tag:blogger.com,1999:blog-19639811.post-1137290597286076132006-01-14T20:58:00.000-05:002006-01-15T18:50:44.993-05:00The Conservatives released their platform yesterday, and at $75B it's the most expensive platform put out by any party but the Greens. And what's that money going to be spent on? An amazing $45B is going to tax cuts over the next five years. And who will benefit from this tax relief? Well, here's one of Harper's proposed tax cuts: <ul><li>"Eliminate the capital gains tax for individuals on the sale of assets when the proceeds are reinvested within six months."</li></ul> The Conservatives are spinning this as a way to provide tax relief for people selling their family businesses. But the capital gains tax also applies to, and is much more commonly used for, stock market profits. Under Harper's plan, investors who have the funds and know-how to put their savings in the stock market <i>wouldn't have to pay taxes</i> on the profits from the stock market until they took the money out. It would be like giving stock investors access to an unlimited-size RRSP where their money could accumulate interest-free, that they could cash in any time without penalty. Not only that, but capital gains are taxed at a lower rate than other income. So when investors did cash in their retirement portfolios, they'd pay less tax than folks with a traditional RRSP. Who would benefit from this tax cut? It's a no-brainer. Upper-income Canadians are disproportionately likely to invest in the stock market and to see substantial capital gains. That's who'd get what amounts to an unlimited, cash-out-any-time RRSP. If you'd rather see your money go to health care or child care than to preferential retirement programs for the investor class -- don't vote Conservative. <b>Update</b> (Jan. 15) -- An anonymous commenter pointed out that the analogy to RRSPs isn't perfect. Specifically, you make RRSP contributions with pre-tax dollars, but any stock market investments you make outside your RRSP are made with post-tax dollars. This proposed tax cut is still a great deal for investors, though. Even though your initial "contributions" to your stock-market nest egg aren't tax-deductible, the majority of the money in a typical mature retirement portfolio has come from compounding gains over the years. That's what makes this proposed capital gains cut let stocks act like an RRSP -- just as the money in your RRSP can compound interest without a tax bite being taken out of the interest every year, your investments in the stock market could, with this tax cut, grow without your paying taxes on the growth every time you reinvest it.Natalkahttp://www.blogger.com/profile/17904243446473763995noreply@blogger.com