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2020- 2022 Policy Process | Green Party of Canada
Where GPC membership collaborates to develop our policies
G21-P057 Income, Wealth and Estate Tax Reform to Address Inequality
Submitter Name
Brian Smallshaw
Ratification Vote Results: Adopted
PDPC Comment: P057 has significant content overlap with P056. Both P057 and P056 were adopted at the 18th General Meeting.
Proposal
The GPC will reduce inequality by:
- Making income taxes much more steeply progressive;
- Adopting a progressive wealth tax that will be applied to large family fortunes;
- Adopting a progressive estate tax that will be applied to very large inheritances; and
- Taxing income from capital and labour at the same rate.
Objective
This policy's objective is to reduce inequality and fund social programs with a more steeply progressive income tax; by taxing the wealth and inheritances of those with large fortunes; and by taxing income from capital and labour at the same rate.
Benefit
These measures will narrow the gap between rich and poor, which is widely acknowledged to have grown in recent years. It will also help to make “dead capital” held by the very rich more productive, and reduce the tendency for large fortunes to perpetuate themselves over multiple generations.
Supporting Comments from Submitter
Inequality of income and wealth has risen in the last few decades, as the progressivity of income tax rates have declined. There is strong evidence that returning to something close to the rates of the 1970s would help to reduce the gap, as would adopting taxes on large fortunes and inheritances, and eliminating the tax break enjoyed by capital gains.
The following two books exhaustively explore the history of inequality, and propose tax measures to reduce it:
- Capital and Ideology, Thomas Piketty
- The Triumph of Injustice, Saez and Zucman
This study, commissioned by an NDP MP, looks at the revenue that could be generated by a wealth tax: Net wealth tax on Canadian resident economic families Parliamentary Budget Officer, Government of Canada:
https://www.pbo-dpb.gc.ca/web/default/files/Documents/Reports/RP-2021-01
A recent StatsCan study reveals Canadians’ wealth is more tied to that of their parents than ever before:
https://globalnews.ca/news/7631994/canadian-income-gap-wage-inequality-statscan/
Green Value(s)
Social Justice
Relation to Existing Policy
Add to current GPC policy G06-p44.
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4 comments
The reason this proposal (https://www.greenparty.ca/en/convention-2021/voting/proposals/g21-p057) was categorized yellow was that it overlaps with the one (https://www.greenparty.ca/en/convention-2021/voting/proposals/g21-p056) put forward by Atul Bahl (actually Dimitri Lascaris under Bahl's name). The only difference between the two is that Bahl took my proposal and added specific thresholds for when wealth and inheritance taxes would kick in (above $10 million), and set a 100% tax rate on inheritance and incomes above a 'certain cap'.
The reason we are in this situation is that after writing my proposal, one of Dimitri's followers suggested that I invite him to sign on as a supporter. He suggested the above-described amendments, which I rejected because setting specifics like that is not good policy-making. In response, rather than putting his changes forward as an (unfriendly) amendment, Dimitri copied my proposal, added in his desired amendments, and put it forward as a separate amendment. Both proposals received more than enough support to likely pass.
I think the best way forward is to have my proposal stand as-is, and remove the substance of my proposal from Bahl's, leaving behind the calls for a specific threshold when wealth and inheritance taxes kick in, and the call for 100% taxes on wealth and inheritance above a certain cap. I think it is important for the membership to consider if they really want to tie the hands of future Green MPs with a specific number, and if they really want a 100% tax on income and wealth and inheritance - this would mean, of course, if you or your inheritors are fractionally below that certain cap, you retain a tiny portion of your income or the estate; at or above it and you receive nothing. I fear that these implications have not been considered because there has been very little workshopping of proposals this time around.
Backgrounder
In recent decades, inequality between the rich and everybody else in Canada has been rising to alarming levels, approaching that of the ‘robber baron’ era of the late 1800s and early 1900s. Because so much of the wealth of the ultra-rich is hidden in offshore tax havens, estimating its exact levels is difficult, but we know that a very small number of individuals hold a large portion of the country’s wealth. This condition, where a single person holds more wealth than they can conceivably use can be understood as a sickness, what the Algonquin called wetiko, a disease of the spirit where the sufferer is driven by greed, excess and selfish consumption at the expense of others. A person suffering from wetiko no longer sees themselves as enmeshed in an interdependent web of relationships, the ego has become unchained from all reason, consuming with the logic of a cancer. As such, wetiko is seen as more than simply murderous, it is cannibalistic.
Fortunately, we have remedies for wetiko: progressive taxation. From the 1930s and especially after WW2 until the early 1980s, marginal tax rates on the highest incomes reached 90% in some countries, providing funding that enabled the creation of social safety nets and funding higher education that enabled social mobility and the development of intellectual wealth. Moreover, contrary to arguments that high income tax rates stifle growth, in the period between 1950 and 1975 when there was a higher rate of tax progressivity, we enjoyed the greatest period of economic growth ever experienced in this country. While this was not solely because of high income tax rates for the wealthy, it certainly didn’t prevent it from occurring.
During the recent economic downturn as a result of the COVID-19 pandemic, the fortunes of Canada’s wealthiest families have risen dramatically while Canadians of ordinary means struggle to stay afloat and the Canadian government is forced to take on record high levels of debt. Economic historians such as Thomas Piketty have documented in great detail how the shift in taxation policy in all of the developed nations of the world since the 1980s towards less progressive rates of income tax has eroded the ability of governments to fund health care, education and other important elements of a developed country, while increasing inequality to levels that threaten social stability.
There has also been a trend towards giving a preferred rate of tax to income derived from capital over that from labour; income from capital; capital gains, dividends and rents, is taxed at a lower rate than income from labour. This is patently unfair: all money earned, whether from labour or capital, should be taxed at the same rate.
Backgrounder (continued)
The concentration of a nation’s wealth in the hands of a few is a threat to the economic health of the country, and the wetiko of extreme inequality is also detrimental to a country’s overall happiness. A large fortune tends to perpetuate itself and grow larger long after the individual or company that created it has ceased to innovate, or even exist. The money that is concentrated in these large fortunes is dead capital that could be more productive were a portion of it returned to society as a whole. To enable redistribution and to spur innovation, a low annual wealth tax of say 1% can be levied on large fortunes to reduce the tendency towards the concentration of capital. Furthermore, many of the largest fortunes tend to persist over generations, for even greater stagnation of a country’s wealth. Canada is one of the few developed countries without an inheritance tax, and the implementation of an inheritance tax on large fortunes would be an important step in reducing inequality and spurring innovation.
22-03-27 | Plenary Finale
Passed by 91 voters at 60.4%.
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