Further Thoughts on the Capital Gains Tax - Melville McMillan

It is assumed that the properties are sold in 2023, but (lacking an inflation rate for 2024) the taxable capital gains are calculated according to the 50 per cent and 66.7 per cent rules introduced in the 2024 budget—that is, as if the 2024 budget rules applied in 2023. [...] Since the increase in the property value only offset inflation, the sale price of $800,000 represents no increase in purchasing power over the years, so the capital gain taxes impose a real (2023 dollar) loss of $181,473 to the property owner. [...] However, if the appreciation rate was inflation plus five per cent, the effective rate becomes 33.7 per cent on the 1960 property, becomes 49.1 per cent for the 2020 property and peaks at 53.4 per cent in the 2021 case. [...] Slemrod and Chen (2023) note the desirability of indexing and the primarily political difficulty of implementing it and other reforms in the context of the United States. [...] 7 About The School of Public Policy The School of Public Policy has distinguished itself as the leading institution DISCLAIMER of its kind in Canada, offering a practical, global, and focused approach to The opinions expressed the analysis and implementation of public policy across various domains: in these publications are the authors’ alone and 1.