Toronto – August 9, 2018 - We have heard about income inequality, but what about wealth inequality?
A new report by the Canadian Centre for Policy Alternatives (CCPA) which compares the net worth of the 87 richest families in Canada to the wealth of average families, shows these richest families hold almost as much wealth as everyone combined in Newfoundland and Labrador, New Brunswick, and Prince Edward Island combined. These 87 families are worth $3 billion on average, and that between 2012 and 2016 their wealth grew at a rate of 37 percent.
The report argues that while the current debate about inequality has focused on the growing income gap between the 1% and the rest of us, the disparity in wealth should be just as concerning. Wealth inequality is in part a by-product of income inequality. The more you make, the more you can save and the faster your net worth grows. Returns on large sums of invested money are higher, so the growth in the net worth of the wealthiest Canadians will continue to outpace everyone by a larger and larger factor with each passing year.
Less than half of the wealthiest families were self-made. More than half inherited most of their wealth, and because of their wealth, can take advantage of tax loopholes and tax havens to pay less tax on their incomes. And because the government taxes income on wealth at lower rates than income from wages, the wealth gap will continue to grow.
The report by the CCPA says tax reforms aimed at reducing inequality, such as an inheritance tax, could help alleviate this situation and provide new sources of revenue for important social programs and support. Canada is the only G-7 country without an inheritance tax. Cracking down on tax havens and loopholes and eliminating tax breaks for capital gains and on dividends would also raise tens of billions of dollars to help reduce inequality.
In Ontario, where there is a Premier who also inherited his wealth, inequality is likely bound to grow; especially with new legislation that targets those at the lowest end of income spectrum. Cutting planned increases to social assistance and disability rates and cancelling a pilot project on basic income will only lead to even greater wealth inequality and income inequality.