For the upcoming federal budget, the Institute has put together a blog series exploring key areas the federal government must take immediate action on to continue to effectively respond, and recover from the COVID-19 pandemic. Our three-part blog series includes submissions in the areas of: Investing in the Caring Economy; Taxing the Rich; and, Vaccination.
From the fall of the Roman Empire to the American Civil War and its devastating aftermath, inequality has perhaps been history’s greatest scourge. My research as an historian shows that extreme inequality has time and again led to instability and widespread impoverishment. Unfortunately, this is what Canada faces today.
It wasn’t always this bad. The distribution of income, wealth, and access to resources generally have been getting more unequal in this country over the past 4 decades. During the mid-20th century, Canada had an estate tax and top marginal income tax rates over 80%. Today, while income and especially wealth inequality are at levels not seen since the late 19th century, our fiscal system remains woefully regressive. The country’s richest, who collectively control more than 25% of all wealth, have seen income rates fall and many other forms of wealth – including securities and high value property – taxed at very low rates, if at all. More and more groups, including mainstream organizations like the IMF and World Bank, are now sounding the alarm, noting that wealth taxes, digital services taxes, and corporate tax reform are necessary to ward off what history has shown to be the most devastating effects of the sort of extreme inequality many countries now face.
The COVID-19 Pandemic did not create these problems, but it has laid bare just how bad inequality has become. Myself, along with many of my colleagues at Resource Movement, are one of the privileged and wealthy individuals who have been relatively insulated from the effects of the COVID-19 pandemic. Our families have most benefited from Canada’s increasingly regressive fiscal policies, and now it’s time to pay our fair share. Together, we’ve been calling for the implementation of progressive wealth and inheritance taxes. These would affect only the wealthiest 10% of households – like our own – with rising marginal rates (up to 10% on net wealth over $20 million and 55% on estates over $7.5 million). These rates will do no harm to wealthy families like ours, but can raise billions of dollars every year to help with our long-term recovery efforts. Other wealth tax estimates exist. In a recent CCPA paper, economist Alex Hemmingway, estimated that a more modest 1% wealth tax over $20 million would raise $10 billion in its first revenue year, while progressively raising the threshold over time could result in $20 billion or more in revenue.
History teaches us to be bold when confronting crises like those we face now; we need sustained collective action to address the challenges we face together, we need comprehensive reform to turn the tide against rising inequality, and we need major boosts to our vital services like health care, housing, a just ecological transition, and more to improve people’s well-being and build back better. Otherwise, we may be doomed to suffer the fate of fallen societies from the past.
Daniel Hoyer was raised with wealth and class privilege in Toronto / Tkaronto. He holds a PhD in Classics from New York University and currently works as Senior Project Manager and Lead Researcher of Seshat: Global History Databank and Part-Time Professor at the Centre for Preparatory & Liberal Studies at George Brown College in Toronto.