We demand urgent and decisive action from the government to strike the capital gains increase from the 2024 Canadian budget on or before June 25, 2024.

Section 8.1 of the Liberal Canadian Budget 2024 announces the government's intention to increase the inclusion rate on capital gains realized annually above $250,000 by individuals and on all capital gains realized by corporations and trusts from one-half to two-thirds, by amending the Income Tax Act, effective June 25, 2024.

As a young Canadian working on a pre-seed round for new projects, the capital gains tax is creating a volatile investment environment for me and all other Canadians. This short-sighted decision is not informed enough. We need to stop making it more difficult for innovators and entrepreneurs to create a better future and the ability to create jobs for other Canadians. This issue affects far more than the 0.13% of Canadians you claim. These policies are driving innovation, entrepreneurialism, and investment out of Canada.

Sign this petition to support Canada's innovators and entrepreneurs!

For more information please see our current letter to Parliament.

Key Facts:

Current Situation: Over the past fifty years, the purchasing power of Canadian households has significantly declined (World Bank). Despite nominal increases in wages, the real value of income has not kept pace with inflation and the rising cost of living. For instance, the average family income in 1974 was $14,895(Income Data, Unadjusted). Adjusted for inflation, this would need to be approximately $154,000 to $209,000 today to maintain the same standard of living. Currently, the median household income is around $75,000(Alberta 2023), highlighting a substantial decrease in purchasing power by a factor of approximately 2.78-4.12.

This has had some consequences, Scott Galloway illustrates the data in the following video titled, America’s War on the Younger Generation which describes a 59% decrease in birth rate, less available education, and in general a continued escalation of mental health symptoms amongst younger generations (Poll 20, Poll 19 MHRC). This is an indirect exploitation and theft of the ability for the younger generation to have homes, start families, get educated, and save for the future. 

We need our leaders more than ever.

Given this decrease, in both birth rate and purchasing power, it should be apparent that it is in our best interest to focus collectively on increasing purchasing power for everyone in the country. This will lead to more profits for Canada and her institutions as well as more economic prosperity for all even if it means some policies in the short term that level things out. It's time to be responsible.

Impact of the 2024 Budget on Purchasing Power

There are other alarming points concerning the proposed 2024 Canadian Liberal Budget:

Raising the National Debt Ceiling:

The proposal includes raising our national debt ceiling by another $508 billion, from $1.83 trillion to $2.33 trillion to accommodate the projected borrowing needs for 2024-25. This ensures the government can refinance maturing debt and manage new borrowing requirements. (Budget Canada) This occurred back in 2020 as well (BNN).

Currently, we pay $20 billion annually to service our existing debt. This number will only increase after adding $508 billion to the debt, raising debt servicing costs significantly. (Fraser Institute)

This represents flagrant mismanagement of federal spending. However, before pointing fingers, we must acknowledge the positive steps the Liberal government has taken, such as:

Creating new infrastructure for electric vehicles (EVs).
Improving dental affordability for low to middle-income families.
Advancing trust and reconciliation efforts.
and more.

These are solid foundations for programs but overinvesting in ideas without effective implementation is often the first critical mistake when creating new products or initiatives. For those who have read the book, The Lean Startup, businesses and new initiatives are supposed to stay lean, growing as they add value, balancing their books properly, and avoiding unnecessary expenditures. The government must adopt this approach or an approach like this to ensure efficient use of taxpayer money.

The United States Government has employed lean startup ideas. The Federal Chief Information Officer of the United States, Steven VanRoekel noted in 2012 that he was taking a "lean-startup approach to government".

Economic Data:

I've done the math and encourage everyone to read and challenge the data presented. You can find the detailed analysis here.

GDP Growth:

Our GDP growth, which should be around 2-3% annually, has dropped to 1.1% over the past seven years, with a projected growth of only 0.7% for 2024, reflecting severe underperformance compared to expected standards. In comparison, other G7 countries have also faced challenges but have generally shown higher growth rates. For example, the U.S. is projecting 2.2% in 2024 to Canada's 0.7%. (Table A1.1 Budget Canada, BEA)

Disputing the 0.13% Claim:

The claim that removing the capital gains tax will impact only 0.13% of Canadians overlooks several key points:

Wider Economic Impact:

The removal of the capital gains tax can have broader economic consequences, including job creation and support for small businesses. Lowering or removing the capital gains tax can incentivize investments in startups and small businesses, potentially leading to job creation across various sectors.

Small Business Consequences:

Small businesses are the bedrock of our economy. If business owners can retain 16% more of their income simply by starting their business two hours from Toronto, in Buffalo, they will do that and it is already happening: The Exodus of Capital, Talent, and Entrepreneurs from Canada - Benjamin Bergen

Impact on Savings and Investments:

Many Canadians, especially those nearing retirement, rely on investments for their financial security. Higher capital gains taxes can reduce the incentive to invest, impacting retirement savings and overall financial well-being.

Given these considerations, the percentage of Canadians indirectly impacted by changes in capital gains taxes is significantly higher than the 0.13% figure often cited. When accounting for inflation, CPI, GDP growth, and broader economic factors, it is reasonable to estimate that at the minimum of at least 20-30% of Canadians will be directly or indirectly impacted by this tax increase. This includes those with investments, small business owners, entrepreneurs, and those relying on investment income for retirement.

The Middle-Class Struggle:

Consider the current middle-class reality:

Overall, the estimated annual income needed to afford a home and raise 2-3 kids across Canada ranges significantly, but a figure around $150,000 to $200,000 annually is a reasonable estimate for many regions. (Savvy New Canadians, Wealth Awesome)

Where are the policies addressing housing commodification? Where are the measures to control grocery price increases as part of the consumer price index?

These are standard policies that governments should implement to ensure prosperity for all parties involved. Without these measures, the burden on the middle class will only grow, making it harder for families to sustain their quality of life. The reality is, if current trends continue, the new middle-class threshold could soon be as high as $250,000 in some areas sooner than we think.

Call to Action:

Removing this single aspect from the budget is both reasonable, prudent, and informed. Given the current economic conditions in Canada, it's a necessary step to ensure fiscal responsibility. It's just one of many questionable allocations of spending within the Canadian government. If this change is not made, it could seriously impact the purchasing power of our dollar.

Please sign or support this petition. Our economic prosperity as a country is on the line.

Thank you,

Thomas Hulsmans
Business Owner and Canadian Entrepreneur 

 

Other Resources:
Over 84% of Canadian CEOs, Presidents, and Founders now view the United States as the best place to grow a technology company.

More than 70% of Logic subscribers have a negative view of the capital gains tax hike.

US research shows that a 5% decrease in capital gains taxes would mean over 15% more start-ups.

Entrepreneurship and risk-taking is in crisis. Today in 2024, there are nearly 100,000 fewer entrepreneurs in Canada than in 2000.

Other Resources
Sign CCI’s Open Letter to Prime Minister Trudeau and Deputy Prime Minister Freeland: ProsperityForEveryGeneration.ca
Read CCI’s Op-Ed in the National Post: Benjamin Bergen: Why would anyone invest in Canada now? https://nationalpost.com/opinion/benjamin-bergen-why-would-anyone-invest-in-canada-now