The middle class, these new “ultra-rich”.

Many of us are about to discover that we're richer than we think, at least according to the IRS.

The way the Trudeau government is talking about its capital gains tax increase could suggest it will only make an impact 0.13% One of the richest taxpayers in the country.

Unless you own your own plane, no worries, right?

However, since the changes were proposed, a slew of newspaper articles have discussed how ordinary Canadians are affected, even though their incomes are well below average. $203,100 Which Ottawa's elected officials will get this year.

Once

Among those affected is Liz Diachon, a 93-year-old grandmother from Ontario, who donated part of her farm to her daughter and grandson. For her donation, she received an invoice for $40,000 From the Canada Revenue Agency.

There are also people like Roche and Rose, a Montrealer who saved to buy a duplex in the 1990s and was counting on selling it to fund their retirement. Together, they earn about $60,000 a year.

Although only a small percentage of Canadians report high capital gains income in a given year, most of those who do report it only once in their lifetime, when they sell an asset such as a duplex, a chalet, or a small business.

The best way to understand this is to look at how their tax returns have changed over time. This is what Statistics Canada's Longitudinal Administrative Data Bank does.

in 2011, 25,100 Canadians reported capital gains income of $250,000 or more on their tax forms. Nearly two-thirds of them did not make such capital gains again during the following decade. Only 15% of them saw such gains again during this period.

In fact, less than 1% of all Canadians who reported such large capital gains in 2011 reported similar gains every year over the next decade.

problem

That's why, when the Trudeau government says the capital gains tax increase only affects 40,000 taxpayers, it doesn't tell the whole story. Although it may affect a limited number of people in a given year, the people affected are different each year.

During their lifetime, it is likely that 1.26 million of Canadians will be directly affected by the Trudeau government's capital gains tax increase, according to calculations by economist Jack Mintz, a President's Fellow at the University of Calgary's School of Public Policy.

To put this number in perspective, the number of Canadians currently living in an entire province is approximately the same SaskatchewanYou will receive a higher tax bill because of this change. This is much more than the 0.13% of taxpayers offered by the Trudeau government.

Here's the problem with Ottawa's attempts to make the rich pay: the tax collector tends to think you're richer than you think.

Photo courtesy of Emanuel B. Faubert.

Emmanuelle B. Faubert, Economist, Montreal Economic Institute