Wealth Tax: A Plan to End Income Inequality in Canada
A wealth tax must be part of any plan to end income inequality in Canada, writes Alex Cosh (aBC-based journalist), for Canadian Dimension. Cosh also maintains that the plan to finance a bold social agenda through higher taxes on the wealthy is supported by most working Canadians.
Just in case you are wondering what it is, a wealth tax would require the country's richest households, to pay an annual tax on the assets they hold, which may include property, business interests, investments, yachts, fine art and other possessions.
A majority of taxpayers are used to paying taxes on income, such as wages, each year. However, a wealth tax would target assets, irrespective of whether they're sold, traded or earn a dividend. “Wealth, in other words, is what you'd have if you could sell everything you own right now,” says Harlan Levinson, a certified public accountant based in Beverly Hills, California quoted on US News.
Affluent individuals can easily be categorized into two groups. First, there are people, such as celebrities and footballers, who earn a high income but have minimal wealth. On the other hand, there areindividuals with immense wealth who earn very little income. A great example is Jeff Bezos, who is reported to earn a salary of less than $100,000 annually, yethasassets surpassing $100 billion.
The idea of taxing the wealthy was recently popularized by two U.S senators, Sen. Elizabeth who proposes to tax assets of $50 million or more at 2% and assets of $1 billion or more at 3% and Sen. Bernie Sanders who would like to tax 1% of wealth of more than $32 million for married couples, then increase the tax to 2% for wealth between $50 million and $250 million and continue to increase incrementally before topping out at 8% for wealth of more than $10 billion.
Advocates of a wealth tax say that taxing the wealthy would be the perfect way to reduce economic inequality, address the climate crisis and boost the economy. As a matter of fact, U.S News reports that a group of very wealthy Americans wrote an open letter asking to be taxed on their wealth to strengthen the U.S. economy.
In Canada, the federal NDP, in its 2019 election manifesto, says it wants to introduce the idea of taxing the wealthy in the country. The party, proposed a 1% levy on wealth over $20 million while increasing the capital gains inclusion rate to 75%. The NDP estimates, that these measures would generate $3 billion per year in revenue for important social projects.
Expectedly, this plan has brought along with it, mixed reactions from citizens. Among the ordinary citizens and lower-income earners of Canada, wealth tax seems to be a welcome idea. Canadian Dimension cites an Abacus Data poll commissioned by the left-leaning advocacy group North99, where 67% of respondents said they supported or somewhat supported the proposal.
However, Canada’s wealthy elites and their supporters in corporate media have publicly opposed the NDP’s proposal. Right-wing columnist Matthew Lau, quoted on CD, called the tax “class warfare” and labelled the plan a “sea of economic absurdities and expensive promises.”