1mo ago

The Overwhelming Case for a Wealth Tax

Attention Required! | Cloudflare

Who and how much:

Consider an annual tax on the net wealth of families with rates of one per cent above $10 million, two per cent above $50 million and three per cent above $100 million.

This means the first $10 million of any family’s wealth is entirely unaffected by the wealth tax. Based on modelling of the first year of this wealth tax, the bottom 99.4 per cent of Canadians would pay nothing, while only the richest 0.6 per cent would pay any amount. This means that only about 100,000 families across the country would pay any amount under the wealth tax, with 10,000 wealthy enough to fall into the second-highest bracket and 3,700 in the highest bracket.

This narrow tax on the wealthiest few would raise an estimated $39 billion in its first year, $62 billion by its 10th year and $495 billion cumulatively over a 10-year window.

How:

an effective wealth tax must make use of extensive third-party reporting of assets, particularly from financial institutions, rather than relying too heavily on self-reporting as in the case of some older wealth taxes.

16 comments

You mean like the increase to capital gains tax Carney killed in his first few days as acting PM? He wasted no time letting his crew at Stripe and Shopify know who he gets shit done for.
- Too many people thought that tax would cut into their retirement investments. So dumb. We can’t do anything good without conservative hucksters convincing median income Canadians it will hurt them.
  
  While I disagree with dropping the tax, it's clear the liberals dropped that and similar policies (carbon tax, capital gains, etc) to combat the conservative slogans that appealed to the truly moronic among us
with rates of one per cent above $10 million, two per cent above $50 million and three per cent above $100 million.
If someone has hoarded that much money, taxation at that rate will have absolutely zero impact on their lifestyle.
They have no valid complaints about a system like the one being proposed.
- Even if they complain, they'd get laughed out of the room. That's why the actual go-to tactic is threats.
- Wealth isn't often in cash. It could be a founder of a company, and their stocks make their networth over 10 million.
  In order to pay 1% they'd have to come up with another 100k, but the only way to do that is sell the stock. Selling the stock erodes the founders say in the company (shares = voting power) and will further incur taxes so it's more than 100k.
  So if by nothing you mean slowly erode a person's ownership in their business over many years, then sure, nothing.
  
  We agree that taking money from them would in fact take money from them. Want a cookie?
The rare Tyee article that is direct and to the point.
I'm for a wealth tax, but it makes a heck of a lot more sense to tax gifts and inheritance than try to keep track of the largest and most complicated wealth portfolios in Canada.
Also important bits:
First, a well-designed wealth tax must apply to all types of assets equally (rather than exempting certain types of assets such as real estate, which would make tax avoidance by shifting between asset classes easy and likely).
Another concern is that the wealthy may move abroad in response to a wealth tax. Even if some do, that does not mean they can avoid the wealth tax. To reduce the incentive, either a substantial exit tax can be imposed or annual wealth tax obligations can continue to be applied after expatriation for a set number of years. This would be a fair recognition of the broader society’s contribution to creating and enabling these fortunes.
A hard cap would also have none of these possible weaknesses, although it may be seen as too radical.
When.
- After voting reform. Probably around the same time we internally do something about housing.
- No time like the present.

16 comments