A recent report by the Canadian Centre for Policy Alternatives has revealed the extent to which incomes in Canada have become heavily weighted in favour of a very few. It is not quite the same as the infamous 1% in the United States, but it is getting close. According to the Centre’s Report, called Born to Win: Wealth concentration in Canada since 1999″, Canada’s richest 87 families have roughly the same amount of wealth as that held by 12 million of their compatriots, or about a third of the country’s population.
The Report’s author, David Macdonald, notes in his introduction that “We find that while the average net worth of Canada’s wealthiest families rose by 37% between 2012 and 2016 – from $2.2 billion to $3.0 billion, for a gain of $806 million in inflation-adjusted dollars per family – the net worth of middle class families increased by 16%, or $41,000, over the same period (from $264,000 to $305,000). As a result, Canada’s wealthiest 87 families now have 4,448 times more wealth than the average Canadian family, and they collectively own the same amount as the lowest-earning 12 million Canadians”.
To give the statistics some context, this means that the wealthiest 87 families in the country have a net worth of $259 billion, the equal to everything owned by the combined populations of Newfoundland and Labrador, Prince Edward Island and New Brunswick ($269 billion). In part at least, this growing gap is caused by the fact that the more money you earn, the more you can save. People getting by paycheque to paycheque cannot afford to put money away. But those savings accumulate over time, and the individual’s wealth grows because they can afford to save in the first place, making the gap greater.
Over time, this has tremendous influence on wealth inequality. Wealth generated through work is passed down to other generations, who use that capital to make even more. The effect of this was shown in the Report. “In 1999, 46 of Canada’s 87 wealthiest families were first-generation holders of that wealth, which is to say they hadn’t inherited it…In 2016, 39 of Canada’s 87 wealthiest families (45%) were first-generation wealth-holders”.
The Report goes into details on the effects of taxation policies on wealth and income inequality, and discusses the various factors which have brought about the current situation. But the question to be asked is: So what? Does this have any interest to anyone outside of those 87 families?
The negative effects of this kind of wealth inequality in the U.S. has become very clear indeed in recent months and years. When the wealthiest people also run the major corporations, financially back political candidates, and thereby exert significant influence over political policies, such as taxation, then the needs and rights of the poorer members of society (the vast majority compared to the 87 families) can be ignored by legislators. But the Report notes that the answer to inequality involves changes in taxation policy. There is the rub.
The Report points out that: “Canada is the only country in the G7 without taxes on inheritance, gifts or estates…Instituting a 45% inheritance tax in Canada on estates valued over $5 million, in line with the rest of the G7, would generate $2 billion in revenues for the federal government. Taxing capital gains just like wage income could raise substantial amounts of revenue while effectively curbing unproductive wealth accumulations among Canada’s higher earners, and thus reducing inequality.”
What this would mean for Canadians is more money being freed up for social spending and infrastructure improvements: benefits to healthcare, education, roads and water systems. This is a growing issue in Canada and will need to be addressed at some point. But by who? The levers of power are beholden to the very people who would have most to lose. And they like to talk about money: it seems crass. As Ogden Nash once put it: “Some people’s money is merited, and other people’s is inherited. But wherever it comes from, they talk about it as if it were something you got pink gums from”. The poem is called The Terrible People. Worth a read.