Jim Stanford
Well, from the perspective of the conventional economics and tax world — people who accept all of these arguments about free-flowing capital and how efficient markets are and how business entrepreneurship is the leading force in society — you get all kinds of mumbo jumbo arguments about why we must treat income from investments more favorably than income from any other source, including working for a living. So you’ll get all kinds of stories about how it’s an incentive to invest, or it’s an incentive to take risks. You often hear this sort of thing — as if taking risks is somehow something we want people to do more of. I mean, I taught my children not to take risks. I taught them to look both ways before they cross the street. This mythology that taking risks in and of itself is a productive activity is unbelievable.
Another argument is that since investors have already paid tax on the money they initially invested, they shouldn’t have to pay tax on the profits from those investments, which is also ridiculous. While some may have paid tax on their initial investment, that’s not the case if they inherited it or if it was a reinvested capital gain from another investment, which is often what happens. Regardless, whether you paid already or not, the profit from that investment is new income, so you should pay tax on it just like everybody else does.
Another common stereotype is that favorable treatment of capital gains is necessary if we’re going to have business investment in machinery and equipment and technology and research and development — wrapping the whole thing up in a high-tech cloak. And that’s not true either. Our report looked at the history of Canada’s actual investments in machinery and equipment and technology and research, and there’s no correlation at all to capital gains. Capital gains taxes…
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Auteur: Jim Stanford
