THIS [PAST} WEEK, as government leaders, business executives, and heads of state gathered in Davos at the annual World Economic Forum meeting to discuss what they view as the most pressing issues facing our world. But perhaps the most pressing issue, extreme wealth inequality, was completely off the agenda.
Participants discussed many of the symptoms of this extreme inequality — a damaged climate, crisis of sovereignty and democracy, skyrocketing costs of living — but tactfully ignored a tax system that funnels wealth and power towards the very people at the exclusive Swiss ski resort.
As Dutch author and historian Rutger Bregman said at the conference seven years ago, “I hear people talking the language of participation and justice and equality and transparency, but then almost no one raises the real issue of tax avoidance and the rich just not paying their fair share. I mean, it feels like I’m at a firefighters’ conference and no one is allowed to speak about water.”
He has not been invited back.
The good news is that not all of the world’s richest are willing to ignore the problem. In fact, according to new polling, most of the wealthy people around the world want their governments to do more to address extreme wealth inequality and tax the rich.
This week, an open letter entitled Time to Win was released. It was signed by nearly 400 millionaires and billionaires (the list has continued to grow since its public release) in over 20 countries, including 25 Canadians. It demands that government leaders at Davos take decisive political action on wealth inequality.
The letter is accompanied by a new poll of 3,900 millionaires and billionaires (defined as those with over $1 million in assets excluding their home) across all of the G20 countries, showing that the signers of the letter are certainly in the majority. The poll shows broad support among the wealthy for increased government action to tackle extreme wealth and tax increases on the wealthy (including wealth taxes). It also shows the majority believe that wealth inequality is harmful to democracy, a fair and factual media, social trust, and a decent standard of living for the non-rich.
Inequality in Canada has gone beyond crisis levels. The top one per cent of households in Canada hold 24.1 per cent of Canada’s total wealth, and the concentration gets worse the further we move up the scale. Nearly half of that wealth is held by just the top 0.1 per cent, who are worth at least $36.5 million. The top 0.01 per cent, just 1,800 families, hold 5.7 per cent of the country’s total wealth, while the over seven million families who make up the poorest 40 per cent of the country have just 3.3 per cent of total wealth.
No one builds wealth alone. Those who have benefitted the most from our public services like infrastructure, education, and healthcare, are not being made to reinvest in those services through our tax code. This is not simply a matter of fairness—deeply unequal economies are not sustainable. If consumer bases and workforces are degraded and the public services they rely on are diminished, our consumer driven economy cannot thrive. It also makes our country a place no one wants to invest, start a business, or raise a family.
So it should come as no surprise that the 199 Canadian millionaires surveyed had similar attitudes to their G20 peers:
- 62 per cent believe political leaders should do more to tackle extreme wealth inequality
- 65 per cent believe that the government should raise taxes on the very wealthy to reduce inequality, fund improved public services, and address the cost of living crisis.
- 71 per cent believe extreme wealth concentration is a threat to democracy.
The survey also showed the majority of respondents were concerned that extreme wealth was buying political influence, and disproportionately influencing public opinion through control of traditional and social media.
So what policies should a truly representative government pursue? It would start by not valuing wealth and assets over work and income, and would crack down on tax evasion and avoidance.
One of the biggest giveaways to the super rich in our tax code is the preferential treatment of capital gains, and our complete inability to tax wealth. Most wealthy people do not make their money in a bi-weekly paycheck. Instead, they buy and sell assets, and take capital gains. While all of the income most Canadians make from their paycheque are subject to taxes, only 50 per cent of capital gains are. Canada needs to reform the taxation of capital gains to reflect the obvious fact that money is money, and making it by already having it is not more valuable than working for a living.
Many of the super-rich also simply borrow against the assets, using extremely low interest personal loans specially designed for them, and declare no income, allowing them to put off paying any tax bill indefinitely. That’s why we also need to implement a wealth tax. Revenue estimates on G7 countries compiled by Patriotic Millionaires Canada and the EU Tax Observatory (cited in USD for currency consistency), showed that Canada could raise $18.1 billion annually (roughly $25 billion CAD) with a three per cent tax on wealth over $100 million USD (roughly $138 million CAD). For reference, you need around $175 million CAD to be in the top 0.01 per cent of Canadian households.
One of the simplest solutions is to crack down on those who, despite all of their advantages, are still deciding to cheat the system. According to research done in 2021 by the Parliamentary Budget Officer, a 5 year $606 million investment in enforcement, focused on hiring specialized auditors for high-net-worth Canadians hiding wealth offshore, would bring in around $1.4 billion in revenue, while also helping combat money laundering and terrorist financing.
That we have support of the public (even the wealthiest among them) is clear. What we now need is political leadership that recognizes the threat of extreme wealth inequality, and has the political courage to pursue the obvious solutions.
Dylan Dusseault is the executive director of Patriotic Millionaires Canada. This article was originally published by the Canadian Centre for Policy Alternatives and is reprinted under the Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 Unported license. Title image: Evangeline Shaw on Unsplash.
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