The idea that Canada’s economic inequality problem isn’t as bad as the U.S.’s is a “convenient fiction,” says a new report calling for a wealth tax on multi-millionaires.
Canada’s richest one per cent have seen their share of the country’s wealth grow while all other groups have seen theirs shrink, said the report from Canadians for Tax Fairness, released Thursday.
It found that the number of billionaires in Canada, and the wealth they hold, doubled between 2010 and 2019.
Citing several previously published studies, the CTF report found that Canada’s 100 richest people hold as much wealth as the 12 million poorest.
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The top one per cent have seen their share of income rise to 26 per cent, from 17.9 per cent a decade ago, while the poorest half of Canadians have seen their share of income shrink to 4.7 per cent in that time, from 5.9 per cent.
“There’s a convenient fiction perpetuated that Canada hasn’t experienced the great extreme inequalities of wealth at the top end that the United States has,” the report said.
“It’s true that our wealthiest don’t have fortunes at the same level as Jeff Bezos or Warren Buffett, but the number of Canadian billionaires has increased at a far faster rate than the number of American billionaires and their total wealth has also increased at a much faster rate.”
The report found Canada’s 44 wealthiest people, all billionaires, grew their wealth by a total of $53 billion between April and October of this year.
A fifth of that boost in wealth went into the hands of Canada’s richest family, the family of David Thomson, heirs to the Thomson Reuters media empire, who saw their estimated net worth rise by $10.4 billion in that time, to $52.5 billion.
However, the report’s estimates may be overestimating the trend a bit, as they compare billionaires’ wealth just after the major stock market crash this spring to their wealth six months later, when stock markets had recovered.
Still, there’s little doubt the world’s rich are largely better off today than before the pandemic. The Dow Jones Industrial Average stock index is about 6 per cent higher than it was a year ago, having hit record highs earlier this week, and real estate prices have soared in numerous countries, including Canada, with the strongest gains at the higher end of the market.
Digital-economy billionaires in particular have seen their wealth soar, with Amazon co-founder and CEO Jeff Bezos increasing his personal fortune by some US$100 billion this year. Bezos this year was the first person officially to reach US$200 billion in net worth.
In Canada, “billionaires have benefited from tax loopholes for the rich, corporate tax cuts, tax havens and the absence of wealth and inheritance taxes,” said Toby Sanger, an economist and director of Canadians for Tax Fairness.
“The Trudeau government now has a golden opportunity to both reduce extreme wealth inequality and generate billions in revenue to help pay for the crisis and the recovery.”
‘Taxing extreme wealth’
The report’s top priority for addressing inequality is a wealth tax, which it says could be used to fund programs for lower-income people amid the pandemic.
Given that many people at the bottom end of the income ladder are women and visible minorities, “taxing extreme wealth to fund social programs would help to reduce gender and racial inequalities,” the report said.
A wealth tax of one per cent on fortunes above $20 million, rising to 2 per cent on wealth over $100 million and 3 per cent on wealth above $1 billion, would raise some $20 billion annually, the report estimated.
That’s a larger wealth tax than the one proposed by the NDP this fall, which was a flat rate of one per cent on all fortunes over $20 million. The Parliamentary Budget Office estimated earlier this year that the NDP’s proposed tax would raise $5.6 billion.
The idea of a wealth tax is proving popular with Canadians, nearly eight in 10 of whom said in a recent poll that they would back a wealth tax of the sort proposed by the NDP this fall. Even a majority of Conservative voters said they would support the move.
The report also called for a number of other reforms to reduce economic inequality, including an inheritance tax on estates over $5 million; a temporary “excess profits” tax on those companies, like supermarket chains, that have seen profits soar in the pandemic; and reforms to stop the use of offshore tax havens by the rich.
A number of countries, including Norway, Spain and Switzerland, have some variation of a wealth tax. However, many other European countries, including France, abandoned their wealth taxes after finding them difficult to enforce. Some studies suggested they pushed wealthy people to move to other countries.