Die Argumente für eine Vermögenssteuer sind in Kanada stärker denn je
Die Argumente für eine Vermögenssteuer sind in Kanada stärker denn je
15 Kommentare
And will never happen.
Any attempts to do so will be met with so much lobbying it’s not even funny. Companies will, oddly, spend millions of dollars buying politicians to avoid paying millions of dollars to support the country. Billionaires are even worse.
As it openly acknowledges, this „article“ is a biased opinion piece. The important bit is at the end:
>A person can accumulate wealth (typically in the form of corporate shares) and pay no tax as that wealth grows. However, the Canadian Income Tax Act stipulates that the person is obliged to pay tax whenever they cash in any of those shares, or when they die—*or leave the country*.
That’s been tried in Norway – a 37.8% exit tax on unrealized gains. Bloomberg and FT (Financial Times) have widely reported on the impact on startup founders leaving the country to avoid the tax upon success and because they can’t attract talent or investors, which has weakened entrepreneurial culture.
Canada is *already* fighting that weakness. Why make it worse?
For those who don’t read the article, this is speaking to taxing those with about $25,000,000 in assets.
But regardless it will never happen, we don’t have a political party in Canada who would implement such a tax, and even if such a party were to gain traction with the idea, our media would turn people against it, just like it does anything else that disproportionately taxes the rich.
The Liberals aren’t going to implement a wealth tax. The conservatives DEFINITELY aren’t going to implement a wealth tax. The NDP SHOULD, but they won’t, because the media would turn people against them, and like everyone else, they’re subject to corruption and lobbyists as well.
Has there been an analysis on how much revenue this would generate? I know the richest Canadians don’t actually live in Canada (for example CZ. Founded of Binance).
Perhaps just add a yearly 1-2% tax on all real estate. It’ll generate revenue and tank property prices as people sell forced to sell if they cannot pay. Win win for millennials and Gen z.
Or get rid of primary residence cap gainz exclusion or cap it at 500k.
A 1% per year federal land value tax would be much better for affordability, especially if it is used to offset federal income tax. The rich own a ton of land! They leave it empty or under developed to create scarcity and pay less property tax. And it’s super simple to implement with being tax evasion proof.
The Liberals need to take note – excuses like „it will never happen“ don’t fly in the face of how egregious inequality is undermining capitalism. It kind of blew my mind when diehard Conservative partisan Tony Clement was the one making an impassioned and well argued defense for a wealth tax [on the Paikin Podcast](https://www.youtube.com/watch?v=eSlQuTFvihw).
Wealth taxes are very popular with everyone except the established elite.
The closest the Liberals will ever introduce would be an inheritance tax because that would take the most from the middle class.
Taxes on unrealized gains are nonsense. Just tax the activities that take advantage of it: if you want to borrow with your wealth as collateral, add fees and taxes to that activity. But just taxing holdings is bad policy, and usually suggested by non entrepreneurs with literally zero business sense.
There is no policy objective that can be accomplished with a wealth tax that cannot be achieved, at lower administrative cost, by a tax on capital income (which we already have). The only real difference is that a wealth tax is typically applied to unrealized gains, whereas capital income taxes are applied only to gains when realized. There are very, very strong administrative reasons to favour the latter.
Wealth taxes are a horrible idea in general, specially for a country like ours, that is struggling to boost its productivity. Most wealth is generated by investment, it doesn’t matter if we are talking about Warren Buffet or LazyImmigrant – we are basically disincentivizing wealth generation and investment. It doesn’t matter if this policy is limited to the super wealthy – lets say your wealth generates 6% real rate of return. A 2% wealth tax is in effect a new 33% tax on investment income. You can’t seriously think it wont have a chilling effect on investment.
Biggest thing I’ve learned is you can’t call it that. Everyone is on the cusp of wealth, but if we call it ‘the private jet fuel and penthouse tax,’ we might make up some ground.
I do not think many serious economists would disagree with the statement ‚In Canada wealth is increasingly becoming a fundamental driver of class divide, compared to income‘.
If we start with this assumption we can choose whether or not to progressively tax wealth. People will correctly point to Norway as a case study. They’ve experienced the flight of wealthy individuals looking to sheild themselves from the tax. However, the tax draws revenue that can be spent on social services or public goods investment. What will the social returns be on those investments compared to the social returns borne out of investments by those wealthy who left?
I would argue is it imperative that we tax wealth. The freedom of choice to pass down wealth to your beneficiaries or to live off its interest and dividends, is creating a social system where that freedom conflicts with the freedom to choose your path in life as an individual with limited means.
I think a much more interesting question is „what is the best/most fair way to tax wealth?“
Norway set its thresholds quite low and taxed unrealized gains from emergining businesses. Does that create a fair investment environment for small business owners? Especially in a place like Canada where room to operate is low thanks to large oligopolies dominating various markets.
Is a modest inheritance tax really going to cause untold capital flight if it means uprooting yourself and your beneficiaries to avoid it?
Can we strategically target industries whose wealth is tied to our geography?
Can cities effectively tax the massive windfall profits earned by homeowners who bought pre-2010s?
I read the whole piece. It would have been helpful for me if it discussed examples of successful wealth taxes in other countries. It’s not something I’m very familiar with, so it would be nice if they gave some examples. It would also be nice if they made an estimate as to how much revenue it would bring to the country.
The case is strong than ever? I’d say the case is as weak as it has ever been, given our desire to attract investment and diversify from the US.
Once again, this is another amateur article which does not even consider the concept of unrealized gains, which is where the very concept of a wealth tax falls apart. You can’t tax someone when their stock portfolio goes up, but then not simultaneously compensate them when it goes down.
The simplest way to raise revenues, if that is the desire, would be to increase the GST as all sound economists would say. But politicians seem allergic to that, and would rather play in the land of a fairy tail economy with gimmick exclusions from the GST instead(which is bad).
„As a result, the amount collected through a wealth tax would be massive: in the range of $40 billion a year. That revenue would enable us to pay for a wide range of benefits, social supports, climate measures, and public infrastructure improvements that could transform the lives of millions of Canadians. “
Hmmm…
Seems like a lot of money.
Meanwhile, the federal budget right now is somewhere in the range of $550 billion or so dollars.
We current pay out more than $73 billion in OAS expenditures alone as of 2023, and that figure is expected to rise to over $100 billion in the near future.
The wealth tax proposed will just cover the expected increase in OAS expenditures due to an aging society and won’t even touch the massive increases in defense spending already planned.
So while this wealth tax is something to consider, I don’t think one can actually sell it as a game changer in any way shape or form. It seems at best to be stopgap measure.
Furthermore, it fails at its basic premise IMHO. It will do nothing to address the wealth gap at all by every account of it I’ve read. Nothing will be done to increase the wealth of the 99.9%. All the funds go to the government for them to fritter away on whatever goals they happen to have at the time. No money or assets or wealth are going to us at all. It’s just being taken from the top of the pyramid for whatever the government sees fit to spend it on (maybe on debt reduction, maybe defense, maybe OAS, maybe an artificial lake for sailboating, maybe anything, but not necessarily increasing the wealth of the 99.9% other Canadians).
Anyways, just some thoughts.
We really should alter our laws to minimize the influence of the wealthy over government. Campaign contribution limits are already very low (which is good), but public subsidies for political parties is probably a good idea to further dent the power and influence of the very wealthy. We’ve done this before and we can do it again.