'Some practical first steps' - Macleans.ca

‘Some practical first steps’

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Within a longer treatise on taxation, Brian Topp has released his proposals for tax reform.

The first step in restoring fairness to Canada’s personal income tax system is to end the free ride for Canada’s highest-income 1% by introducing a higher marginal tax rate on income in excess of $250,000. I propose a new 35% rate on income in excess of $250,000.

With two important caveats, capital gains should be taxed as ordinary income – 100% of this form of income should be recognized – and not be discounted by 50%.

Income from cashing in stock options should be taxed at full rates, abolishing a tax benefit for the wealthiest that cost the federal treasury $750 million in 2008.

Under Harper’s plan, the corporate income tax rate will drop from 16.5% to 15% on January 1, 2012. That cut should be rescinded. Thereafter, corporate income tax rates should be increased by 1.5% each year until they reach the rate of 22.12% that applied before the Harper.

The two caveats on capital gains are that they should be protected from inflation and that the changes would not apply to sale of homes, small businesses and farms.