Author: Jack M. Mintz, Senior Fellow, C.D. Howe Institute

"Based on a conservative assumption 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 in the long run with most of the adjustment in five years. Employment would permanently decline by 414,000 over the same period. To put this in terms of its impact on unemployment, the capital gains tax hike would increase unemployment from 1.5 million to 1.9 million Canadian workers (based on employment  data for November 2024). GDP will fall by almost $90 billion and real per capita GDP by 3 percent. 

Clearly, the impact of the capital gains tax hike is substantial and another hit on Canada's productivity and economic growth on top of other tax increases and, more important, regulatory obstacles to investment." (see footnotes in link)

Full article may be found at:

https://www.cdhowe.org/wp-content/uploads/2025/01/Final-final-E-Brief_365.pdf