What if there was one simple policy that could raise the federal government an extra $19 billion or so to pay for a just recovery from the pandemic, with the side benefit of ever so slightly decreasing the chasm of inequality between the ultra-rich and most people in Canada?
New research from the Canadian Centre for Policy Alternatives shows that even a moderately ambitious wealth tax could do just that.
The CCPA analysis, released this morning, argues the Parliamentary Budget Officer’s 2020 estimate that a 1 per cent wealth tax on fortunes over $20 million would generate $5.6 billion in revenue in its first year was actually lowballing the potential yield from such a tax reform measure.
CCPA policy analyst Alex Hemingway has calculated that a 1 per cent wealth tax would actually generate approximately $10 billion in the first year. A moderately more ambitious wealth tax, with additional brackets of 2 per cent on the portion of fortunes over $50 million and 3 per cent on those over $100 million, would nearly double the windfall for the public coffers with an estimated $19.4 billion.
- Canada’s richest have raked in $37 billion since March
- Poll: Over two-thirds of Canadians back a wealth tax
Imagine what could be built with all that money reallocated to the public good.
Last year, the feds announced a new Rapid Housing Initiative with a price tag of $1 billion to “cover the construction of modular housing, as well as the acquisition of land, and the conversion of existing buildings to affordable housing.” They estimated the program would create 3,000 units of truly affordable housing. Extrapolating from those numbers, just half of the $19.4 billion generated from a modest wealth tax could add another 29,000 units of desperately needed housing across the country. And that would still leave another $9.7 billion to spend on public transit, Indigenous health and water infrastructure, post-secondary education, and many other vital public goods and services.
All that money, the report explains, would be generated from a miniature slice of the population: “Wealth taxes of these kinds, targeted to net worth over $20 million, would apply to only about 25,000 wealthy families, representing the richest 0.2% of the country. This tiny fraction of Canadians, the richest of the rich, together control $1.8 trillion of the country’s wealth.”
The CCPA calculations are based on the latest economic research, including the work of Berkeley economists Emmanuel Saez and Gabriel Zucman, which estimates significantly less wealth tax revenue lost to behaviours such as tax evasion and avoidance.
Even before the pandemic profiteering that has seen billionaire wealth soar while thousands have lost lives and millions have lost work, polls showed overwhelming support across party lines for a wealth tax in Canada. And yet we’ve seen only sporadic and tepid campaigning on this issue to date. The NDP did include a wealth tax in its 2019 federal election platform, but the ask for a 1 per cent tax on fortunes over $20 million was still far too weak.
For an opposition party like the NDP, which has consistently pushed the governing Liberals to increase spending on COVID emergency relief, there is no rationale not to campaign for at least a moderately ambitious wealth tax to fund a program for a just recovery and other necessary social spending.
With Justin Trudeau looking to parlay his handling of the pandemic into a majority government in the near future, a progressive party looking to distinguish itself ideologically and programmatically from the Liberals would be foolish not to adopt a bold wealth tax proposal and to campaign on it aggressively.