New data on tax expenditures released by the federal Department of Finance on April 16 show that one of Canada's most generous tax breaks for the very affluent continues to swallow more and more tax revenues and to increase the income gap between the top 1% and the rest of us.Income from capital gains, usually made as profits from the sale of financial assets such as stocks and bonds as well as non-owner occupied real estate, is not treated in the same way for personal income tax purposes as income from employment. While 100% of wages is included in taxable income, just one half of capital gains income are taxable.The cost to the federal government of this special tax break is significant, almost $6 billion ($5.95 billion) in 2016 according to the Department of Finance. Provincial government revenues are also reduced.The cost of the capital gains partial exclusion to the federal government is now projected to be $6.9 billion for the 2017 tax year, up from the $6.0 billion projected by the Department of Finance just last year in the 2017 tax expenditure report. The lost revenue is growing rapidly and is now forecast to reach $7.1 billion in the 2018 tax year.The lion's share of the very large and growing benefit of the capital gains tax break goes to the very rich. This is hardly surprising since the great majority of ordinary Canadians earn little or no capital gains income outside of tax sheltered employer pension plans, RRSPs and Tax Free Saving Accounts.A research paper published in the Canadian Tax Journal in 2015, “Top-End Progressivity and Federal Tax Preferences in Canada,” by Brian Murphy of Statistics Canada with Michael Veall of McMaster University and former Assistant Chief Statistician Michael Wolfson found that the top one percent of individual taxpayers making more than about $200,000 per year receive almost all (87%) of the benefit of the capital gains tax break.This tax break is big enough to help explain the growing after tax income gap between the top 1% and middle-class Canadians. The rate of return on financial assets held by the very affluent has generally grown faster than the wages of the ordinary family.The case for taxing income from investments on the same basis as employment income on the grounds that “a buck is a buck” dates back to the Carter Commission of the 1960s. The capital gains inclusion rate was set at 75% after the Commission reported, but it was cut to 50% by then Minister of Finance Paul Martin in the 2000 Budget.In their 2015 election platform, the federal Liberals promised to “conduct a review of all tax expenditures to target loopholes that particularly benefit the top one percent.” They saw tax breaks as a significant source of the growing inequality problem, and specifically promised changes to the highly beneficial tax treatment of stock options which are treated as if they are capital gains and are mainly issued to senior corporate executives.But there has been no open, public review of tax breaks for the very affluent, and no action other than some modest changes to the taxation of investment income held in private corporations. Indeed, Minister Morneau has recently become much more concerned about tax competitiveness than tax fairness.This is unfortunate. Progressive tax reforms could help close the growing gap between rich and poor, and raise the revenues we need to pay for needed public services and social programs, not least the expansion of public health care to include prescription drugs and a national child care program.Hopefully, the new data will prompt some re-thinking in Ottawa.Andrew Jackson is Adjunct Research Professor in the Institute of Political Economy at Carleton University and Senior Policy Advisor to the Broadbent Institute (www.BroadbentInstitute.ca)