A lot has been said about the Liberal government’s roughly $10 billion – but closer to $20 billion – annual deficit.
Very little, meanwhile, has been proposed in regards to how we can achieve a more balanced budget. Well, here’s a great place to start: close tax loopholes for the rich.
According to a study conducted by prominent economist Toby Sanger, five tax loopholes that mostly benefit the wealthy cost Canada’s federal and provincial governments nearly $16 billion annually.
Sanger says these loopholes have grown more generous since the late 1990s, contributing to increased inequality and greater financial instability.
The most significant loophole concerns capital gains (profits from investments), which are only partially included in income taxes. This is estimated to cost Canada’s federal government around $12 billion a year; 90 per cent of the benefits of this loophole accrue to the top 10 per cent of earners.
Tax havens pale in comparison, costing Canada around $2 billion in revenue every year. Stock option deductions cost some $800 million a year, while corporate meal and entertainment deductions cost $460 million.
Yes, all those $16 orange juices add up.
Sanger also suggests that higher income professionals, including doctors and dentists, widely abuse the small-business tax credit to the tune of around $500 million in lost federal revenue annually.
He went on to suggest two immediate solutions: capital gains tax reform as a priority for the Liberals, as well as investment profits being taxed at the same rate as “income from working.”
A breakdown of Sanger’s assessment, per the Huffington Post:
[ad_bb1]