Peter A Allard School of Law

The Pivotal Role of Capital Gains in Efficient and Progressive Tax Reform

Capital gains are a form of income that is both taxed at highly preferential rates and extremely concentrated at topmost incomes, thus undercutting the tax system’s progressivity. Several arguments have been made for continuing this tax preference, which is a major contributor to top-end inequalities and tax avoidance stratagems, but most of those arguments can be rebutted. Empirical evidence also weakens the argument that the capital gains tax preference is needed for an efficient and growing economy, and the gains preference actually harms the efficient allocation of economic resources. This study assesses the case for reforms that would increase the gains tax inclusion rate from the current 50 percent to 75 percent but restricted to taxpayers with total gains and/or incomes above specified high thresholds. Such reforms would be much more effective, raise far more revenues, and be much more transparent than the tepid changes affecting capital gains contained in the 2023 federal budget’s revisions of the Alternative Minimum Tax. The targeted changes proposed here would affect relatively few taxpayers and should receive wide public support.

This lecture qualifies for 1.5 CPD credits.


Rhys Kesselman

Jonathan Rhys Kesselman joined Simon Fraser University’s School of Public Policy in 2004, where he was a professor and held the Canada Research Chair in Public Finance until his retirement in 2017. Professor Kesselman’s research topics have included wage rate subsidies, the economics of tax avoidance and evasion, reform of the GST and provincial sales taxes, finance of post-secondary education, various child benefit programs, flat taxes, personal and business tax reform, First Nations taxation, federal and provincial payroll taxes, BC fiscal and taxation policies, the distributional impacts of taxes, the “brain drain,” mandatory retirement policies, income splitting, the basic income guarantee, expansion of Canada Pension Plan retirement benefits, and reform of capital gains taxation.

The Tax Law and Policy Speaker Series at Allard Law is an academic, interdisciplinary forum for disseminating research on tax law and policy. In past years, the series has featured many leading scholars of tax law and policy from Canada and the rest of the world. The series is often (though not exclusively) held in conjunction with a Tax Policy seminar course offered to UBC law students. Many sessions are open to the public.

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