Capital gains are taxed more, and these economists say that's a good thing

The Liberal government plans to change the way capital gains are taxed in Canada, which will affect corporations and the country's wealthiest individuals.

The federal budget tabled on Tuesday proposes to tax capital gains on two-thirds rather than half – the same applies to gains from the sale of assets.

The increase, known as the incorporation rate, applies to capital gains over $250,000 for individuals and all capital gains made by corporations.

Business groups are not happy with the changes, which they argue will ultimately hurt productivity if companies pay more taxes.

But Trevor Tombe, an economics professor at the University of Calgary, is one of several experts who point out that the changes could help productivity by taxing capital gains in line with other taxation, such as dividends.

Michael Smart, a tax policy expert and economics professor at the University of Toronto, said the changes would level the playing field and encourage businesses to make the best investment decisions, not the most tax-efficient ones.