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Federal government’s capital gains tax hike is worse than you think

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From the Fraser Institute

By Jake Fuss and Grady Munro

Following the recent plunge in Canadian and U.S. stock markets, many Canadians likely saw a sharp decline in the value of their investments. Yet as Canadians reckon with this sudden change, other factors help reduce the return on their investments—namely, higher capital gains taxes.

When an investor sells a capital asset (i.e. stocks) for a higher price than they originally bought it, they realize a capital gain. Prior to this year, investors would pay tax on 50 per cent of any gain (based on their highest marginal personal income tax rate), but the Trudeau government recently increased that inclusion rate to 66.7 per cent for capital gains above $250,000.

This increase will cause economic damage and increase taxes for many middle-class Canadians—despite being framed by the government as a tax increase on the wealthy. And the effect is even more harmful than it first appears because capital gains taxes don’t adjust for inflation.

Inflation, the general rise in the prices of goods and services in the economy, erodes the purchasing power of money. For example, if a basket of goods costs $100 in Year 1, and annual inflation is 4 per cent, that exact same basket would cost $104 in Year 2. The Bank of Canada maintains a target inflation rate of 2 per cent per year, but in recent years the rate has well-exceeded that target.

From 2021 to 2023, Canada experienced an average annual inflation rate of 4.7 per cent. And though inflation is easing and fell to 2.5 per cent last month, by the end of this year prices are still expected to be 17.5 per cent higher than they were in 2020. For comparison, prices increased 6.7 per cent from 2016 to 2020.

While inflation erodes the purchasing power of one dollar, it also erodes the returns people receive from their investments. If an asset increases in value by 5 per cent over one year, but inflation is 4 per cent, the asset’s real value has increased by just 1 percentage point. In other words, of the total 5 per cent gain, 4 percentage points are the “inflationary” gain while 1 percentage point is the “real” gain.

Which takes us back to the Trudeau government’s tax hike on capital gains. Unlike income thresholds for federal personal income taxes, which are adjusted to account for inflation, capital gains taxes don’t distinguish between “inflationary” and “real” gains. Therefore, even if a realized capital gain is solely inflationary—meaning there’s no increase in real wealth—the federal government will still levy the same amount of tax as it would if there was no inflation at all.

This is what’s happening right now. After years of high inflation, inflationary gains represent a significant share of the capital gains Canadians are currently realizing. For example, from the beginning of 2020 to the end of 2023, the S&P/TSX Composite Index (Canada’s benchmark stock market index) increased 22.6 per cent. However, after adjusting for inflation (a cumulative 14.7 per cent), that 22.6 per cent represents a real gain of less than 8.0 per cent. As such, a large portion of revenue the Trudeau government expects to generate from raising capital gains taxes will originate from inflationary gains rather than actual increases in asset values.

As Canadians struggle with a weak economy, the Trudeau government’s recent capital gains tax hike will only add to the problem. But after years of high inflation, the effect is even worse than you might think.

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Companies Are Getting Back To Business And Backing Away From DEI

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From the Daily Caller News Foundation

By Devon Westhill

 

Classic American companies like John DeereHarley Davidson and Tractor Supply Co. are finally reevaluating Diversity, Equity, and Inclusion (DEI) initiatives. They are realizing that their consumers, many from rural, midwestern and working-class communities, don’t care for the DEI practices of corporate elites. They just want good service, reliable tractors and badass motorcycles.

The about-face is especially timely as the Supreme Court’s 2023 affirmative action decision prohibiting race-based college admissions has increased scrutiny of private sector DEI practices. This new legal climate, combined with the discovery of problematic DEI programs at major American companies, means that corporations are at long last feeling significant pressure to prioritize excellence and efficiency over faddish diversity metrics.

Companies operating in the free market have one purpose: to provide quality goods and services to consumers in order to make a profit. For too long, much of corporate America has focused on virtue signaling to appease the left’s cultural mandates. Now, business incentives are forcing a return to the bottom line.

The change began in June when conservative commentator Robby Starbuck took to social media to expose companies masquerading as all-American brands with traditional values. He first exposed Tractor Supply’s DEI practices and announced that he would be investigating a list of other companies considered exemplars of Americana.

In response, Tractor Supply customers began boycotting the company, resulting in an 8% decrease in its stock price (a $2.8 billion market value loss) over five days. This led Tractor Supply to announce later that month the termination of its DEI programming. The company promised to stop submitting data for the Human Rights Campaign’s Corporate Equality Index and withdrew sponsorship of LGBTQ+ pride events and voting campaigns, calling them “nonbusiness activities.”

Starbuck’s later exposure of John Deere’s DEI policies also caused the company to issue a statement announcing major cutbacks to their DEI programs. Harley DavidsonJack Daniels and Lowe’s followed suit, preemptively terminating their DEI programs and standards.

All of these companies should be commended for abandoning excessive DEI and getting back to business.

Now, instead of requiring costly, time-intensive programs to prove their liberal bona fides, they can focus on delivering results for their customers. Free from worry about optics and bureaucratic compliance, they can hire the most qualified employees and let them rise to the top.

But these decisions are not without their naysayers. DEI proponents have labeled these moves as bullying from far-right extremists and claim that terminating these policies will encourage gender and race discrimination in the workplace.

This hysteria is unwarranted and relies on the absurd claim that without DEI standards, there can be no equality, inclusion or respect in the workplace. Of course, it is crucial that businesses cultivate a culture of respect and dignity. Employees should be educated on their protections and duties regarding civil rights and basic civility in the workplace. All of the companies reversing on DEI have remained committed to fostering respectful, safe cultures for their employees.

In fact, too much corporate DEI can wreak havoc on a company’s morale. In many cases, it can result in scapegoating certain groups of people for grievous wrongs none of them had a hand in committing. It can also lead to damaging intellectual conformity and groupthink. DEI hiring quotas, in particular, can lead to serious legal risk. All of this results in the complete opposite of DEI’s purported goals. Instead, it increases workplace disunity and harms true diversity.

Ultimately, the DEI policies at these classic American companies have proven to only burden corporations, frustrate employees and confuse customers. Companies should prioritize producing better quality products, lowering prices, and offering attractive wages and benefits for all employees, instead of pouring time and money into ineffective policies that do not represent the American values of their customer base. So long, discrimination disguised as diversity.

Devon Westhill is the president and general counsel for the Center for Equal Opportunity.

 

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Pornhub hit with lawsuit over videos victimizing 12-year-old who was drugged and raped

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From LifeSiteNews

By Doug Mainwaring

There is a backlog of about five months between when a user reports a video and an authorized team leader reviews it to determine whether to remove it, allowing the video to remain available on the Pornhub site for download and redistribution for nearly a half year after the complaint was first reviewed.

A man who as a 12-year-old boy was drugged and raped in nearly two dozen videos that were uploaded to Pornhub by his victimizer for monetary gain is suing the massive online pornography leviathan for breaking child sex trafficking and RICO laws.

According to the world’s leading anti-porn activist Laila Mickelwait, “His jury trial could put Pornhub out of business.”

In recent years, scandal-plagued Pornhub — and its shadowy parent company, Mindgeek, which recently changed its name to “Aylo” to escape its “scandal-ridden smut empire” reputation — has come under fire for posting child sexual exploitation material, sexual trafficking, and assault videos and then ignoring victim’s pleas to remove the videos from their website.

The predator who admitted that in the summer of 2018 he used, induced, and enticed the young boy and another minor to engage in sexually explicit conduct for the purpose of producing video pornography is now behind bars serving a 40-year sentence for “sexual exploitation of a child, advertising child pornography, and distribution of child pornography.”

However, Mindgeek and Pornhub have yet to face their young accuser for enabling the public distribution of the videos.

According to the lawsuit, videos of the boy’s molestation “astonishingly” generated nearly 200,000 video views, and as a result of Mindgeek’s actions and/or inactions, the now-young man “has suffered incomprehensible past and present physical, emotional, and mental trauma.”

“MindGeek knows that there is a demand for CSAM (Child Sexual Abuse Material) on their sites and they cater to this demand,” according to the 78-page legal complaint filed in a U.S. District Court in Alabama where the sexual exploitation of the minors took place.

Hundreds of thousands of ‘teen’ sex video titles available

The case asserts that Mindgeek has historically sought to maximize profit, aggressively promoting child porn via titles and video descriptions that would more easily direct Google users to the exploitative videos featured on Pornhub.

“One such tag MindGeek used to classify pornographic content on its websites was ‘Teen.’ The suggested terms include ‘abused teen,’ ‘crying teen,’ ‘extra small petite teen,’ and ‘Middle School Girls,’” the legal complaint explains.

“In 2018, the word ‘teen’ was the seventh most searched term on all of Pornhub,” the complaint notes. “Other eponymous search terms, including ‘rape,’ ‘preteen,’ ‘pedophilia,’ ‘underage rape,’ and ‘extra small teens’ would call up videos depicting the same.”

The proliferation of these keywords and tags on the website ensures that when outside users Google these terms, Pornhub, or another MindGeek website, will be among the top results. This draws new users, even those searching the internet for illegal content, to MindGeek websites.

MindGeek’s aggressive data collection and traffic analytics mean that MindGeek knows exactly what users are looking for (and what exists) on their sites and that this includes sex trafficking material and CSAM.

For example, as The New York Times recently reported, as of December 4, 2020, a search for “girl under18” led to more than 100,000 videos. And a search for “14yo” led to more than 100,000 videos and “13yo” led to approximately 155,000 videos.  MindGeek sought to capitalize on such traffic by allowing illegal search terms, creating suggested search terms, keywords, and tags

Purposefully failing to censor criminal child/teen porn videos

The case notes that while Mindgeek-Pornhub does have online moderators who review complaints about videos on the site, the 10 moderators “have no prior training, medical or otherwise, to identify whether someone depicted in a pornographic video is a child” and are, by design, set up to fail at their task.

The ten individuals on the “moderation/formatting team” were each tasked by MindGeek to review approximately 800-900 pornographic videos per 8-hour shift, or about 100 videos per hour. According to Pornhub, there are approximately 18,000 videos uploaded daily, with an average length of approximately 11 minutes per video. Hence, each moderator is tasked with reviewing approximately 1,100 minutes of video each hour. This is an impossible task, and MindGeek knows that.

To compensate for and accomplish the impossible task, moderators/formatters fast-forward and skip through videos, often with the sound turned down. The problem is not resources: MindGeek’s annual revenues are at least $500 million, and it could certainly hire and train more true moderators.

One of the most disturbing assertions in the case is that “When minor victims of sex trafficking and their representatives have contacted MindGeek to remove videos of them from its websites, MindGeek has refused to do so.”

In some cases, MindGeek moderators/formatters even looked at video comments, deleted those noting a video constituted child pornography or otherwise should be removed from the system, and left the video up.

The MindGeek moderators/formatters are discouraged from removing illegal content for particularly profitable users. Generally, when an uploader has a history of highly viewed content, the employees are only permitted to send warning letters about illegal or inappropriate content.

There is a backlog of about five months between when a user reports a video and an authorized team leader reviews it to determine whether to remove it, allowing the video to remain available on the Pornhub site for download and redistribution for nearly a half year after the complaint was first reviewed.

The videos that the boy’s victimizer uploaded to Pornhub bore “disturbing titles that clearly suggested the child depicted was a minor, including but not limited to: ‘(Had sex with) my Step Nephew’; ‘Taking Teen Virginity’; ‘My sweet little nephew.’ The other 20 video titles are too crude and obscene for LifeSiteNews to cite.

Despite those titles and the content of the videos, Mindgeek “never informed the authorities about the identity of the child sexual predator, the fact he posed child sexual violence, or the fact that child sexual violence was being utilized on their platforms for profit to their mutual benefit.”

At no time did the MindGeek Defendants attempt to verify CV1’s identity or age, inquire about their status as minor children, victims of sex trafficking, or otherwise use their platform to root out the trafficking of their images. Instead, the MindGeek Defendants continued to disseminate these images around the world for profit even after law enforcement informed the MindGeek Defendants the images contained child pornography.

‘Pornhub would rather stop doing business than prevent kids from watching porn’ 

Pornhub has now ceased operations in 12 states that have begun to require age verification in order to enter the porn sites: Texas, Utah, Arkansas, Virginia, Montana, North Carolina, Mississippi, Kentucky, Indiana, Idaho, Kansas, and Nebraska.

“The world’s biggest porn site would rather stop doing business than prevent kids from watching,” conservative commentator and author Michael Knowles noted earlier this year. “Quite telling!”

“Pornhub has decided that age verification laws damage their business model to such an extent that it is better for them to simply block entire states rather than comply with (age verification laws),” LifeSiteNews columnist Jonathon Van Maren wrote in January.

Despite the legal troubles, Pornhub racked up a total of 5.49 billion visits globally in May, and with over 1.1 billion visits in the U.S. was ranked 10th nationally for online traffic. It’s not unusual for the website to reach over 10 billion total global monthly visits.

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