Wealth Tax Can Foster Equality and Help Meet Human Needs

Wealth Tax Can Foster Equality and Help Meet Human Needs

Rising inequality has caused many people to demand a hefty tax on big wealth. According to a June 2020 report by the federal Parliamentary Budget Office, the top 1 per cent collectively own about a quarter of Canada’s total wealth, $2.6 trillion. In 2018, 87 families alone had a combined net worth of $259 billion, equal to 15% of the country’s entire GDP for that year. Meanwhile, over five million people in Canada then lived below the poverty line.

The Canadian Centre for Policy Alternatives (CCPA) states that, “61 Canadian billionaires alone now control $324 billion in wealth. Some of the same super-rich benefited as owners of large corporations amid ballooning corporate profits, which rolled in even as inflation rose rapidly and Canadians struggled with an escalating cost of living.” With current inflation, more than half of Canadians worry about their ability to cover basic living expenses. Greater inequality in developed countries is associated with higher rates of stress and mental illness, addiction, school bullying, and crime rates.

Almost 90 per cent of Canadians, including 84 per cent of those who identify as Conservative, asked government to enact a well-planned set of wealth taxes. Those polled stated that this would help with economic recovery following the pandemic. Further, 92% of Canadians surveyed are in support of closing tax loopholes. This will stop the off-shore hoarding of corporate wealth and increase government revenue.

Wealth taxes only affect the super-rich, those with over $10 million in assets. Other taxation policies, such as an inheritance tax, excess profits tax, corporate tax reform and a luxury tax are part of a suite of tax changes that encompass the term “wealth taxes.” One of the most important of these is change to the capital gains inclusion rate and closing the tax loopholes, which will stop corporate hoarding of income, offshore, to avoid taxation. None of these changes would affect middle income earners; only the extremely wealthy would now be required to pay their fair share.

In November 2020, federal NDP leader Jagmeet Singh introduced an opposition day motion to implement a one per cent tax on wealth over $20 million and an excess-profits tax on “big corporations profiteering from the pandemic.” It was defeated 292-27, with the Liberals, Bloc Québécois, and Conservatives voting against the motion. This shows how capitalist politicians are not heeding the electorate.

An emergency, one-time tax on the profiteering super rich was suggested in February 2021 by MP Nathaniel Erskine-Smith. The PBO estimated that the proposed tax of 3% on net wealth over $10 million and 5% on net wealth over $20 million would bring in $44 to $50 Billion dollars revenue. The CCPA estimated higher revenue, since research does not support the PBO’s estimate of the high amount of tax evasion.

Then, in August 2021, Prime Minister Justin Trudeau called a snap election, rather than debate the suggested pandemic recovery plans. These plans included a suite of Wealth Taxes and a Basic Income, to be modeled after CERB benefits, rather than an extension of social assistance. The tax revenue would be more than enough to pay for Basic Income, improve our healthcare system, and allow for higher wages for public workers in fields such as education.

Many wonder whether extremely wealthy people would simply leave the country, rather than pay higher taxes. Research shows that a steep “exit tax” of 40% of assets would deter that type of tax evasion. Key design features are essential, such as taxes applying equally to all types of assets to avoid shifting assets to exempt classes. Frequent audits would be possible, with the small billionaire class being targeted with wealth taxes.

It is predictable that radical change to the tax system would be vigorously resisted by the rich and powerful, up to and including ruthless efforts to de-stabilize and remove a democratically elected administration. This points to the need for a class struggle strategy aimed at establishing a Workers’ Government. The latter would mobilize the working class and its allies to replace the capitalist system of domination with a vibrant cooperative commonwealth and a mindful Eco-socialist democracy.