Should Canadian Millionaires Pay More Taxes?
Tim Hortons co-founder Ron Joyce, listed among the wealthiest of Canadians, says he wouldn't favour a so-called "Buffett tax" on the very rich, believing he already gives enough money to the government.
"I don't think it's fair that they should pick on a segment of our population that is one of the heavier taxpayers," Joyce told CBC News.
"I know I pay a lot of taxes. You know, I started with nothing and I've paid my fair share," said Joyce, who, according to Canadian Business magazine, has an estimated net worth of $1.15 billion and ranks 55th on its list of richest Canadians.
The idea to impose higher taxes on the very rich gained steam a few months ago when American billionaire investor Warren Buffett wrote a piece in the New York Times, complaining that his "mega-rich" friends had been coddled for too long and needed to pay more taxes.
U.S. President Barack Obama also took up the call, proposing a so-called "Buffett Rule." While vague, the plan would mean that no household making more than $1 million annually should pay a smaller share of its income in taxes than middle-class families pay. Democrats, however, recently backed away from their demand for higher taxes on millionaires.
In Canada, the idea seems to be gaining a little traction. NDP leadership candidate Brian Topp recently told The Canadian Press he wants his party to make higher income taxes for high-income earners a key plank in its next election campaign platform.
Topp's proposals include taxing individual incomes of more than $250,000 at 35 per cent, a six per cent hike on the current rate.
"More and more income and wealth has been concentrated in the hands of the wealthiest Canadians," Topp said. "Most middle and working families have not enjoyed a real increase in their income in many years. Income inequality is now as bad as it was in the late 1920s."
Already paying 'a significant amount'
Some, like Joyce, however, argue that the very rich already pay their fair share.
"At the year end, I end up paying a significant amount of money," Joyce said. "I think the richest guy in the world is speaking for himself and God bless him, if he wants to give more, then why doesn't he do it?"
Canadian billionaire Seymour Schulich, an investor and noted philanthropist, told CBC News that he also doesn't agree with a higher tax and believes the wealthiest Canadians are already taxed more than their American counterparts at the upper brackets.
While the federal tax for the highest bracket is actually higher in the U.S., provincial taxes are often higher than U.S. state taxes.
"There's two ways to go to balance the budget. One is to get more revenue and the other is to cut your expenses. You're not going to get that much taxing the rich people," said Schulich, who is estimated to have a net worth of $1.75 billion and ranks 31st on the list of richest Canadians.
"If you get too crazy — I'm not going to move at my age … but the younger guys can move. You're going to lose a lot of good people. You get what happened in Europe. You get all your rich people who are migrating. Meanwhile, rich people are generating most of the jobs."
Buffett's column generated some backlash, particularly from those who pointed to statistics suggesting that very rich Americans actually pay a higher share of federal income tax.
Figures by the non-partisan Washington, D.C.-based Tax Policy Center seemed to back that up. The centre said that the top one per cent of income earners — those making more than $500,000 a year — pay about one-third of all federal income taxes but only have one-sixth of the total income.
Higher proportion of earned income
The top one-10th of one per cent, meaning those who are earning more than $2.1 million, pay 17 per cent of all federal income tax but only have seven per cent of the total income.
According to 2009 figures from the Canadian Taxpayers Federation, the wealthiest Canadians are also paying a higher proportion of earned income.
For example, Canadians earning more than $250,000, or roughly the top 0.7 per cent of income earners, received nearly 10 per cent of all dollars but paid almost 20 per cent of all income taxes.
Those in the $150,000-to-$250,000 group, about 1.4 per cent of the population, earned around 6.2 per cent of total income but paid more than 12 per cent of taxes.
However, those in the lowest income brackets, representing a little more than half of all Canadian tax filers, earned almost 18 per cent of all income but paid four per cent of all taxes.
"Guys like Brian Topp don't know how much [the wealthy] pay in taxes already. It's an easy target," said Scott Hennig, Alberta director of the Canadian Taxpayers Federation.
But Armine Yalnizyan, a senior economist at the Canadian Centre for Policy Alternatives, says wealthier Canadians should be taxed more, noting that according to data, Canadian millionaires are paying tax rates equivalent to those in the 1920s.
"We have room for the rich to be taxed a little bit more," she said, adding that there are 17,000 millionaires in Canada.
'A BuffettTax for Canada?'
In a recent column for Canadian Business titled "A Buffett Tax for Canada?," Yalnizyan argued that a new 32 per cent tax bracket for incomes of more than $250,000, an increase of three per cent on the current top rate, would raise $2 billion.
That same three per cent increase on Canadians in the lowest tax bracket would only generate $154 million, she wrote.
And a 35 per cent tax bracket for Canadians whose income is higher than $750,000 would yield $1.2 billion, she wrote.
"You wouldn’t get a huge amount by taxing them at a higher rate but you'd get something," said Yalnizyan.
"All of that can help reduce the deficit, repair infrastructure, clean water, building new roads, health and education."
Yalnizyan rejected the notion that raising taxes on the very wealthy is akin to punishing the rich.
"And who should be punished? This is not a punishment. This is a contribution to keeping the economy going."
PRODUCTS AND SERVICES FOR THE SUPER RICH