The federal government recently increased the capital gains tax inclusion rate from one-half to two-thirds for all capital gains realized by corporations, and for individuals realizing capital gains exceeding $250,000 annually. Presented as a tax change that will only affect the “wealthiest” Canadians, in reality many Canadians earning modest incomes, such as families with second properties or professionals with equity in their business, will face higher taxes as a result of the recent change. A significant body of literature concludes that capital gains taxes are among the most economically damaging. In particular, the recent increase in the inclusion rate will adversely affect investment, productivity, entrepreneurship, and innovation in Canada. By increasing the inclusion rate, the federal government has also lowered Canada’s competitiveness relative to other advanced countries. At a 50.0 percent inclusion rate, Canada’s top capital gains tax rate ranked between 17th and 23rd, depending on the province, out of 37 OECD countries. By raising the inclusion rate to 66.7 percent, Canada now ranks between eighth and 13th highest, depending on the province. Simply put, Canada now has effectively no capital gains tax advantage over three-quarters of OECD countries. However, by reversing this change and lowering the inclusion rate to one-third, the federal government can greatly improve Canada’s competitiveness. At a 33.3 percent inclusion rate, Canada’s top capital gains tax rate would rank between 30th and 31st. In other words, every Canadian province would enjoy a lower top capital gains tax rate than the majority of OECD countries.