While recognizing the danger of increasing inequality in Western societies, I have not been a fan of a wealth tax, one of the more commonly offered solutions. I have been inclined to accept the usual criticism that it’s simply too hard to implement.
I have now had my mind changed. I have been influenced by US Senator Elizabeth Warren who has long supported a wealth tax and now that she has been appointed to the Senate Committee on Finance intends to make it her first order of business. American billionaires have added $1-trillion to their collective wealth since the start of the pandemic. The senator has a strong financial background both in academia and in government, so I take her views very seriously.
The leading French economist Thomas Piketty, also to be taken very seriously, argued for a global wealth tax in his books Capital in the Twenty First Century and Capital and Ideology. He states, “The idea that strictly private property exists and that certain people have an inviolable natural right to it cannot withstand analysis. The accumulation of wealth is always the fruit of a social process, which depends, among other things, on public infrastructures (such as legal, fiscal and educational systems), the social division of labour, and the knowledge accumulated by humanity over centuries. Under such conditions, it is perfectly logical that people who have accumulated large amounts of wealth should return a fraction of it to the community each year.”
And, to my great surprise, the notoriously conservative World Bank supports a wealth tax. According to Senior Advisor Jim Brumby, “Now is the time to consider a wealth tax. It can support fairness and deliver serious recurring revenue. This can help close the inequality gap, plug the fiscal hole and win back trust.”
He would seem right about the time as far as this country is concerned. As Canadians for Tax Fairness point out, “In the past decade, only the top one percent have increased their share of total wealth in Canada while the share of all other groups has declined.” The pandemic has aggravated the trend. Canada’s top billionaires increased their wealth by over $50-billion (28 percent) between April and October of 2020. According to the Canadian Imperial Bank of Commerce, all the jobs lost in 2020 were among workers that earned below average wages while high-income earners experienced job gains, and the situation is expected to get worse.
So my mind is changed. A wealth tax is indeed timely.
The like-minded can take a couple of small steps in support: sign a letter Canadians for Tax Fairness is sending to Finance Minister Chrystia Freeland and/or join the Broadbent Institute’s “Tax the Rich” movement. A detailed analysis on implementing a tax is covered in the Institute’s report “The Case for a Wealth Tax in Canada.” Definitely worth a read.