Canada Should Emulate Argentina’s Wealth Tax

Canada Should Emulate Argentina’s Wealth Tax

As published in the Ottawa Citizen: 30 December 2020

Canada would be wise to emulate Argentina’s recent adoption of a one-time wealth tax of one percent on those earning over a million dollars per year. The Argentine measure was designed to fund the post-Covid recovery and slow the growth of their federal deficit. Recently, the governing Liberals, Conservatives and Bloc Quebecois combined to reject a similar NDP motion that would have reduced Canada’s huge and growing deficit.

A similar wealth tax proposal in the UK was estimated to be capable of raising nearly $440 billion to rebuild that nation’s tottering infrastructure and reduce its borrowing. Like Canada’s political elite, Britain’s establishment refused to even consider the idea of wealth taxes. Both nations tax wage earnings at a higher rate than investment income to ostensibly encourage “risk takers”. A Canadian wealth tax enjoys broad popular support but lacks what we call political support, an odd contradiction that begs many questions.

Canada’s tax system features generous loopholes for the rich and powerful, while offering privileged treatment to the assets of the wealthy. For instance, Canada taxes only 50 percent of capital gains earnings compared with 100 percent of wage earnings, and lacks an inheritance tax. A wealth tax would probably be unnecessary if the federal government actually collected all taxes owed, an unlikely scenario.

The Canada Revenue Agency, recently reported that, “…some $3 billion (Canadian) of annual tax revenue is lost from the untaxed investment income that is generated from the $240.5 billion that wealthy Canadians have squirrelled away in offshore tax shelters.”

Opponents of enhanced taxation enforcement and wealth taxes claim that such measures will punish “job creators and innovators” and hurt the economy. This argument ignores the negative effects of foreign out-sourcing of Canadian jobs and elite tax avoidance. The threat of capital flight is an increasingly empty threat in a world where money enjoys greater mobility than human beings and has itself become a commodity.

Morgan Duchesney
Ottawa Canada