Check It Out: Are Canadians funding gov't income redistribution?

By Joan Janzen

Financial planning is generally not a humorous topic, but this anonymous quote might cause you to smile. “This is worse than a divorce. I've lost half my net worth, and I still have a wife.”

Speaking of investments, Chrystia Freeland, our Minister of Finance, has been promoting the government's investments. "Do you want to be a country that invests in housing, affordability, childcare and infrastructure?" she asked Vassy Kapelos on Power Play.

Vassy started off the conversation with a brief summary: Beginning June 25, 2024, the capital gains inclusion rate increased from one-half to two-thirds on all capital gains over $250,000 for individuals and on all capital gains on most corporations and trusts.

The Finance Minister quickly reassured listeners that principal residences would continue to be fully exempt from capital gains, which caused Canadians to wonder if this was possible.

This particular episode of Power Play was interesting. Viewers familiar with Vassy can quickly tell where she stands on any particular topic. If she smiles at any time throughout her introduction, it's a good indication she agrees with her guest. This time, Vassy wasn't smiling, and she got right to the point, repeating words Chrystia had spoken: "The wrath of the vast majority of the less privileged burns so hot."

Vassy responded by asking her guest, "What responsibility does the government take for putting us in that position in the first place?"

It was a great question, but the Finance Minister continued to use the same talking points in her response to every question she was asked. And the talking points didn't provide answers.

"There are a lot of people who are not wealthy who feel like the government is going after them," Vassy told her guest.

"This is not about going after anybody," Chrystia responded. "We need to make all these investments, so you have to say how are you going to finance them? Are you going to take on more debt? I don't think that's right. The way to do it is through fair tax policy."

The online program Northern Perspective analyzed the interview. "Anytime they use the word investment, they should be using the term deficit spending. They're spending money Canadians do not have," Cypher from Northern Perspective noted. "The responsible thing is to say it's time to lower government spending and look at lowering taxes for Canadians."

Chrystia claimed, "This is really going to help Canadians because $20 billion is a meaningful amount to invest in the things Canadians need."

Franco from the Canadian Taxpayers Federation recently commented, "Freeland will blow through the extra capital gains tax cash in less than a week." He might have a point.

The Finance Minister assured everyone that only 0.13 percent of wealthy Canadians would be affected. In the House of Commons, the official opposition suggested they put this in law in an amendment stating that no one whose income is in the bottom 99.87% will pay the capital gains tax. Unfortunately, the response was disappointing.

During her interview Vassy addressed the elephant in the room, saying, "I have been inundated with people calling my radio show saying I did not have a public sector job, could not rely on a pension. I invest in a second rental property, worked non stop to do that, paid taxes along the whole way. Now I'm told I'm among the ultra-wealthy that has to fund the government's income redistribution plan."

The Finance Minister claimed, "We believe in fairness for every generation." However, Cypher from Northern Perspective made a valid observation.

He said, "That one time in your life that Vassy is talking about is when you inherit your parent's home when they pass away. You're going to sell it, and the government is going to come after you for the capital gains. Other people have been fortunate enough to have a cottage. Now they can't afford to have it anymore so they say I'm going to sell it because that's a fiscally responsible thing to do, but now the government is going to come after them for that. The Liberals are framing this as an assault on the ultra-wealthy, but there are a lot of middle-class people who are going to get caught in this."

He also pointed out that the government can't afford the new programs and their administration costs, so it's creating a new tax to pay for them. Margaret Thatcher's quote explained why that can be problematic: "The problem with socialism is that you eventually run out of other people's money."