Canada’s wealthiest are doing better than ever
May 23rd, 2014 - 1:53pm
A lot of attention is paid to the salaries and bonuses of Canada’s wealthiest CEOs since they differ so dramatically from the take-home pay for most everyone else that it is always shocking. A recent study from Canadian Centre for Policy Alternatives (CCPA) explains that the problem of inequality is even worse when we look at how wealth is distributed in Canada. The report, ‘Outrageous Fortune,’ focusses on the enormous wealth concentrated among Canada’s 86 wealthiest individuals and offers some suggestions that could help slow the rapidly growing nest eggs that these super-rich enjoy.
The reason for focusing on wealth instead of salaries is because it provides a clearer picture of inequity since it involves more factors than mere salary comparisons. By including property holdings and debt in the calculation we learn that the richest 86 Canadians have as much wealth as the poorest 11.4 million Canadians combined. When looked at as percentages of our population, 86 people amounts to 0.0002% and 11.4 million is roughly 34%. While shocking, it is important to know that the gap is growing too, with figures from 1999 pegging the wealth of the top 86 as being equal to the poorest 10.1 million in the country.
It is hard enough to fathom that a CEO pulling down 20 million dollars in salary and bonuses works 415 times harder than someone making the average salary in Canada of $48,250 a year. When asked to accept that 86 people deserve to control as much wealth as a full third of the population it becomes an impossible task. The CCPA report shows how vast the holdings of these 86 people are - they could buy the entirety of the Province of New Brunswick (houses, mortgages, debts, savings, all property items like cars, and even everyone’s pensions) and still have money to spare.
One last, and important item gleaned from Outrageous Fortune is that no matter how hard an individual works, they will never make it into the ranks of the super-rich in Canada. Even if some of the people on the list are working as executives in a (family owned) company, the majority of their fortune has been inherited. So it is circumstance alone that allows these people to be in such privileged positions, but that doesn’t explain why this wealth is growing faster than everyone else’s. Clearly there are systemic factors that can account for some of that phenomenon.
One big reason is the rate of taxation for capital gains which is about half the rate a person is charged on their income. The CCPA explains that “one Canadian makes $100,000 a year selling a company while another makes $100,000 a year working at a job, the worker will pay twice the tax of the business seller.” Another fix proposed by the CCPA is an increase in the income tax rate for the very top earners in Canada. Time and again we hear how these measures would drive down job creation, but 30 years into trickle-down economics it is pretty clear that is a fanciful line of wishful thinking from people who are doing very well padding their bank accounts.