Yes but why is the Canadian approach more fair than the US approach?

In the Canadian approach, as I understand it, all capital gains taxes are assessed upon disposition; including disposition at death.

In the US approach, capital gains disposed at death avoid capital gains taxes.

Here are two similar scenarios where the difference in actions is small, but the difference in net estate distributed to heirs is large.

Both scenarios: Parent P buys (split adjusted) 100,000 shares AMZN on Jan 3, 2000 at close for $4.47. Parent P has no other assets.

Scenario 1: Parent P sells March 9, 2026 at close for $213.49 per share; realizing $209.02 in capital gains per share, ~ $20.9M capital gains, $21.4M proceeds. Parent P dies March 10, 2026. If cap gains tax is 20% uniformly (which it isn't), ~ $4.2M goes to income tax, the estate at time of death is $17.2M. If estate tax is uniformly 40% of amounts over $15M (which it isn't), the estate tax is about ~ $0.9M, and the net estate is $16.3M

Scenario 2: Parent P dies March 10, 2026, without selling. The estate promptly sells at close for $214.33. $21.4M proceeds, ~ $20.9M capital gains, but no capital gains tax is due. Again assuming 40% estate tax over $15M, estate tax is $2.6M and the net estate is $18.8M

How is it fair for the heirs of Parent P in scenario 2 to get so much more than in scenario 1 when the circumstances are so similar?

If you use actual tax brackets, you could make the example numbers more accurate, but I don't think it will change the results significantly.

▲

fer 2 hours ago | parent | prev [-]

Because wealthy people can perform buy borrow die and poor people can't, artificially amplifying generational wealth differences.

▲

twoodfin 2 hours ago | parent [-]

You don’t have to be wealthy:

Homes get a step up basis on inheritance like any other capital asset, and home equity loans are quite popular.

Less common but not obscure financial options include borrowing against your 401(k) or other equities.

▲

fer 2 hours ago | parent | next [-]

Talking about homes: if a wealthy person see a depreciation of the equity they have a parachute (more homes, stocks, etc), if middle class sees a depreciation of the equity they're on the street. The risk profile is absolutely not the same.

▲

Groxx 2 hours ago | parent | prev [-]

401k and home ownership count as "wealthy" in many circles. It's not "I can do whatever I want any time" wealth, but it does still mean "this is not an option for people who likely need it the most" which is the real issue.

	▲	twoodfin 2 hours ago \| parent [-]
		How are income taxes a serious burden on “people who likely need it the most”? Those who truly need it the most are typically well into the plus column on government transfer payments: On net, the government is paying them far more than they’re paying it.