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| EST. READ TIME 1 MIN.Canada’s capital gains taxes hurt economy, reform could liberate ‘locked-in’ capital
Capital gains taxes, like all forms of taxation, raise revenues for the government. But capital gains taxes impose significant costs on the economy. The cost of capital gains taxes is not limited to the amount of tax revenue collected. Capital gains taxes impose additional costs on the economy. That’s because they reduce returns on investment and thereby cause individuals and businesses to alter their behaviour particularly with respect to the reallocation of capital, the stock of capital, and the level of entrepreneurship in Canada. The ultimate outcome is less investment and less economic activity.
This essay is meant to provider readers with a general understanding of capital gains taxes, the economic costs imposed by extracting taxes from capital gains, and some basic information about capital gains taxes in Canada and other industrialized countries. As the first essay in a series of collected essays on capital gains taxation in different countries, this essays aims to establish a foundation from which to review the options available for capital gains tax reform, which are detailed in a comparative sense in the rest of the collection.
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Jason Clemens
Executive Vice President, Fraser Institute
Jason Clemens is the Executive Vice President of the Fraser Institute and the President of the Fraser Institute Foundation. Hehas an Honors Bachelors Degree of Commerce and a Masters Degree in Business Administration from the University of Windsor as well as a Post Baccalaureate Degree in Economics from Simon Fraser University. Before rejoining the Fraser Institute in 2012, he was the director of research and managing editor at the Ottawa-based Macdonald-Laurier Institute and prior to joining the MLI, Mr. Clemens spent a little over three years in the United States with the San Francisco-based Pacific Research Institute. He has published over 70 major studies on a wide range of topics, including taxation, government spending, labor market regulation, banking, welfare reform, health care, productivity, and entrepreneurship. He has published over 300 shorter articles, which have appeared in such newspapers as The Wall Street Journal, Investors Business Daily, Washington Post, Globe and Mail, National Post, and a host of U.S., Canadian, and international newspapers. Mr. Clemens has been a guest on numerous radio and television programs across Canada and the United States. He has appeared before committees of both the House of Commons and the Senate in Canada as an expert witness and briefed state legislators in California. In 2006, he received the coveted Canada’s Top 40 Under 40 award presented by Caldwell Partners as well as an Odyssey Award from the University of Windsor. In 2011, he was awarded (along with his co-authors) the prestigious Sir Antony Fisher International Memorial Award for the best-selling book The Canadian Century. In 2012, the Governor General of Canada on behalf of Her Majesty the Queen, presented Mr. Clemens with the Queen Elizabeth II Diamond Jubilee Medal in recognition of his contributions to the country.… Read more Read Less… -
Charles Lammam
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Matthew Lo
Matthew Lo was a 2014 research intern at the Fraser Institute. He is currently studying his Master’s Degree in Economics at the University of British Columbia.
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