The recent Canadian government budget and the work of Pro Publica in the United States with IRS information have raised concern that funding of public programs is reduced by the failure of the rich to pay their share.
Lynn Desjardins reporting for RCI (Radio Canada International) note the Canadian government is asking the public to go online and suggest how it should spend money to “jumpstart the country’s economic recovery” from the effects of the pandemic. A coalition is suggesting Canadians fill in the government’s online questionnaire and take the opportunity to urge it to tax the rich.
For its own part, the coalition will urge the government to include three tax reforms: Implement a wealth tax on the very rich, close tax loopholes used to “hoard wealth,” and implement a tax on excess profits that were made during the pandemic. It notes that young Canadians, women, racialized and Indigenous people are bearing the brunt of the health and economic crisis. It urges people to ensure they are not left behind in the recovery by joining the Tax the Rich campaign.1In the United States, Jesse Eisinger, Jeff Ernsthausen and Paul Kiel of Pro Publica have investigated IRS files that reveal how the wealthiest avoid income tax.
ProPublica has obtained a vast trove of Internal Revenue Service data on the tax returns of thousands of the nation’s wealthiest people, covering more than 15 years. The data provides an unprecedented look inside the financial lives of America’s titans, including Warren Buffett, Bill Gates, Rupert Murdoch and Mark Zuckerberg. It shows not just their income and taxes, but also their investments, stock trades, gambling winnings and even the results of audits. Taken together, it demolishes the cornerstone myth of the American tax system: that everyone pays their fair share and the richest Americans pay the most. The IRS records show that the wealthiest can — perfectly legally — pay income taxes that are only a tiny fraction of the hundreds of millions, if not billions, their fortunes grow each year.2Michael Sean Winters writing in the National Catholic Reporter notes all of the ways these billionaires employed to dodge a larger tax bill were perfectly legal. As the report states, "The IRS records show that the wealthiest can — perfectly legally — pay income taxes that are only a tiny fraction of the hundreds of millions, if not billions, their fortunes grow each year."
I do not care about the specific nature of each individual tax loophole: They may or may not serve a specific public purpose. There are two larger issues here. One is basic fairness, and the numbers speak for themselves. The second, related issue is our society's inability to make needed public investments because the people who are getting fabulously wealthy are contributing zilch to the public kitty.3Shreya Kalra & Katrina Miller of the Broadbent Institute write how Budget 2021 misses the Opportunity to Tax the Rich. Despite promises it made in its 2020 Throne Speech, the federal government failed to “tax extreme wealth inequality” in the 2021 budget.
Income inequality in Canada has been rising for decades, and the pandemic only brought this reality to the forefront. Median household income has remained flat since 1982, while upper income brackets have steadily risen over time. Finance Minister Chrystia Freeland herself has written extensively about this trend in and the hollowing out of the middle class. Right now, the bottom 40% of Canadians own a mere 1.2% of total wealth, while the top 1% control about 29%, according to new research. Recently, a CCPA report also revealed that in just one year of the pandemic, the top 47 billionaires in Canada have increased their wealth by $78 billion, to a total $270 billion.4The Broadbent Institute claims that implementing tax reforms like creating a wealth tax, implementing an excess pandemic profits tax, and closing tax loopholes, Canada can raise the revenue it needs to fund its post-pandemic recovery.
We don’t have to choose between childcare and pharmacare; or making substantial investment in eldercare to implement new national standards the government has committed to establishing for long-term care. With real tax reform, Canada can fund a climate action plan that ends Canada’s dependency on oil and gas.4Our needs for climate change mitigation, childcare support, pharmacare, worker retraining for the Green Economy, and infrastructure rebuilding call for a taxation scheme where all Canadians pay their fair share.
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