Beaver [she/her]Sectors that earned most corporate capital gains created no jobs over 5 years: report
kent_ehthe miscellaneous intermediation sector, which includes venture capital companies and investment banks, as well as the real estate sector
For the curious. It’s buried halfway down the article.
Why am I not surprised by these two sectors being the culprits?
I feel like the rest of the sentence is important for those skimming for the important bits -
together made 52.6 per cent of all corporate capital gains reported in Canada between 2018 and 2022.
That’s a stupidly large percentage of the capital gains reported.
Wait… It turns out businesses always want to be more efficient, and whether they pay a tax they have no control over makes no difference?
And in fact, increasing the tax on profits makes it much, much more valuable to reinvest in the business.
Like, lets say your business is expecting a net profit of $200K after a year. You can either choose to reinvest that into the business to buy new equipment and hire new staff, or you can record that as profit, pay the taxes, and then put the after tax dollars money directly into your and your investors pockets.
With our current corporate tax rate of 15%, it’s really tempting to just pay the 30K in taxes and personally keep $170k as take-home, which gets taxed at a MUCH lower rate than regular income, rather than keep it in the business.
However, if taking money our of the business was much more expensive, say 45% or something comparable to the marginal persoal income tax rate, then maybe as a business owner you might think about whether there are other opportunities WITHIN the business you could invest in, putting those profits towards new equipment or training, rather than lining your own pocket.