It's Counterintuitive, but Tax the Rich, Not the poor
Take some money from the wealthy, give it to the poor -- why not do it?
It's Counterintuitive, but Tax the Rich, Not the poor
By Duncan Cameron / rabble.ca

Basic accounting suggests that another $1,000 for a student with a $10,000 yearly income puts them further ahead than the same amount does for someone earning $100,000. After all, it gives the student a boost of 10 per cent, and the affluent person only one per cent.

In Canada, the small amount of income redistributed to the poor has long been a matter of public debate. Lately, the poor have been losing. The low-tax, small-government crowd, both Liberal and Conservative, have had control of the federal government for decades.

Today, accepting that the rich should pay a fair share of taxes would constitute progress. Through tax cuts, money is being returned to corporations and the wealthy. Personal tax cuts enacted by the Chrétien Liberals in the 2000 budget put one-third of the benefits in the pockets of the richest five per cent of taxpayers.

Economists can be found arguing that taxing the rich reduces incentives to create wealth. True-believing right-wingers argue that the rich are entitled to whatever money they have, regardless of how that money is used or how it was obtained. Cynics simply observe that through provincial sales taxes and the GST, it is possible to soak the poor, always more numerous than the rich.

With greed being presented as a virtue, even the idea that all individuals benefit from redistributing resources through taxation to provide education, health care, recreation, and access to cultural activities for the entire population can seem counterintuitive. Yet the principle that each should contribute to society according to ability to pay retains its power.

Whoever knows financial success already reaps more material benefits than others, and should be called upon to contribute accordingly. Wealth and high income confer rewards; such resources provide the fortunate a greater responsibility for collective endeavours.   

The publication of Capital in the Twenty-First Century by Thomas Piketty adds an important policy option to the "make the rich pay" side of the debate: a wealth tax. Instead of just taxing extra income, Piketty wants to see capital assets taxed. Stocks, bonds, ownership shares and property should be subject to worldwide levy, Piketty argues.

Though North American super salaries, stock options and bonuses have catapulted (mainly) financial executives into the top 1% of wealth holders, most wealth is inherited. Canada once had an inheritance tax, but it was abolished years ago. Now estates pass on to next of kin subject only to tax on capital gains, while in many other countries death duties apply.

For all wealth holders, capital gains (valued at only 50 per cent of their total worth for tax purposes) are taxable, but not the underlying assets, except for homes and commercial property, which are subject to yearly taxes. In fact, the existence of the property tax suggests that financial assets have an unfair favourable treatment compared to real property, and should be taxed yearly. 

Income on wealth is taxed, often at more favourable rates than salary income. In Canada for instance, dividends on stocks are taxed at a preferential rate.

There is no shortage of ideas of how to use new taxes to redistribute income. Since 1972 when it was first proposed by the late Nobel Prize economist James Tobin, the Tobin Tax -- a small fee that could be charged on foreign currency trades -- has been widely discussed and debated.

The foreign exchange (FX) market measured over $5 trillion per day in 2013. It far outstrips international trade which measures in mere billions of dollars per year.

Most FX trades are speculative -- money traded to make money -- unconnected to trade in real goods or services. Making trades more expensive by taxing them would serve to reduce foreign currency speculation and calm movements in exchange rates, a good thing in itself. Tobin wanted the tax to fund international institutions and further economic development.

The Financial Transactions Tax (FTT) is a close cousin to the Tobin Tax. A levy on the purchase of financial instruments, such as stocks and bonds, was initially proposed in 1997 by then editor of Le Monde diplomatique, Ignacio Ramonet.

After years of discussion and without reaching full agreement, 11 countries of the European Union are moving to introduce a FTT on January 1, 2016.

In 2010, prior to the G8/G20 meetings in Ontario, France and the U.K. pushed for a special bank tax, if only as an insurance measure, so as to fund the next bank bailout. Host Stephen Harper found allies and fought off the proposal.

Not all new tax ideas aim to redistribute income from rich to poor. The Ecofiscal Commission headed by Chris Ragan of McGill University wants to introduce "green" consumption taxes and reduce income taxes.

Replacing progressive taxation where the rich pay more, with regressive taxes which all would pay regardless of income, is being sold as an environmental policy.

The policy option with the most promise is clamping down on tax havens. Canadians for Tax Fairness estimate that $7.8 billion could be added to tax revenue simply by applying existing laws to money stashed outside the country.

Getting serious about ending tax evasion means working with other countries. The next Canadian government needs to lead an international effort to eliminate tax advantages inherent in shipping assets offshore, and hiding income in shell companies.

Duncan Cameron is the president of rabble.ca and writes a weekly column on politics and current affairs.

Photo: Eric L/flickr

4.5 ·
3
What's Next
Trending Today
Have You Heard of The Great Forgetting? It Happened 10,000 Years Ago & Completely Affects Your Life
Daniel Quinn · 19,242 views today · (Excerpted from the book, The Story of B) With every audience and every individual, I have to begin by making them see that the cultural self-awareness we inherit from our...
A Hauntingly Beautiful Short Film About Life and Death
5 min · 12,501 views today · The Life of Death is a touching handdrawn animation about the day Death fell in love with Life.
The Myth of Positivity: Why Your Pain Holds a Mighty Purpose
umair haque · 12,437 views today · Of all the great myths of contemporary life, one of the most toxic is positivity. It says: there are negative and positive emotions, and only the positive ones are worth...
10 Stunning Images from the Wildlife Photographer of the Year People's Choice Award
Natural History Museum · 11,260 views today · These incredible images are a selection from of the 25 shortlisted by The Natural History Museum for the People's Choice Award from this year's Wildlife Photographer of the...
Seven Must-Have Skills for the 21st Century
Tommy Lehe · 5,047 views today · We live in a world that moves faster than we do. Trying to keep up can be an overwhelming task that at times feels hopeless, like we are falling further and further behind—but...
Forget Air Force One, Pentagon Wastes Billions and Billions Every Month
Nadia Prupis · 4,653 views today · President-elect Donald Trump's focus on single Boeing contract ignores enormous waste of bloated Pentagon budget
Stunning Summary of US Imperialism and Native Resistance... on MSNBC!
4 min · 2,485 views today · On The Last Word with Lawrence O'Donnell on MSNBC, Lawrence explains why a protest by Native Americans in North Dakota reminds us of the history American always tries to forget.
The Most Powerful Algorithm in the World
Joe Brewer · 2,414 views today · After the insanity of the U.S. election, a lot of people are blaming Facebook for its algorithms that parse us into ideological bubbles and spread “fake news” and other kinds...
DREAM: A Spoken Word Meditation For When Life Is Kicking Your Ass
4 min · 1,719 views today · If life is kicking your ass and the general un-coolness of everybody on planet erf is making you want to off yourself, TALK to someone: 800-273-8255 (national suicide...
Amanda Abbington Introduces iAnimal - 42 Days in the Life of Chickens
4 min · 1,323 views today · Shot undercover in British factory farms and slaughterhouses, this immersive 360° video gives you a birds-eye view of what happens to chicken from farm to plate.
The Other Way of Knowing
Lilian Na’ia Alessa · 1,322 views today · Western science and Indigenous worldviews are often seen as incompatible, with the Indigenous view usually being far less valued by society at large. But an inside look at...
Standing Rock Wisdom: How Sacred, Nonviolent Activism Has the Power to Succeed
Charles Eisenstein · 1,252 views today · I am told by Native American friends active at Standing Rock that the elders are counseling the Water Protectors to undertake each action prayerfully and to stay off the...
How a White Supremacist Became a Civil Rights Activist
Araz Hachadourian · 1,103 views today · The story of a KKK leader’s transformation shows us that we need not live forever with the kind of violence we saw in Charleston this month.
Dear Activists, Maybe It's Time to Admit That We've Got It All Wrong
Mickey Z. · 1,024 views today · “The first step in the revolution is eye contact.” - Alicen Grey
Sean Carroll - The Meaning of Life
7 min · 961 views today · The world keeps happening in accordance with its rules; it's up to us to make sense of it and give it value. Sean Carroll Music: Moby - God Moving Over the Face of the Waters
What Makes Call-Out Culture So Toxic
Asam Ahmad · 933 views today · Call-out culture refers to the tendency among progressives, radicals, activists, and community organizers to publicly name instances or patterns of oppressive behaviour and...
John Lennon's "Imagine," Made Into a Comic Strip
John Lennon. Art by Pablo Stanley · 886 views today · This is easily the best comic strip ever made.  Pabl
Veterans at Standing Rock Ask Forgiveness for War Crimes Against Tribal Nations
Jen Hayden · 851 views today · Jon Eagle Sr., Tribal Historic Preservation Officer at Standing Rock Sioux Tribe has reported something wholly unexpected happened at the Standing Rock Reservation today. The...
Solar is Already Producing More Energy Than Oil, Says Major Scientific Review
Nafeez Ahmed · 813 views today · And is twice as powerful than previously thought
Today I Rise: This Beautiful Short Film Is Like a Love Poem For Your Heart and Soul
4 min · 768 views today · "The world is missing what I am ready to give: My Wisdom, My Sweetness, My Love and My hunger for Peace." "Where are you? Where are you, little girl with broken wings but full...
Load More
Like us on Facebook?
It's Counterintuitive, but Tax the Rich, Not the poor