Unhinged

Fifteen years ago Paul bought, then paid for, a second home. “I was thinking at the time about my three young kids,” he says, “so I could sell later and have money for their university.”

Made sense. Then came Chrystia.

“With the new liberal governments capital gains tax at 66 per cent,” he tells me, “my plan has proven to be a failure.  If I sell now my children won’t have enough for an undergrad degree.  This is a betrayal.”

He’s not alone, of course. Anyone like him with an investment rental property, or who’s owned a cottage for years and wishes to sell or pass it on to their family is now snared in the finance minister’s sticky, hasty, expanding web of tax and deceit.

Why deceit?

Because we’re being lied to with regard to the big jump in the capital gains tax now being pushed through to fruition in 12 days time. Freeland says this will raise an implausible $19 billion over five years, with that money funding socialized dental care and pharmacare, as well as going to parents and for environmental issues. “The fair way to finance them is with tax fairness. That’s what we’re doing.”

But is it fair?

She says, repeatedly, a mere 0.13% of Canadian taxpayers will be affected – the uber-wealthy with an average income of $1.4 million. The people everyone loves to hate. And Chrystia has done all she can to stoke that class warfare, emotion and division. Check out what she said in a Toronto speech after dropping the tax bomb:

Do you want to live in a country where those at the very top live lives of luxury, but must do so in gated communities behind ever higher fences, using private health care and airplanes because the public sphere is so degraded and the wrath of the vast majority of their less privileged compatriots burns so hot?

Yikes. Bring out the pitchforks, comrades. We’re storming the castles and the mansions tonight!

Of course, the rich aren’t the problem. Truth be told, we don’t have enough successful people in Canada. And anyone making $1.4 million is already handing over 53% in income tax while four in ten Canadian families pay net nothing. Isn’t that ‘fair’ enough already? The reality is we have a spend-and-tax government without the ability to live within its means, now reaching for the lowest common denominators: envy and revenge.

In reality it’s not the crazy-wealthy, high-net-worth, gated-house-&-private-jet types who are being hosed here as the inclusion rate swells. Trust me, those folks already have it figured out. Instead, it’s society, plus a whole lot of unsuspecting, self-employed, middle-class, beneficial and productive people who are not salaried and work through personal corporations, which will now be fully whacked.

At a minimum, the proposed individual annual $250,000 cap (at a 50% rate) should be extended to those corps. Or just carve out doctors and farmers, IT workers, carpenters and others who don’t use costly tax shelters like RRSPs and serve society. The deadline for this could also be extended to the end of the year. Why June 25th? Weird. And why have we created a back-door inheritance tax on family cottages and farms without an adequate debate?

“The government was hasty and dismissive as it cobbled together its tax proposal, an approach consistent with other recent tax legislative fiascos,” former CRA advisor Allan Lanthier wrote in the Financial Post a few days ago. “And its class warfare rhetoric has been reckless and divisive. Canadians deserve better governance than this.”

There’s a lot of politics in this as well. The whole point of not including the cap gains legislation changes in the budget bill was to force an open vote on the new tax assault. Chrystia’s extreme words about “the wrath of the less privileged” are designed to paint the opposition Cons as oppressors of the people and friends of the evil Galen Weston. This is a banner they wish to carry into the coming election, now that T2 has been shredded in recent polls. If it means being untruthful, manipulative and destructive, well, hey, you know…

To his credit, Poilievre has finally said his people are in opposition to the tax increase. But, of course, that’s irrelevant because of the fast and steady NDP support. Dippers never met a tax they didn’t like. And they adore this one.

By the way, Paul asks me if it makes sense for him to extract the equity in his rental and use it to build a B&D portfolio instead. He can set up a HELOC, for example, to obtain funding plus have tax-deductible interest. The gains in that non-registered account will qualify for the lower capital gains rate, plus he can reap tax-advantaged dividend income.

So another property is not added to available listings during a housing crisis. A non-rich person is encouraged to use debt to invest. Net federal tax receipts are reduced. And a responsible Canadian’s plans to support children are thwarted by an unhinged, dishonest government.

This isn’t Chrystia Freeland’s finest hour. Does she not see the boss is using her up?