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A contractor looked at my deck a few years ago and found rotting boards underneath. His fix: sand it down, apply filler and add a coat of paint. Cheap and fast, so I agreed.
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Recently, a second contractor pulled back the paint and showed me decay that had spread well past cosmetic repair; the whole structure was now at risk. I was frustrated and embarrassed with myself. I had the chance to do it right the first time, but instead paid for something that wasn’t.
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That story keeps coming to mind, because it describes how Canada tends to approach tax policy.
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The Department of Finance has run a string of stakeholder meetings and consultations over the summer ahead of the next budget, with a public portal for submissions closing Tuesday. The government’s language frames the coming budget around growth, trade diversification, investment, competition and what it calls economic sovereignty. Read between the lines: Finance wants big ideas, and it wants them to sound bold.
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My concern is what “bold” ends up meaning. There’s a real difference between genuine, structural tax reform and a grab bag of politically appealing measures dressed up in reform language. The former requires confronting the whole system at once. The latter photographs well.
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One approach I’d hate to see imported are populist, high-optic tax measures. For example, California’s billionaire tax initiative — a one-time five per cent levy on residents worth more than US$1 billion — is now officially certified for the Nov. 3 ballot after signature verification cleared the required threshold.
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Other states also have populist tax amendments in various stages.
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- Carney’s next budget has to offer real changes, not just paint over the economic cracks
- It’s time for Canadian income tax rates to match those of the U.S.
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Washington’s capital gains tax — the one that reportedly helped push Jeff Bezos to Florida a few years ago — already carries a 2.9 per cent surtax on gains over US$1 million (9.9 per cent combined). It has now gone even further: in March, it signed into law a new 9.9 per cent tax on all income of more than US$1 million — effective for 2028 — which is notable given the state didn’t have a broad-based income tax at all before this year.
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Maryland has already layered on new top brackets and a two per cent capital gains surtax on income over $350,000, while Illinois, Virginia and Minnesota have further copycat proposals stalled at various legislative stages, from committee hearings to bills awaiting a floor vote.
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The instinct behind all these proposals is a sand-and-paint tax policy: satisfying in the moment, rot and hollow underneath.
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Even the jurisdiction that pushed furthest is now retreating. Since the Dutch parliament’s lower house passed a 36 per cent tax on unrealized gains on certain property, a newly formed coalition government has moved to scrap that component entirely and revert to taxing gains only when realized, before the measure even takes effect, though the governing parties remain divided on the timeline. That tells you something about the durability of the idea.