The most recent push is aimed at cutting Canada's capital gains tax. Progressive Conservative leader Joe Clark promised eliminating the tax as one of his party's planks for the next federal election. Grubel is a former Reform member of Parliament and currently holds a chair in taxation and finance at The Fraser Institute in Vancouver. There are no solid estimates of how much money the government receives from taxing capital gains. Grubel argues that the capital-gains revenues are very small relative to overall tax revenues.
Economists disagree how the tax cut affects long-term tax revenues.
Grubel isn't a big fan of progressivity, but even on its terms Grubel suggests that it doesn't provide much support for capital-gains taxation. Many economists believe that doing away entirely with capital gains taxation would open a loophole and cause more investment decisions to be made for tax reasons rather than economic reasons. Moreover, Grubel points out that the current level of capital-gains taxation has its own distortions. We welcome your feedback. All rights reserved.