Canada’s wealth gap is bigger than its income gap, says a new report that recommends higher taxes to redress that gap.
The report by the left-leaning Canadian Centre for Policy Alternatives (CCPA) finds that the wealthiest 20% of Canadian families control almost 70% of total wealth, and take a smaller share of income (almost 50%). And, it says that wealth has become increasingly concentrated, with 66% of real wealth generated in Canada since 1999 accumulating with the wealthiest 20% of families.
At the extreme high end of the wealth spectrum, the report says that the 86 wealthiest Canadians held the same amount of wealth in 2012 as the bottom 11.4 million combined, up from 10.1 million in 1999. And, it says that their collective wealth ($178 billion) would be enough to buy the entire province of New Brunswick, leaving them with billions left over.
“Canada’s wealthy 86 represent only 0.002% of the population but they’re so flush they could buy absolutely everything owned by every person in New Brunswick,” says CCPA senior economist, David Macdonald. “They could buy up all of New Brunswickers’ cars, all of their houses, all of their undeveloped land, all of their stocks, bonds, pension funds and RRSPs, all of their jewelry, all of their furniture — everything — and still have billions to spare.”
The report suggests that the wealth gap should be addressed by raising capital gains taxes and increasing income tax rates on high earners. “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,” it says.
“The very wealthy got that way by creating or trading assets, usually companies or real estate,” says Macdonald, noting that capital gains are taxed at half the rate of income.
“There are few direct taxes on wealth in Canada. A fairer inclusion rate for capital gains would help 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,” Macdonald concludes.