Capital gains tax hike could reduce “extreme” wealth gap in Canada, report says

    1 of 1 2 of 1

      If you think income inequality is bad in Canada, hold on to your wallet.

      According to a new report from the Canadian Centre for Policy Alternatives, wealth inequality is even more "extreme" in this country.

      "For instance, many gasp at the fact that Canada’s richest 20% of families take almost 50% of all income. But when it comes to wealth, almost 70% of all Canadian wealth belongs to Canada’s wealthiest 20%. Move higher up the income spectrum and the wealth gap is even greater," CCPA senior economist David Macdonald writes in Outrageous Fortune: Documenting Canada’s Wealth Gap.

      Released today (April 3), the report shows that 66 percent of the new wealth created in Canada between 1999 and 2012 went to the wealthiest 20 percent of families.

      The upper middle class took 23 percent of new wealth. Collectively, the middle class, lower middle class, and poor received the remaining 10 percent.

      It turns out that the richest 86 Canadian residents, while representing only 0.002 percent of the population, hold $178 billion in net worth (up from almost $120 billion in 1999). That's equivalent to the wealth shared by the poorest 11.4 million Canadians, or 34 percent of the population.

      Members of this elite group include the Thomson family, Galen Weston, Jimmy Pattison, Chip Wilson, Brandt Louie, Heather Reisman and Gerry Schwartz, Eric Sprott, and Pierre Karl and Erik Péladeau. The report notes that their wealth doesn't come from large CEO paycheques but from assets.

      "The Wealthy 86 have enough money to buy absolutely everything in private hands in the entire province of New Brunswick, with a few billion to spare," the report states.

      In Canada, municipal property taxes are among the only taxes that apply directly to wealth or capital.

      The report asserts that one of the "largest legal loopholes for the wealthy in Canada" is found in the taxation of capital gains. That's because only 50 percent of capital gains are taxed as income.

      "Canada’s rate is presently not as high as France or Germany, but it is higher than countries like Austria that have no tax at all on capital gains. Canada also does not levy differential rates on short term speculation vs. longer term investing," Outrageous Fortune states.

      "A combination of a higher inclusion rate and higher income taxes at the top of the income scale could go part way to offset the flood of wealth that is accumulating in the pockets of Canada’s wealthiest and ensure some of those benefits are returned to the majority of Canadians."

      Comments

      19 Comments

      AJ

      Apr 3, 2014 at 3:26pm

      What a surprise!! The rich get richer and the middle class or poor stay middle class or poor. Gotta luv our country! lol. Hey Rich people, when shit hits the fan and if there's ever a NWO, guess who the people are going to target first :)
      Now that will be fun!

      MarkFornataro

      Apr 3, 2014 at 4:04pm

      There is this wealth gap which works hand in glove with the gap between the laws that enable this reality and what is morally right. The Wall Streeters get off virtually unscathed for their financial crashes while if a poor mother needs to steal some bread for her child you can be sure she will be prosecuted.
      http://nader.org/2014/03/14/destructive-wall-street-owes-young-americans/

      jack ellefson

      Apr 3, 2014 at 4:10pm

      Remember that 80% of the personal income taxes in Canada are paid for by the wealthy 20% of income earners.
      We need more rich not less which capital gains would impact to some extent.

      Bruce

      Apr 3, 2014 at 5:00pm

      The tax system is set up to make it easier for people who understand it, and have enough money to move it around, to get many more breaks than people who just earn a living and spend it each year. Tax Free Savings Accounts are designed to make it easier for wealthy people to avoid tax. Same for dividend tax credits, that give you money back for accepting dividends on Canadian shares. Dropping the GST and now income splitting are other ways for the Harper government to give more money to the rich.

      edge

      Apr 3, 2014 at 5:11pm

      "Capital gains tax hike could reduce “extreme” wealth gap in Canada"

      And that is why The Harper Government™ will never hear of it.

      eddieo

      Apr 3, 2014 at 5:18pm

      @jack ellefson;

      The reality is - and it has been seen since AT LEAST Ancient Rome - is that the more disparity there is in a given society, the worse the overall economy functions.

      A fair taxation scheme should redistribute wealth as it creates more wealth for all - including the rich. One can simply look at the tax regimes of various states down South and see that the fairest regimes - Minnesota for example - have the fewest blips in there local economies, have lower crime rates and better overall health; thus reduced costs.

      On the other hand, there are the red states (Republican run) that suck money out of the federal government, have pathetic employment rates and are in a downward spiral. Yet, the ignorant keep voting for policies that harm them because they are thrown a bone of homophobia or abortion debate from time to time).

      After all, one can only take advantage of the rising tide if one has a boat.

      Time Agora

      Apr 3, 2014 at 6:45pm

      While there might be a problem, taxation isn't the answer. Government people are already richer than most and would only hike their own salaries with the tax money. No or little benefit would be seen beyond the already very high gov't paycheques.

      I think a better approach would be to craft the economic system here so that those wealthy people are encouraged to spend heavily into the Canadian economy. This would benefit the whole nation and promote a country wide increase in prosperity.

      Two separate issues

      Apr 3, 2014 at 7:49pm

      Time Agora, if you disagree with higher government salaries then oppose that when the time comes. It doesn't make sense to be opposed to a completely unrelated policy (increasing the capital gains tax), simply because you're afraid it'll magically lead to increased government salaries. They're two separate issues.

      As for your second paragraph, any specific ideas for how to do that?

      Lance

      Apr 3, 2014 at 8:46pm

      The Rich (let's say over $500,000 a year individual income)pay tax and they are still rich....The rest of us pay tax and go from comfortable to poor...we sacrifice...the rich don't and that's the difference.

      cristian

      Apr 4, 2014 at 6:28am

      jack ellefsen, so the rich pay 80% of the income tax going to the coffers, how is this narrowing the weatlh gap exactly?