07/31/2018 10:03 EDT | Updated 08/01/2018 11:24 EDT

Canada's Richest Families Have As Much Wealth As 12 Million People

A lack of inheritance tax is partly to blame, the Canadian Centre for Policy Alternatives argues.

Mark Blinch / Reuters
Galen G. Weston stands with his father W. Galen Weston, left, after the Loblaw annual general meeting for shareholders in Toronto, May 5, 2010. The Weston family is the second-wealthiest family in Canada.

Canada's richest families collectively own the same amount as nearly a third of the country, and a new report points to a couple of reasons why.

According to an analysis from the Canadian Centre for Policy Alternatives, Canada's 87 wealthiest families have a combined net worth of $259 billion, meaning on average they have 4,448 times more wealth than the average family. The report analyzed data from Canadian Business magazine and StatCan's survey of financial security.

The $259-billion amount is also nearly what everyone in three provinces— Newfoundland and Labrador, P.E.I., and New Brunswick — collectively own ($269 billion), and is the same as what Canada's 12 million lowest earners have, combined.

Family money matters

The report points to a few reasons why Canada's wealthiest have so much in properties, cars, investments, pensions, and cold, hard cash. One is that many members of these families are some of Canada's highest-paid CEOs.

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David Thomson, chairman of Thomson Reuters and of The Woodbridge Company Limited, speaks during a photography seminar on Dec. 5, 2016 in New York City. The Thomson family is the wealthiest family in Canada.

But the amount of money children inherit from their parents also widens the income gap. The report found inheritance to be a more important factor of overall family wealth today than it was almost 20 years ago. In 1999, 46 of the wealthiest 87 families didn't inherit their money. But in 2016, that number dropped to 39 families, meaning more than half of them were born into their wealth.

Canada is also the only G7 country without an inheritance, estate, or gift tax, which the report argues is worsening inequality. It calls for an inheritance tax of 45 per cent on estates valued over $5 million, which would generate $2 billion in revenue for the federal government.

Property tax hikes would only hurt the middle class

The report argues that Canada's tax system heavily favours income obtained from wealth over income earned through labour. Capital gains are taxed at half the rate of ordinary income, and income from dividends paid by Canadian corporations to shareholders qualifies for tax credits.

In other words, if you have enough money to put some into investments like stocks and bonds, you'll pay less tax on what you earn when you sell those investments than what you would if you made that money by working.

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And despite the rise of real estate investors and speculators in Canada's most expensive housing markets, the report argues against targeting property taxes — at least, in a "non-progressive way."

For middle-class Canadians, a higher proportion of wealth is tied up in real estate — 49 per cent, compared to 19 per cent for the wealthiest 87 families.