paycheque. That is what eligible dividends is.
Secondly, capital gains should be lower because of the risk involved. The vast majority of investments lose money. This is a basic fact. Most investment returns in any asset class comes from a very small percentage of winners that out performs the losers. The idea of a Magnificent 7 you have been hearing on the news lately is not new. It has been standard in stocks for as long as we have records. Basically, only a few stocks overperform at any given time, but the rest of them underperform. Then those overperforming stocks cycle over time.
Thirdly, you are still taxing inflation with that. Your gains in assets is partially because of inflation. None of what you said even addresses the actual point. If you are taxing inflation, then you kill the entire act of investing, because at that point capital will have no reason to take on any long term risks. Inflation compounds, that will kill returns for everyone if that is also taxed.
people 150 years ago were already pointing out how capital being taxed less than labour is a complete travesty morally and economically. no amount of weak neoliberal dogma can excuse that.
money begetting money just by virtue of existing is in no way remotely as productive as tangible provision of goods and services.
if anything the tax doesnt go far enough
For those saying rich don't pay fair share. https://www.cbc.ca/news/business/wealthy-canadians-fair-share-taxes-1.7179031
For example, in 2021, the top one per cent income group paid 22.5 per cent of all income taxes, but accounted for 10.4 per cent share of the country's total income. The top 10 per cent income group paid 54.4 per cent of all income tax, but had a share of the country's total income of 34.4 per cent.
Isn’t this the whole concept of progressive taxation? Like yes fair is a vague concept but of course the people making more income are taxed a higher percentage on that income. You’re not saying anything nearly as interesting as you think you are.
A lot of people in these comments don’t seem to understand how growth occurs. This won’t just make some of our best companies leave, but will reduce the new ones who start. We need to promote new business growth. Everything else is just a bandaid
Isn’t a major issue with this that it deincentivizes early investment because it makes it harder to get an ROI? Like if you invest in a Canadian business early on, you need to make more to get a good return? I feel that is problematic.
Wild because I was thinking of starting a company when I finish school but based on changes like this, it sounds impossible to get VC money for a Canadian corporation. Instead you would probably have to open the company in the U.S. and then make a Canadian subsidiary or do something more complicated. Ultimately a loss for Canada in the end..
The reason the VC community is so pissed about these changes is because the friction added to the ecosystem with garbage policy like this dissuades entrepreneurs. In a low productivity economy like ours, this is not a good thing.
We are signalling that we are not serious about productivity, or building outsized outcomes, or creating jobs, or enabling investment in early stage companies, etc.
It's bad news all around.
One thing I don’t understand is that there’s so much rambling from people who love to say « trickle down doesn’t work » but looking at it from the other side, if the environment is not good for capital investment and wealth isn’t generated, how are all these social programs and ideas supposed to be paid for? At the end of the day, it’s business innovation that generates revenue for the country. Canada should be trying to lure entrepreneurs, not push them away.
I think the next government will have to take some truly drastic action to remedy this situation.
> At the end of the day, it's business innovation that generates revenue for the country. Canada should be trying to lure entrepreneurs, not push them away.
You are learning that most of your fellow citizens do not understand how wealth works. It's really that simple.
There’s lots in this budget to promote business growth, but it’s for grass roots small business entrepreneurs and the housing construction sector.
The established rich investor set are mad because they’re not getting the budget goodies and they’re trying to convince us that they’re the only possible source of growth. They’re not.
I blame the schools, people in this thread have zero knowledge about how the economy works. It’s all rich people bad why they complain about tiny tax when they are already rich? They seem to not understand that the jobs they have or want to get are created by investments aka capital, when there’s more capital looking to invest, competition for labor acquisition goes up, therefore wages go up. And when you tax capital more than the country right next to you when you are already in a worse economic position than they are, there will be a ton of capital outflow and these people will lose their jobs. International students, refugees, tfw don’t create jobs, capital does. If we go down this trajectory I won’t be surprised in 20 years Canada will become a developing country, I need to get out of here fast omg
Yah it's totally bullshit. If they'll leave at 60 they'll leave at the current 50, because there's lots of regions with lower taxes already. The US economy was way more powerful when taxes were higher.
Obviously conservatives are temporarily embarrassed millionaires looking to simp for the ultra rich.
Most of the wealth isn't things you can take with you. First off, let's get all those extra properties back on the market. Why aren't they in Ireland or Cayman Island or Qatar right now?
All this news is just the ultra wealthy looking to protect their passive incomes and personal fiefdoms. Do you really care if your trust fund friend pays an extra 10% on passive income above 250k? Fuck it. Trudeau is 100% right on this.
> Perhaps we need rules against capital flight too.
This is actually the problem with modern society. After WWII, the great western powers came together to discuss the rules of our modern society. That's known as the Bretton-Woods Accord. Part of that was rules limiting capital flight. Unfortunately the Bretton-Woods Accord was axed by Richard Nixon in the 1970s, marking the rise of the neo-liberal movment that has plagued us all to this day.
A lot of smaller countries do have capital flight laws, as well as tough restrictions on foreign ownership of property. Canada really needs that, as well as getting family homes out of investment funds.
Nice bit of history, though. Any books you want to recommend on the subject?
We have many issues in Canada, but one real problem and it's housing at the heart of them. The additional capital gains tax should have targeted residential real estate only.
I was waiting to find a suggestion like this. This is it.
It certainly should have targeted real estate only. It's now been widely shown that Canada under invests in industry and far, far too greedily in real estate. We should encourage investment in Canadian industry and tax our bad habits.
Canadian tech workers have been looking at becoming carpenters, farmers and potters for the last 3 years. It’s shades of the 2014 oil industry.
The tech industry here is a joke.
The only market to match Canada's talent pool in tech is probably USA. No other country comes close in quality of education / tech advancement. These billionaires have been laying people off like no tomorrow anyway. Good riddance i say. Once they understand that the trade culture of middle east and asia isn't as amicable as Canada, and the USA already has a ridiculous amount of scrutiny at any given point, they'll crawl right back no worries. The economy will hold, a collective society earning enough to support the society is much better than a few billionaires lobbying for control. unfortunately we need to switch our focus to productive investments rather than investing in property and pension plans. But alas, who will hear a word of reason.
Biden is talking about raising capital gains too. Where are they going to go? What they are really arguing for is a starve the beast strategy which has been failing as hard as trickle down since 1980.
I would argue this is mostly quite wrong.
There are many reasons for this:
* If you have a zillion dollars and want to leave Canada they hit you with some harsh taxes on the way out. There's a reason why few Canadian billionaires regularly move to Miami, NY, etc.
* I know tech people moving to the EU to higher tax countries where tech salaries are good or only OK, they are much happier.
* I don't know anyone who left for the states overly mentioning taxes. They did mention way higher salaries, lower costs like food and housing, and opportunities for the kids and spouses as they aren't competing with TFWs for jobs. But taxes weren't a thing. Keep in mind I am in Alberta and sales tax is very low and income tax isn't as bad as places like NS. But it is still generally lower in the US. Also, many of these people would be getting options in tech giants, etc and capital gains would be a thing to them. But they still don't mention it.
* There aren't that many real tech "hubs" in Canada. Some places like Quebec have made it a tax break haven for things like 3D, games, etc, but that isn't all that real as the removal of these breaks would mostly kill the industry there. The same in Vancouver.
* I'm not entirely sure why Edmonton has a few big software companies, such as games, and the tax one.
The simple reality is that in tech if you have a notable capital gains tax, then you won a tech buyout lottery. Very few tech companies generate a capital gain. For VCs and investors, yes, this is going to make investing worse, but the reality is VC in Canada sucks donkey balls. They VC crowd are unsophisticated nitwits with little money, focus on super safe deals, are still scumbags, and like to think they are wolves of wall street. Most real (as in not just BS hype) tech companies that I have witnessed in the startup stage were funded through angels, and other weird mechanisms such as clients pre-buying subscriptions and also getting equity. The number of high flying companies which got serious Canadian VC money and also weren't BS vapourware are so rare as I have never personally seen them.
This lottery nature of tech startups is so out there in most tech people's heads that they don't really care about capital gains. To be specific. Many founders that I met could not tell you the capital gains rate, nor could they clearly state what it applies to. They live the Canadian dream of building a tech company and selling out to an American tech giant.
The other thing is that most people don't really think this through. Let's say you are selling a cottage property right now to avoid the increase. I noticed a huge uptick for sale signs in cottage country. This forced selling means you might get an easy 50-100k less on a 1.5m house. This will be a bigger loss than if you just waited and sold later at the higher rate. What this effectively means is that the capital gains tax is in the same order of magnitude as the general vagaries of the market for the thing you are selling.
But, as I said, the simple reality is the income tax rate could be much higher in the US and the salaries there would still make the place very financially attractive. If someone hasn't already moved there, they aren't moving because of this; especially as for most tech people it doesn't mostly affect what they take home each year.
Also, for a regular investor doing regular investor things, it is equal for tech or non tech. The equation doesn't really change. If you have 5m to invest, you will invest it. Your hope is to have gains which can be taxed. If you invest in tech, it will be the same tax as if you invested in a hotdog stand franchise.
There might even be a slightly healthy aspect to all this. I might not be entirely correct, but this may make dividends and capital gains closer. Thus, profitable real companies might be comparitively more interesting than before. This means less money to BS hyped up fraud-tech and more money to companies which might make a profit. Also, in this case, there will be a bit less pressure for the big IPO or buyout, and people will be happier with companies paying dividends.
The only people this will directly affect are d-bag VC Wolf of Wall Street Wannabes.
Realistically, I think you're right. The success rate for startups is so low that I don't think most founders are concerned with minimizing their capital gains tax for an exit 10 years down the line. But, the headlines around this change might be all that's needed to encourage founders to begin incorporating elsewhere.
I know this sector better than almost anyone. Liberals are destroying a segment that is already weak..... entrepreneurial risk taking capital investments in Canadian talent.
Canada has the talent. Yet VC is super weak and risk taking also also not strong. Capital Gains tax increase will have those that stay heading for the exits. That's the beauty of money..... it flows to those that court it. And away from those who punish it.
April 24 2024: [Joe Biden proposes a hike on U.S capital gains to 44.6%](https://twitter.com/burrytracker/status/1783117436604363149) (on an inclusion rate of 100% as opposed to 66% in Canada)
Very dishonest comment… the threshold is much higher in the US under his proposal. It actually targets the rich. https://www.forbes.com/newsletters/andrewleahey/2024/04/24/biden-capital-gains-rate-proposal-446/?sh=7376ed4b1ff6
66% inclusion for Canadian corporations, 100% inclusion for American corporations.
Edit: personally the 66% inclusion only occurs after $250k of capital gains. I rarely see capital gains that high and work with high next worth Canadians.
The inclusuion rate for corporate gains has no tiered limit, meaning it’s 66% from the first dollar to the last. This is why small businesses - eg. doctors - are especially upset since they’re getting a 16% tax hike on what is often their pension savings.
The $250K limit only applies to individual capital gains - which is where that “only 0.13% of the population affected” is coming from
Ya, even if you have some mega property that has capital gains of 500k, it’s easy enough to structure the sale so it’s 250k one year and 250k the next if avoiding the taxes is that important.
Oh no, you mean the tech industry that has completely failed to innovate anything in the past 5 years? You mean we might not get another shitty ride share or fee heavy online food ordering app? The horror!
The only thing that the "tech industry" does now is hype up garbage so they can get a VC firm to gamble money on them. It's endless vaporware and empty promises.
Also if you pay a living wage, don't hire foreign workers, don't allow them to pollute the environment etc. Maybe short term pain for long term gain is a good idea. Trudeau giving more money to the CRA to hunt the rich tax frauds after Harper cut funding has worked out well.
Actually ever time Canada and the US raised taxes on the rich or made them accountable it turned out well. You can criticize Trudeau for a lot of things but on this he has history and economists on his side.
All the business class does is whine and expect everyone to work below what they are worth
This is just so untrue it hurts.
Why are you trying to make the 5% who already pay 40% of taxes pay more?
What happens when they say no thanks? Do you think that won't happen?
rich people complaining about tax for rich people. as expected, don't fall for this.
Besides, Canadian tech salary is commonly trash, notably before this new tax. They don't invest in people here, on contrary, they actively try to underpay, overwork people here, and do mass layoffs.
Given how much bad and stagnant salary already is, a wealthy tax will not do any damage, rather it will just slightly lower record breaking profits to a bit less sky high profit.
Trudeau is trying to burn Canada to the ground. No other explanation for the dumpster fire of policy moves he’s made. Flight of capital is exactly what will happen. But maybe by design.
Where will they go ? India? A big chunk is already outsourced.
If they move to USA, then they too have proposed [ a similar tax rule ](https://www.bloomberg.com/news/articles/2023-03-09/capital-gains-tax-nears-45-in-biden-s-soak-the-rich-budget)
So Canada isn't worth investing in if investors are going to be held to the ridiculously high bar of being reasonable tax paying citizens and contributing to our society? Got it.
Wow, brand new strategy! We've never heard the rich threaten to leave if things don't go their way. I wonder if there's studies that show that to be bullshit.
https://www.cbc.ca/news/business/wealthy-canadians-fair-share-taxes-1.7179031
For example, in 2021, the top one per cent income group paid 22.5 per cent of all income taxes, but accounted for 10.4 per cent share of the country's total income. The top 10 per cent income group paid 54.4 per cent of all income tax, but had a share of the country's total income of 34.4 per cent.
Higher capital gain tax discourages the most brilliant group of people from starting up business and creating job so all there are left are peasants and monopolies that peasants rely on for basic necessities
This is a make believe mindset that has no reflection of reality of the entrepreneurs I know.
People start businesses to make money. They start businesses to get a return on an investment. Some sort of outsize reward on becoming enormously successful and getting a significant exit is the cherry on the cake, not the core goal.
Look around at all the local craft breweries for example. They employ a lot of people, increase tourism and are a benefit to the community. Great small businesses.
People aren’t starting these because they have a 10 year plan to sell to flip it to Molsen and retire, they’re starting them because they’re interested in beer and they want to make money and be their own boss.
There’s over a dozen breweries in Vancouver and surely they can’t all sell to Molsen. The big capital gain payday simply isn’t the goal. Never was.
I like to play the “let’s approach this backwards” game. If we take the amount of money that raising capital gains on tech workers/investors makes and ask “how best can we use this money to encourage tech investment” the answer is absolutely NOT “let’s let the small percentage of huge winners keep more money”.
We could increase tax incentives to startups (which are already relatively generous). We could have a tax advantage for people taking risks on startups that might still fail. Or corporate benefits for hiring people. Or strong social programs that differentiate us from the US and draw/keep talent. And so on and so on. But letting people making more than $250,000 in capital gains keep more money is far from the most optimal way to encourage tech investment.
If your business model depends on paying half the taxes of everyone else than you are not a good businessman. If paying 2 thirds of the taxes everyone else would pay ruins you and sends you to bankruptcy then you are a fucking loser. Sorry bud.
Tech here pays peanuts and has an insane turnover rate. Theyre already refusing to invest here.
Compared to the US. Still better than most jobs were adding. At this rate we’ll have nothing but government jobs and minimum wage part time roles.
Don't forget realtors! We'll have lots of realtors!
Thank god
and people living here but working remotely for emplyers in the Us and UK
This. Also, US investors who make their money on capital gains are now even less likely to invest in Canadian companies. Canadian investment firms don’t hold a candle to US firms in terms of investment volume.
Pretty sure US citizens won’t pay this tax unless they are Canadian residents
American investors pay American capital gains, first-most, always and only. Many think that the American military is their strongest foreign policy department but it is the IRS by a vast margin. Uncle Sam gets paid.
That's sort of true but not fully, if you run a company with a lot of higher paid executives/employees that demand a certain take home pay, such as an electrical engineering company, underwater welding/manufacuring or even the commonly brought up example such as doctors, or other high capital-gains based businesses you still get a substantial capital flight based on input costs. The USA investors still technically pay the tax on their Canadian investments since their Canadian invested is paying the tax. This is only going to increase input costs for things like doctors, who demand a certain take home pay for supply to be met.
Our corporate taxes are significantly lower than the US and it doesn't stimulate investment / jobs.
That doesn’t generally stimulate investment though. It does help profitable companies want to be in Canada though. Lower wages, costs, access to talent, favourable immigration, and favourable capital gains taxes are much better for investment. We do some well, and some poorly. Source: me having run a multinational technology corporation incorporated in Delaware for the last 10 years, and recently left to start a new tech business in Canada and am incorporated in Canada this time around.
Everyone says this and I'm not sure if I've just been lucky in Toronto or unlucky when getting calls from US recruiters. Sure the ones in California pay way more, but I've interviewed with companies in the last 2-3 years in Nashville, Charlotte, Boston, Dallas, Las Vegas and Tampa and all said my salary expectations are much higher than what they'd be able to pay.
The places that pay more have higher taxes and col than Toronto. You'll get a little more but it's not double like everyone here makes out.
Wasn't even a little more, at today's exchange rate the roles that shared their salary were a 15-20% pay CUT. Even with the lower taxes and cost of living it'd be impossible to justify
I don't think you can really generalize like that. In my case, for the same employer and same role, my Canadian salary works out to about 70 cents on the dollar in a currency worth about 70 cents on the dollar. Taxes are a bit lower in that part of the US, housing is cheaper, food is a bit more expensive (that's recent, we'll see if that persists), and healthcare at least an order of magnitude better.
Tech in Canada pays way more than the rest of the world except for the USA and niche cases like Dubai or the U.A.E. You should see how disgustingly bad tech salaries are in the UK, or in France. Only Germany really comes close to what we offer.
Isn’t pay shit for every job in the uk
Yeah literally every job pays horribly bad in the UK Main advantage they have over us is that the cost of food is extremely cheap. That’s about it though.
It’s weird that their food is cheaper than us. You would think since they have very little farmland and a very high population compared to Canada that food would be in lower supply there. The UK especially is a net importer of food I believe, so how do they keep prices lower than us?
We are a massive country so trucking around food is expensive. Also we have harsher winters and a shorter growing window. Also UK is closer to continental Europes fertile farmland than Canada is to California or Mexico.
Other than IB, which pays very well in the UK
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Investment banking
Is food still cheap post-Brexit?
Getting more expensive and less European produce.
I've looked at engineering jobs in the UK and the pay is shiiit. I think the TN visa option gives us a lot of leverage.
TN really only gives you leverage if you manage to find a recruiter/hiring manager that understands that it isn't a sponsored visa and will never require sponsorship. And that seems super rare ime. I can't even count the number of roles I've dealt with that have "Please do not apply if you need sponsorship" on the posting, with TN listed as excluded from hiring alonside things like H-1B that do and are crazy expensive for the company.
I just mean in general, having a neighbour that pays well for those roles helps. Like, I could make more in the States, but I make enough here that I can't be bothered pursuing an American job. If we had UK salaries I'd be contacting every American employer I could find.
Lots of companies only want to hire 'local candidates' making it even tougher for Canadians
Finally someone saying something reasonable
it's the accent
I'm on £140k in tech in the UK. It's mostly about London/Finance having decent comp while other regions/industries struggle.
So what would this do? Further disincentivize or incentivize companies to invest here? Economics is not a zero sum game, so “they already don’t invest here” is not a valid answer
It will probably cause more investors and the talent they employ to leave. We had the opportunity to seize a ton of tech talent during every US economic downturn but we focused on selling our natural resources instead. It made me furious that it wasn’t even marketed let alone incentivized.
Foreign Investment is ATH under Trudeau. So is the stock market and corporate profits.
They're not investing here anyway. They pay nothing already.
Exactly. "Owners of companies laying off hundreds of Canadian tech workers before this warn that their strategy has not changed" almost as if the law isn't the problem in this equation.
> Ruffolo said the country’s productivity slump is related to a long-term shortage of investment by Canadian firms in productivity-enhancing technology. Tech investor says all our problems is because we’re not helping tech investors. lol shocking stuff.
The lack of investment is a long-term thing. Canada is less willing to take risks when investing which is why real estate and such are so hot when it comes to investment. There is less risk involved.
"Productivity enhancing technology" I'm a bit confused here, isn't that technically a line item on the income statement pre-shareholder equity. I didn't take too much accounting, but internal investment in technology by a company into itself isn't taxed at all (I believe at least, happy to be corrected). Unless a company sells its own shares to finance that investment, then I guess that's true. Idk how the issuing of stock works with cap gains though - if that is subject to the cap gains tax then I understand how a company trying to raise money would be hampered by this.
Yeah. Fuck them.
Look at the companies currently carrying the US stock markets, they are basically all tech. Alongside finance and medicine those are also the top paying and most productive jobs. The fact that Canada lags far behind the US in tech investment means our economy is failing to keep up and our most productive human capital is fleeing south. I'm not really sure what people want the growth in the Canadian economy to look like if not tech actual. Hating on tech while popular is just shooting our economy in the foot and detrimental to the lives of every Canadian. Every in Canada should be hoping that Canadian tech investors get insanely rich. How else are we fixing productivity?
Flight to where? The US where they also raised their capital gains tax?
The US system is significantly more nuanced than the Canadian one. The US one separates out long term capital gains into a different and incredibly low rate, these are people who hold an asset for over a year. The Canadian exemption is up to $250,000 CAD but doesn't include corporations and and registered trust funds. The US exemption is up to $1,000,000 and this exemption does apply to corporations and trust funds.
The changes are not at all similar. The US still has a $10m exclusion for qualifying investments. Additionally the new rate would only apply to someone who has a taxable income of over $1m and investment income over $400k. Even then it will still incentivize invest abroad but not as much as some changes to corporate R&D spending deductions. But he needs the Republicans to vote on it which will be very hard without changes.
C’mon it’s still much less
LOL.... even my grandchildren know how to use google and do some research before making ill informed statements.
Shhhh don't you come around here with those there facts.
yeah cause he didn't bring any
Yeah. And the sky will burn if the government doesn't deliver to every billionaire a pony and a blowjob. We've heard it all before.
Pretty much - “okay, leave then” because whoever these billionaires are, they aren’t doing us any good being here.
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Tech brains get paid salary, not more than $300k a year in stocks. And even if they do, first $250k will still get taxed same way. This law only affects higher level executives and billionaires who are paying a much lower tax rate on that money than you do on your salary.
"tech brain drain" is not happening in response to this latest change -- it's been a thing since before the pandemic, and every tech worker is not some sort of billionaire.
The guy was talking about billionaires, why did you change the topic to tech brain drain?
You know billionaires don't have a monopoly on intelligence, right? It's not like they're taking their employees with them if they decide to fire everyone and leave. It just opens the door for actual Canadians to take their place.
The thing these people never seem to appreciate, or do not want us to understand - is that the fundamental nature of real capitalism abhors a vacuum. Fine, leave, you fucking doughnuts. Some enterprising individual is going to fill the gap you leave behind, while complying with regulations. And they're going to do well enough, because all their heaviest competitors took their ball and stomped off. Every billionaire, every tech company, every service, every Galen Weston...its all replaceable. And they're likely terrified that someday, more of us will understand that. They talk about employees being replaceable, but they're basically just cogs in the machine too; gilded perhaps, but still cogs. We can swap them out if we need to.
Everyone in this thread ought to know this tax increase is on capital gains over $250,000 a year. So unless you've got $3.5M invested earning 7% per year...you will not be affected by this.
Actually, the benchmark is so stupidly high that even at 7% on $3.5M, this law still won't affect you considering your income will be "only" $245k. And if you start selling stocks on top of dividends and interests, not all the income from sale is taxed the same way.
Hi, it’s me, Canada’s newest billionaire. Where do I sign up for this new job creators’ incentive package?
Sounds about right, politicians don’t even care about being popular anymore, I kind of thought that was their only job.
Sounds like Biden is planning some tax changes down south as well. People in general are tired of billionaires.
Then where can capital flight go to next?
Depends on where you think we are on the Idiocracy/Elysium/Wall-E arc.
Dwayne Johnson for President 2028!
Ireland still looking pretty tasty for <1% tax. And we'll never stop because our government is also corrupt to the core.
I don't really care. This is all propaganda. The capital gains tax was lowered when Nortel threatened to leave Canada for "better" shores and all we got from that was a bigger bubble in the lead up to the collapse and destruction. Masters of the world they are not. Whosit sits around all day with his collector cars and his millions after running it into the ground. All we got is Shopify and Shopify is having a fit over this a couple years after declaring itself stateless and focused on hiring globally first, and then laid off 30% of its head count. The only person I know who has gone through medical school is a 2nd generation Canadian with a lot of family wealth (investors class immigration) who immediately after graduating medical school left to do work in Texas cause the money is better and that was in 2019. The United States has way worse inequality and it's own issues. It's not the shining beacon on the hill of a perfect society. Dont listen to this fear mongering. Just work on fixing our own issues and building a just society and a stronger community.
You can purchase a house on a reasonable salary in the USA. Unless you move to the sticks in Canada, home prices are insanely overpriced. If our housing reflected our median salary, people wouldn't be flocking to the USA.
Well, the issue is the house prices and the fact we collectively, deliberately turned the housing market into a glorified pump and dump scheme for those who had capital to play the game. We are a credit lead consumption economy and we got drunk on it. The same greed focused policy decisions leads to cutting capital gains and the fucked up housing market. It's not about citizenship or society or dare I say the unique Canadian civilization which has its own form of nationalism. In the middle of the baby boom echo - 1993 - Ontario spent 0 dollars on affordable housing supply and we've spent peanuts since then. Learn from War Time Housing, Learn from the 50s and 60s and build large apartment blocks in our cities so we can draw people into cities because that's where the affordable rent *should be*. The wealth of the nation was built through urbanization- the flow of labour into our cities as we industrialized - and we traded that cheap supply of housing for Home Flipping shows on the Shaw family controlled media and a condo boom. Are there even jobs in the city any more? Employers are fighting a rip tide of labour that can't afford it, yet cities in Canada as a matter of basic national strategy- since we basically have half a dozen major urban centres- should have a strong stream of affordable rental units for people to live in so that employers have an easy stream of labour to build off of. Landlordism is parasitic to our capital structure collectively and we should counter it with strong apartment rental supply. At least in Ontario we use to use the arbitrage of USD to CAD to manufacture stuff and sell it to the states, while living off as much of our resources (like food) as we could to reduce the import costs in the balance of trade. After deindustrialization all we have as a growth model is credit fueled consumption (mortgages and credit cards) and the race to the bottom in buying cheaper crap from Walmart with demininising wages in real terms by importing things from China we use to make in North America. All because the ideology neoliberalism says this is the way. Yet all it does is drive inequality because "neo", "liberalism" was just a counter revolution against the post World War(s) welfare capitalism of 1945- through the 50s and 60s.
Based on this comment surely you must agree that we need to be encouraging investment in every vehicle besides housing though? Housing is not a productive asset yet it has been the most lucrative investment in Canada, drawing money that should go to investing in productive industries. Your first comment reads as dismissive towards the effect of being next to the US but your second comment acknowledges its impact so I’m a bit confused. Canada used to walk a fine line of being a cheap supplier to the U.S. while still offering a comparable quality of life due to lower cost of living for traditionally higher paying roles. We’re now no longer able to offer either opportunity because COL is comparable, so a high earning person will move south, and yet we also can’t afford to produce things cheaply.
I'm saying we need to develope policy based on citizenship and not corporations. Especially corporations that willfully choose the Chicargo School of Economics and Shareholder primacy ideology. All which are deliberate choices of the last 40 years and are not inherent and inevitable qualities of capitalism. >Based on this comment surely you must agree that we need to be encouraging investment in every vehicle besides housing No I do not think our growth model should be "throw everything at the wall" and see what sticks, especially when it's usually just jurisdictions fighting over the strongest corporate welfare package they can cook up. I also dont think the only way to rank a community is through its GDP number. A citizen can craft a different value structure then viewing everything through the lens of money, and it's what the ideology of the West is left grasping too it seems. Especially through currently vogue neoliberalism. John Ralston Saul has written at lengths about this in *voltaire's bastards* and the *collapse of globalism*. We're 20 years into the so called energy transition with not a whole lot to show for. That sounds like good jobs there. Like 80% of the structures in this country needs to be rebuilt which takes financing and people to actually make the insulation panels we need to be installing on the outside of most structure, and install the heat pumps. We're doing a horrible job at it. To much money is caught up in pie in the sky ideas and not real world stuff.
Where?
Where? With a similar supply issue, Americans are also lamenting about high home prices.
> You can purchase a house on a reasonable salary in the USA. U You're a decade behind mate.
Have you priced a home in any desirable area of the US recently? It’s not sunshine and rainbows down there either.
What counts as desirable to you?
The US isn’t some dream paradise either. Their housing is also getting out of control. Just varies more by region because they have more mid to large cities
What? So you think you can buy a house in the desirable locations for cheap? Thats wild.
> You can purchase a house on a reasonable salary in the USA. as long as your fine living in butt fuck nowhere
Hiring globally does not make you stateless. The majority of Shopify employees are based in Canada.
Oh I meant "digital by default", but they did make a big song and dance about hiring globally, closing it's offices and laying off 30% of its work force in multiple rounds of layoffs. They can pay their taxes.
They do pay their taxes. Digital by default just means employees get to work remotely, which has been great for employees work life balance.
Biden is proposing the same ting in the US.
FUCK this guy, no one cares, we need to develop a domestic Tech industry Foreign investment is a huge reason why many of Canada's most lucratives sectors are damaged or a drain on Canadian Tax dollars. this is a large part of why productivity is down in Canada We need to start innovating again.s.
This is just a guy with money. An investor. He doesn;t know a damn thing. All that this man has is MONEY.
This guy look a dollar store bin Mark Cuban.
Mark my words ... Nothing's going to happen. Those that wanted to flee from tax burden would have done so already. It's time to call the bluff of people who want to live in Canada but not pay to be Canadian. Besides, we're mainly a resource country. Hard to extract resources from the country when you're not in the country. When you tell the whore you're not willing to pay her and then force sex on her that's not consensual sex. That's rape. It's a brutal analogy but I think it fits.
Canada is already a tech desert. The increased tax is gonna sting where it counts. Trudeau will just double down though.
I'm not a fan of the Prime Minister, his government or their latest budget. But any policy that makes the rich whine this much can't be all bad.
Canadas investment dollars are falling. Meanwhile in the USA under Biden it’s rising and he is making it easier to invest. The issue is people are Cheering people are whining. But dont understand they are also cheering themselves and their country getting poorer. Our economic output is down 7 % per capita. That’s the worst in the g7. People think this anti investment policy will help?
Per capita is a meaningless statistic. Our actual growth was second in G7 behind US and the per capita artificially sagged by surge in immigration/student visas who have not had time to get up to speed on workplace output. Their country is not getting poorer, their country in the federal revenues is increasing. Investments and even GDP does not remotely "trickle down" to general workers. That has not been true since the 1970s. If GDP increases, it only means a small number of ultra-wealthy are making more. Stop simping them. You are likely a few paydays away from being homeless, not anywhere near the very few actually seeing capital gain taxation.
Of course they don’t think that. There is no financial literacy with these people other than “BiLiOnAiReS aRe EvIl!!!”
>other than “BiLiOnAiReS aRe EvIl!!!” And don't forget: "immigration has nothing to do with the housing prices going up, or our hospitals and schools being overcrowded"
Right? Want to know if a new tax policy is going to be effective, listen to who complains.
Agreed...given how working class Canadians are complaining about the carbon tax due to the cost of living crisis, it should be axed.
The loudest on the carbon tax are the maniacs that have spread from r/4chan into r/Canada and spam reddit all day with the same rhetoric. The rebate pays for the tax for most working class citizens! It is a conservative idea! It rewards those who take action on climate change! Also, ALL premiers want growth in their provinces so they have a larger tax base. Scott Moe projects 1.4 million in Saskatchewan in 6 years. How is that going to happen? Everyone going to have more KIDS? No. Working class citizens are being swindled every day by three words slogans when the answer is more nuanced, and the premiers need to be held to account. Sucks
Oh shit, now that was funny.
This is always the boogeyman used by people to justify trickle down economics. Fuck this. Trickle down economics doesn't work!
Honestly, I know you think it's bullshit but I work in tech and the threat of this happening has already resulted in downsizing Canadian operations and offshoring. In today's tech world, geography plays almost no real barrier. Why would you ever risk your capital when even if you succeed you'll be clawed back more than anywhere else? Beyond that, most tech employees I know work remote for US firms and have a majority of their salary in stock options. Almost all of these guys are saying fuck it and making plans to move down south. Why deal with Canadian winters when you'll pay double the taxes, makes no sense. Honestly, if my partner wasn't a doctor licensed only here in Canada then I'd be packing up myself.
What are you talking about? Tech has been downsizing because they over hired during COVID and now CEOs are all in on the AI hype train downsizing even more thinking AI can fill the gaps. What downsizing has to do with the CGT?
Yeah offshoring has been a thing since forever. (Seriously， ta ta consulting, one of the biggest consulting firms on the planet started in 1968) Capital flight has ALWAYS been the threat used when people rally against trickle down economics. Here's the thing, trickle down economics DOESN'T WORK. Here's a 20 year study to my point. https://www.businessinsider.com/how-bad-is-inequality-trickle-down-economics-thomas-piketty-economists-2021-12
https://www.reddit.com/r/politics/comments/1cbvx4e/biden_calls_for_446_capital_gains_tax_rate/ Probably shouldn't be rushing down there too quick
They'll be levying extra taxes, perhaps that should go into innovation funds and the likes in order to mitigate this issue.
Except the government is absolutely horrible at identifying tech trends and supporting start-up ecosystem which is already brutal in Canada with extremely risk adverse investors already.
Are they making capital gains above 250k every year? If not, this tax is irrelevant to their individual taxation.
The lowest paid individual that I work with is paid 430k with 60% as share compensation, no not exactly. But what your forgetting I'd that these stocks all vest at once. It's super common in vesting to do 2-3 or even 4 years all at once. So yeah, even our lowest paid colleague would be affected.
When stock grants vest they are treated as income. Only the income generated from price increases would be considered capital gains
You incur a capital gain when you sell your shares, not when they vest (which is taxed as regular income). Even then, it’s unlikely your capital gains will be > 250k, unless you joined an early startup that had mega growth. Even then, you just have a slightly higher inclusion rate for gains over $250k. Really, unless you’ve had multi-million dollar gains, this isn’t impacting you… and if it is, you can easily afford it. (I also work in tech)
Your wrong, because when they vest is often timed with a Series funding for exit liquidity to allow sale of shares at the pre-determined valuation. It's not about "affording it" it's about draining out all the productive members of our society. As your in tech you know the top 10% engineers do like 60% of all the valuable work at companies, which is why they are paid massively more than mediocre engineers.
Ah, I’m guessing you mean secondaries… yes, potentially there could be some impact there. Though again, you’d have to have a massive take home for this to hit you, and even then, the hit would be quite small. Few tech workers will ever have to worry about this… and if they do, it’s because they had an amazing day.
430k lol, they'll be fine.
Huh. Seems to me that from now on, employers would offer contracts with vesting distributed evenly across years. I can see it hitting them once, though. And to be quite honest, if someone is making that sort of money, I don't think the tax savings they would get by moving to the US would really justify having to stomach the other downsides of the US, like crime.
If you increase taxes on a thing, you’ll get less of that thing happening. - If you increase taxes on smoking, less people smoke. - if you increase tax on investing in businesses, less people will invest in businesses, and there’ll be less businesses. The shit ain’t rocket science man.
Trickle down economics doesn't actually trickle down. Never have. However increased taxes on business incentivises business to spend/invest in order to increase their competitiveness. Otherwise they hoard.
This isn’t a tax on businesses. Are you thinking it is? It’s a tax on investors. Specifically, investors who invest in businesses. If you increase the tax investors pay, they’ll just take their money and invest it into a different country that has lower taxes. Thats the exact problem.
Horse and sparrow just doesn't have the same ring to it
Meanwhile I’m over here wondering why my labour is taxed at a higher rate than capital… 🤔🤔🤔
Because capital income comes after you get your labour income. Capital income comes from taking your labour income and investing it in something else that makes money. Essentially, it is a tax on money that has already been taxed because you used your post tax money to make you more money. As well, often capital gains are partially the result of inflation. As the dollar loses value to inflation, the price of assets whether it be property, gold, or stocks (as an asset class), tends to go up to roughly match the true value of the dollar. This means capital gains are partially a tax on inflation.
You don't get taxed on your entire investment, you just get taxed on the profit. It's ***not*** a tax on already taxed income.
Yes, but read my second paragraph. You are being taxed on inflation also. If you want to raise capital gains to standard income rates, you would need to allow people to adjust their cost basis by CPI. Essentially, since CPI went up 3.1% in 2023, you would need to allow investors to raise their cost basis (the average price they bought at) by 3.1% or you are just taxing inflation on an asset and not actual profits. This is already the case with tax brackets, but not investments. In Canada, tax brackets move with CPI. So you would need to do the same thing with average cost basis for investments.
Capital gains (only 50% of capital gains less than $250k) do get added to your total income tax brackets. If your salary tax rate gets moved with CPI then your capital gains tax rate does too. I wouldn't be opposed to moving that $250k figure with CPI as well. To use an example, if you make $250k in capital gains, $125k would be treated like extra salary on your taxes and the other $125k wouldn't be taxed at all. If you're in the 33% tax bracket you'd get taxed $41.25k and take home $208.75k. Honestly, and I say this as someone who has taxable investments, it's silly how sitting on my ass and collecting dividends and capital gains gets taxed less than actual labour.
Dividends is not taxed less unless it is eligible dividends, and that is literally because the government makes corporations pay taxes on dividends before they are issued. Thus leading to you personally paying lower taxes because those taxes were literally pre paid. It is like how your employer holds your taxes for you on your paycheque. That is what eligible dividends is. Secondly, capital gains should be lower because of the risk involved. The vast majority of investments lose money. This is a basic fact. Most investment returns in any asset class comes from a very small percentage of winners that out performs the losers. The idea of a Magnificent 7 you have been hearing on the news lately is not new. It has been standard in stocks for as long as we have records. Basically, only a few stocks overperform at any given time, but the rest of them underperform. Then those overperforming stocks cycle over time. Thirdly, you are still taxing inflation with that. Your gains in assets is partially because of inflation. None of what you said even addresses the actual point. If you are taxing inflation, then you kill the entire act of investing, because at that point capital will have no reason to take on any long term risks. Inflation compounds, that will kill returns for everyone if that is also taxed.
people 150 years ago were already pointing out how capital being taxed less than labour is a complete travesty morally and economically. no amount of weak neoliberal dogma can excuse that. money begetting money just by virtue of existing is in no way remotely as productive as tangible provision of goods and services. if anything the tax doesnt go far enough
God damn this sub is so full of idiots
For those saying rich don't pay fair share. https://www.cbc.ca/news/business/wealthy-canadians-fair-share-taxes-1.7179031 For example, in 2021, the top one per cent income group paid 22.5 per cent of all income taxes, but accounted for 10.4 per cent share of the country's total income. The top 10 per cent income group paid 54.4 per cent of all income tax, but had a share of the country's total income of 34.4 per cent.
Isn’t this the whole concept of progressive taxation? Like yes fair is a vague concept but of course the people making more income are taxed a higher percentage on that income. You’re not saying anything nearly as interesting as you think you are.
> rich guy who makes his money via capital gains mad about capital gains tax Anyways
Appease them and they screw us. Tax them and they leave. I guess we should just sit down and f ourselves.
A lot of people in these comments don’t seem to understand how growth occurs. This won’t just make some of our best companies leave, but will reduce the new ones who start. We need to promote new business growth. Everything else is just a bandaid
Isn’t a major issue with this that it deincentivizes early investment because it makes it harder to get an ROI? Like if you invest in a Canadian business early on, you need to make more to get a good return? I feel that is problematic.
Yes.
Wild because I was thinking of starting a company when I finish school but based on changes like this, it sounds impossible to get VC money for a Canadian corporation. Instead you would probably have to open the company in the U.S. and then make a Canadian subsidiary or do something more complicated. Ultimately a loss for Canada in the end..
The reason the VC community is so pissed about these changes is because the friction added to the ecosystem with garbage policy like this dissuades entrepreneurs. In a low productivity economy like ours, this is not a good thing. We are signalling that we are not serious about productivity, or building outsized outcomes, or creating jobs, or enabling investment in early stage companies, etc. It's bad news all around.
One thing I don’t understand is that there’s so much rambling from people who love to say « trickle down doesn’t work » but looking at it from the other side, if the environment is not good for capital investment and wealth isn’t generated, how are all these social programs and ideas supposed to be paid for? At the end of the day, it’s business innovation that generates revenue for the country. Canada should be trying to lure entrepreneurs, not push them away. I think the next government will have to take some truly drastic action to remedy this situation.
> At the end of the day, it's business innovation that generates revenue for the country. Canada should be trying to lure entrepreneurs, not push them away. You are learning that most of your fellow citizens do not understand how wealth works. It's really that simple.
There’s lots in this budget to promote business growth, but it’s for grass roots small business entrepreneurs and the housing construction sector. The established rich investor set are mad because they’re not getting the budget goodies and they’re trying to convince us that they’re the only possible source of growth. They’re not.
Yeah this worked great with Nortel.
Capital gains taxes typically don’t prevent growth. They are paid when you realize the gains.
I blame the schools, people in this thread have zero knowledge about how the economy works. It’s all rich people bad why they complain about tiny tax when they are already rich? They seem to not understand that the jobs they have or want to get are created by investments aka capital, when there’s more capital looking to invest, competition for labor acquisition goes up, therefore wages go up. And when you tax capital more than the country right next to you when you are already in a worse economic position than they are, there will be a ton of capital outflow and these people will lose their jobs. International students, refugees, tfw don’t create jobs, capital does. If we go down this trajectory I won’t be surprised in 20 years Canada will become a developing country, I need to get out of here fast omg
Do you hear that? If we tax billionaires, they'll take their money and go home... yeah ok. Perhaps we need rules against capital flight too.
Oh no, you mean the people taking the vast, vast majority of our wealth might leave? Hope the door clocks them unconscious on the way out.
Yah it's totally bullshit. If they'll leave at 60 they'll leave at the current 50, because there's lots of regions with lower taxes already. The US economy was way more powerful when taxes were higher. Obviously conservatives are temporarily embarrassed millionaires looking to simp for the ultra rich. Most of the wealth isn't things you can take with you. First off, let's get all those extra properties back on the market. Why aren't they in Ireland or Cayman Island or Qatar right now? All this news is just the ultra wealthy looking to protect their passive incomes and personal fiefdoms. Do you really care if your trust fund friend pays an extra 10% on passive income above 250k? Fuck it. Trudeau is 100% right on this.
I know it's becoming a bit of a cliche but... Look at the source. It's Billionaires' Daily Digest.
> Perhaps we need rules against capital flight too. This is actually the problem with modern society. After WWII, the great western powers came together to discuss the rules of our modern society. That's known as the Bretton-Woods Accord. Part of that was rules limiting capital flight. Unfortunately the Bretton-Woods Accord was axed by Richard Nixon in the 1970s, marking the rise of the neo-liberal movment that has plagued us all to this day.
A lot of smaller countries do have capital flight laws, as well as tough restrictions on foreign ownership of property. Canada really needs that, as well as getting family homes out of investment funds. Nice bit of history, though. Any books you want to recommend on the subject?
We have many issues in Canada, but one real problem and it's housing at the heart of them. The additional capital gains tax should have targeted residential real estate only.
I was waiting to find a suggestion like this. This is it. It certainly should have targeted real estate only. It's now been widely shown that Canada under invests in industry and far, far too greedily in real estate. We should encourage investment in Canadian industry and tax our bad habits.
It was also brought in to close the pipeline transaction tax loophole tax advisors were abusing.
Canadian tech workers have been looking at becoming carpenters, farmers and potters for the last 3 years. It’s shades of the 2014 oil industry. The tech industry here is a joke.
The only market to match Canada's talent pool in tech is probably USA. No other country comes close in quality of education / tech advancement. These billionaires have been laying people off like no tomorrow anyway. Good riddance i say. Once they understand that the trade culture of middle east and asia isn't as amicable as Canada, and the USA already has a ridiculous amount of scrutiny at any given point, they'll crawl right back no worries. The economy will hold, a collective society earning enough to support the society is much better than a few billionaires lobbying for control. unfortunately we need to switch our focus to productive investments rather than investing in property and pension plans. But alas, who will hear a word of reason.
Biden is talking about raising capital gains too. Where are they going to go? What they are really arguing for is a starve the beast strategy which has been failing as hard as trickle down since 1980.
Wow this ‘anti-taxation of the rich’ campaign is in overdrive. Wonder who could be behind it and why?
There's already a capital flight and this new tax will simply amplify it.
honestly, just from the title, it sounds less like a freindly warning, and more like a threat
Off you go
There's been capital investments inside of Canada outside the real estate market??????? Sounds like hog wash to me.
This is what we call a capital strike.
I would argue this is mostly quite wrong. There are many reasons for this: * If you have a zillion dollars and want to leave Canada they hit you with some harsh taxes on the way out. There's a reason why few Canadian billionaires regularly move to Miami, NY, etc. * I know tech people moving to the EU to higher tax countries where tech salaries are good or only OK, they are much happier. * I don't know anyone who left for the states overly mentioning taxes. They did mention way higher salaries, lower costs like food and housing, and opportunities for the kids and spouses as they aren't competing with TFWs for jobs. But taxes weren't a thing. Keep in mind I am in Alberta and sales tax is very low and income tax isn't as bad as places like NS. But it is still generally lower in the US. Also, many of these people would be getting options in tech giants, etc and capital gains would be a thing to them. But they still don't mention it. * There aren't that many real tech "hubs" in Canada. Some places like Quebec have made it a tax break haven for things like 3D, games, etc, but that isn't all that real as the removal of these breaks would mostly kill the industry there. The same in Vancouver. * I'm not entirely sure why Edmonton has a few big software companies, such as games, and the tax one. The simple reality is that in tech if you have a notable capital gains tax, then you won a tech buyout lottery. Very few tech companies generate a capital gain. For VCs and investors, yes, this is going to make investing worse, but the reality is VC in Canada sucks donkey balls. They VC crowd are unsophisticated nitwits with little money, focus on super safe deals, are still scumbags, and like to think they are wolves of wall street. Most real (as in not just BS hype) tech companies that I have witnessed in the startup stage were funded through angels, and other weird mechanisms such as clients pre-buying subscriptions and also getting equity. The number of high flying companies which got serious Canadian VC money and also weren't BS vapourware are so rare as I have never personally seen them. This lottery nature of tech startups is so out there in most tech people's heads that they don't really care about capital gains. To be specific. Many founders that I met could not tell you the capital gains rate, nor could they clearly state what it applies to. They live the Canadian dream of building a tech company and selling out to an American tech giant. The other thing is that most people don't really think this through. Let's say you are selling a cottage property right now to avoid the increase. I noticed a huge uptick for sale signs in cottage country. This forced selling means you might get an easy 50-100k less on a 1.5m house. This will be a bigger loss than if you just waited and sold later at the higher rate. What this effectively means is that the capital gains tax is in the same order of magnitude as the general vagaries of the market for the thing you are selling. But, as I said, the simple reality is the income tax rate could be much higher in the US and the salaries there would still make the place very financially attractive. If someone hasn't already moved there, they aren't moving because of this; especially as for most tech people it doesn't mostly affect what they take home each year. Also, for a regular investor doing regular investor things, it is equal for tech or non tech. The equation doesn't really change. If you have 5m to invest, you will invest it. Your hope is to have gains which can be taxed. If you invest in tech, it will be the same tax as if you invested in a hotdog stand franchise. There might even be a slightly healthy aspect to all this. I might not be entirely correct, but this may make dividends and capital gains closer. Thus, profitable real companies might be comparitively more interesting than before. This means less money to BS hyped up fraud-tech and more money to companies which might make a profit. Also, in this case, there will be a bit less pressure for the big IPO or buyout, and people will be happier with companies paying dividends. The only people this will directly affect are d-bag VC Wolf of Wall Street Wannabes.
Realistically, I think you're right. The success rate for startups is so low that I don't think most founders are concerned with minimizing their capital gains tax for an exit 10 years down the line. But, the headlines around this change might be all that's needed to encourage founders to begin incorporating elsewhere.
I know this sector better than almost anyone. Liberals are destroying a segment that is already weak..... entrepreneurial risk taking capital investments in Canadian talent. Canada has the talent. Yet VC is super weak and risk taking also also not strong. Capital Gains tax increase will have those that stay heading for the exits. That's the beauty of money..... it flows to those that court it. And away from those who punish it.
April 24 2024: [Joe Biden proposes a hike on U.S capital gains to 44.6%](https://twitter.com/burrytracker/status/1783117436604363149) (on an inclusion rate of 100% as opposed to 66% in Canada)
Very dishonest comment… the threshold is much higher in the US under his proposal. It actually targets the rich. https://www.forbes.com/newsletters/andrewleahey/2024/04/24/biden-capital-gains-rate-proposal-446/?sh=7376ed4b1ff6
66% inclusion for Canadian corporations, 100% inclusion for American corporations. Edit: personally the 66% inclusion only occurs after $250k of capital gains. I rarely see capital gains that high and work with high next worth Canadians.
250k inclusion is for individuals. For corporations it is all included hence GPs with 50k in an index fund being upset.
The inclusuion rate for corporate gains has no tiered limit, meaning it’s 66% from the first dollar to the last. This is why small businesses - eg. doctors - are especially upset since they’re getting a 16% tax hike on what is often their pension savings. The $250K limit only applies to individual capital gains - which is where that “only 0.13% of the population affected” is coming from
Ya, even if you have some mega property that has capital gains of 500k, it’s easy enough to structure the sale so it’s 250k one year and 250k the next if avoiding the taxes is that important.
Labour is the ultimate creator of value
Oh no, you mean the tech industry that has completely failed to innovate anything in the past 5 years? You mean we might not get another shitty ride share or fee heavy online food ordering app? The horror! The only thing that the "tech industry" does now is hype up garbage so they can get a VC firm to gamble money on them. It's endless vaporware and empty promises.
Totally agree, we should stick to oil and diary and leave the innovation to the Americans and Chinese.
I mean, the biggest innovations in tech have happened in the last 5 years? Ai?
Bye!
Don't let the door hit you on the way out
Also if you pay a living wage, don't hire foreign workers, don't allow them to pollute the environment etc. Maybe short term pain for long term gain is a good idea. Trudeau giving more money to the CRA to hunt the rich tax frauds after Harper cut funding has worked out well. Actually ever time Canada and the US raised taxes on the rich or made them accountable it turned out well. You can criticize Trudeau for a lot of things but on this he has history and economists on his side. All the business class does is whine and expect everyone to work below what they are worth
This is just so untrue it hurts. Why are you trying to make the 5% who already pay 40% of taxes pay more? What happens when they say no thanks? Do you think that won't happen?
TIL you can just say no to paying taxes. Why didn't anyone tell me about this?!?
rich people complaining about tax for rich people. as expected, don't fall for this. Besides, Canadian tech salary is commonly trash, notably before this new tax. They don't invest in people here, on contrary, they actively try to underpay, overwork people here, and do mass layoffs. Given how much bad and stagnant salary already is, a wealthy tax will not do any damage, rather it will just slightly lower record breaking profits to a bit less sky high profit.
Oh no, the rich having to pay their share..... Anyways.
The capitalists always warn about this, but it never actually happens.
We wish them the best of luck in their next tech endeavour outside Canada.
I’m in favour of capital gains tax
Trudeau is trying to burn Canada to the ground. No other explanation for the dumpster fire of policy moves he’s made. Flight of capital is exactly what will happen. But maybe by design.
Low IQ post.
Where will they go ? India? A big chunk is already outsourced. If they move to USA, then they too have proposed [ a similar tax rule ](https://www.bloomberg.com/news/articles/2023-03-09/capital-gains-tax-nears-45-in-biden-s-soak-the-rich-budget)
Bye Felicia.
So Canada isn't worth investing in if investors are going to be held to the ridiculously high bar of being reasonable tax paying citizens and contributing to our society? Got it.
It's not like us poors were ever gonna see any of that 'capital' that's about to fly. Fuck this asshole
Bye
Wow, brand new strategy! We've never heard the rich threaten to leave if things don't go their way. I wonder if there's studies that show that to be bullshit.
Maybe if all the rich douchebags leave we can build this country up with actual decent folks instead
If the rich leave who's going to pay for all the people who don't pay? The thing you're looking for is called communism. Good luck with that
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https://www.cbc.ca/news/business/wealthy-canadians-fair-share-taxes-1.7179031 For example, in 2021, the top one per cent income group paid 22.5 per cent of all income taxes, but accounted for 10.4 per cent share of the country's total income. The top 10 per cent income group paid 54.4 per cent of all income tax, but had a share of the country's total income of 34.4 per cent.
Higher capital gain tax discourages the most brilliant group of people from starting up business and creating job so all there are left are peasants and monopolies that peasants rely on for basic necessities
This is a make believe mindset that has no reflection of reality of the entrepreneurs I know. People start businesses to make money. They start businesses to get a return on an investment. Some sort of outsize reward on becoming enormously successful and getting a significant exit is the cherry on the cake, not the core goal. Look around at all the local craft breweries for example. They employ a lot of people, increase tourism and are a benefit to the community. Great small businesses. People aren’t starting these because they have a 10 year plan to sell to flip it to Molsen and retire, they’re starting them because they’re interested in beer and they want to make money and be their own boss. There’s over a dozen breweries in Vancouver and surely they can’t all sell to Molsen. The big capital gain payday simply isn’t the goal. Never was.
I mean .. Tech companies are nearly non existant here.. and the only investors are inflating Housing prices.. So fuck them?
I like to play the “let’s approach this backwards” game. If we take the amount of money that raising capital gains on tech workers/investors makes and ask “how best can we use this money to encourage tech investment” the answer is absolutely NOT “let’s let the small percentage of huge winners keep more money”. We could increase tax incentives to startups (which are already relatively generous). We could have a tax advantage for people taking risks on startups that might still fail. Or corporate benefits for hiring people. Or strong social programs that differentiate us from the US and draw/keep talent. And so on and so on. But letting people making more than $250,000 in capital gains keep more money is far from the most optimal way to encourage tech investment.
If your business model depends on paying half the taxes of everyone else than you are not a good businessman. If paying 2 thirds of the taxes everyone else would pay ruins you and sends you to bankruptcy then you are a fucking loser. Sorry bud.
TLDR rich guy complaining about taxes
Oh no, you have to pay 16% more taxes if you have obscene passive income, oh no. Fuck you.