Freedom Flyer 5

Sir: It is regrettable that Leonard Shifrin, in his June 3 column deploring the effect of the recent federal budget on needy pensioners, has seen fit to make foolish and misleading statements about the capital gains tax exemption.

He asserts that the money saved by the government through partial de-indexing will be given to rich investors. But this argument is completely false: no such correlation exists. How can allowing some people to keep what is rightfully theirs be characterized as "giving" them something?

Shifrin refers to some un-named "social activist" who regards the government's action as "breathtakingly evil"; I regard his attitude as breathtakingly stupid, given our horrendous budget deficits. (By the way, in my forthcoming "collectivist glossary," the term "social activist" is defined as "one who gets his keep from the state by advocating yet another government program whose benefits accrue to those who do not pay, but not to those who do.")

Shifrin quotes figures which show that the top half per cent of income tax filers get 43 per cent of all capital gains. So what? It's their money, not his. Why not look at something much more significant, like the actual percentage of taxes paid by the rich?

Here are the figures: The top four per cent of taxpayers - those with taxable incomes of $40,000 and up - pay 29 per cent of the total income taxes paid, a ratio of one to 7.25; the top two per cent pay 18 per cent of our taxes, a ratio of one to nine. Extrapolating those figures to the top half per cent would give us a ratio of about one to 12. In other words, the rich are paying their fair share.

Abolition of the capital gains tax simply allows people to keep what they have earned by wise and prudent investment. Theirs was the risk; theirs is the reward. The Carter commission was wrong; a buck is not a buck. The dollar earning interest in a bank account is relatively safe; the dollar invested in volatile equity markets is not. Yet it is this last named dollar which, when invested in companies that are perceived to have the potential for growth, allows such companies to expand, thus creating jobs and mitigating poverty.

The average Canadian, if he would just take off his blinders, could use the capital gains tax exemption as the cornerstone of an investment program which could provide him with a substantial retirement income and free him from money worries in his golden years. Contrary to Shifrin's view, this exemption is available to all, not just to the rich. We could have a whole generation of future senior citizens who wouldn't care one whit if governments chose to completely de-index or even reduce their pensions.

Speaking as a senior citizen myself, and who should put his money where his mouth is, let me affirm my full support for both the application and principle of deindexing. Indexing, as a June 1 Free Press editorial pointed out, is no solution.