Glen Argan: Tax the rich resonates, but is it feasible?

Last month’s federal election fell on the eve of the feast of St. Matthew the tax collector. Matthew, of course, was an employee of the Roman occupying forces in Judah, doing the dirty work of taking from the poor and giving to the rich.

Jesus’ decision to invite Matthew to become an apostle was a bold one, turning an outcast into an emissary of the kingdom of God. It was likely a two-way street with Matthew undergoing a conversion to doing the Lord’s will.

The biblical prophets outlined God’s will in a time like ours in which the disparity between rich and poor was increasing. In trenchant language, they called for a more just and equitable society. Amos, for example, proclaimed, “Alas for those who lie on beds of ivory, and lounge on their couches, … They shall now be the first to go into exile, and the revelry of the loungers shall pass away” (6:4, 7).

During the recent campaign, Canadians heard at least three political parties — the Liberals, NDP and Bloc Quebecois — call for greater equity. All proposed higher tax rates for the country’s “ultrarich.”

NDP leader Jagmeet Singh proposed increased taxation on the wealthiest Canadians as a central plank of his party’s platform. “We believe that the ultrarich should pay their fair share so we can invest in people,” Singh said. His rhetoric lacked the flair of Amos, but the idea was there.

With another minority government elected Sept. 20 and the Liberals relying on NDP support, Singh’s voice will be heard in the months ahead.

The NDP proposed three ways to boost taxes on the wealthiest Canadians. First, a family with a net worth of more than $20 million would pay a one per cent tax on the excess. For example, a family with net worth of $20 million would pay no extra taxes, but one with $100 million of net worth would pay $900,000 a year.

Second, the top marginal income tax rate of 33 per cent on income above $216,000 a year would increase to 35 per cent. Third, the NDP would hike the amount eligible for taxation on capital gains from 50 to 75 per cent of the capital gain.

The Liberals, meanwhile, proposed to set a minimum tax rate of 15 per cent for people in the top tax bracket.

Any move to increase taxes on the wealthy should be popular with Canadians, 89 per cent of whom support higher taxes for the richest Canadians. The opinions of the wealthiest Canadians about such measures have so far not been heard.

There are three main reasons to increase taxes on the wealthy. First, as Singh stated, more tax revenue provides more money for services to the public. Second, such taxes would decrease income inequality. Third, taking money from the rich might slow or halt the concentration of wealth and power in the hands of the wealthy.

The ancient prophets agreed with the latter two reasons but expressed no opinion on the first since a social welfare state did not exist in their time. Still, one suspects they would have found even the proposals of the NDP to be limp and not up to the task of providing income equity.

More radical was the 1960s Carter Commission on taxation. Appointed by a Conservative government in 1962 and reporting to a Liberal government five years later, the commission proposed that all income should be taxed the same. That is, it shouldn’t matter whether a taxpayer’s income came through wages, stock dividends, capital gains, estates or real estate transactions. Resource corporations should not pay tax at a lower rate than other companies. Tax exemptions would be eliminated. The result would be lower taxes for most Canadians but higher taxes on the wealthy.

When the six-volume report was issued, resource companies and Canada’s wealthy reacted with ferocity. The outcry was so strong that Liberal prime ministers Lester Pearson and Pierre Trudeau did their utmost to bury the report and ignore its recommendations. No government since then has dared to take an in-depth look at the tax system.

Today, tax reform means snipping along the edges of a system in which the wealthy have numerous ways to hide their wealth from the taxman. If our political leaders would face the issue of income equity head on, most likely they would hear the same outcry as did political leaders 55 years ago.

(Argan writes from Edmonton.)