It’s too bad that the Conservatives continue to remain largely silent on the critical issue of repealing Justin’s capital gains tax hikes. The impact is far from trivial.
Based on conventional assumptions that an increase in the tax-inclusive cost of capital by 10 percent causes the capital stock to fall by 7 percent, I estimate that Canada’s capital stock would fall by $127 billion. Employment would permanently decline by 414,000. To put this in terms of its impact on unemployment, the capital gains tax hike would increase unemployment from 1.5 to 1.9 million Canadian workers as of August 2024. GDP will fall by almost $90 billion and real per capita GDP by 3 percent.