New report looks at the reasons for wealth inequality north of the border.
Canada’s richest families collectively own the same amount as nearly a third of the country, and a new report aims to explain why.
According to an analysis from the Canadian Centre for Policy Alternatives, the country’s 87 wealthiest families have a combined net worth of $259 billion, which means on average they have 4,448 times more wealth than the typical Canadian family.
The figure of $259 billion is also almost equivalent to the wealth of the entire population of three provinces – Newfoundland and Labrador, P.E.I., and New Brunswick – ($269 billion), and equal to the wealth of Canada’s 12 million lowest earners combined.
The report goes a step further by attempting to explain why the gap exists. According to the Canadian Centre for Policy Alternatives, the basic reason is clear: firstly, nine of the 20 wealthiest families included at least one highly-paid CEO among their members. Yet the amount of money children inherit from their parents also widens the income gap.
The report found inheritance to be a more important factor of overall family wealth today than it was two decades ago. In 1999, 46 of the wealthiest 87 families didn’t inherit their money. But in 2016, that number dropped to 39, meaning more than half of them were born into wealth.
Another crucial factor, according to the study, is that Canada is also the only G7 country without an inheritance, estate, or gift tax, which the report argues may, in fact, be worsening inequality. It specifically calls for a 45 per cent inheritance tax on estates valued over $5 million, which would generate $2 billion in revenue for the federal government.
The report argues that Canada’s tax system heavily favors income obtained from wealth over income earned by working. For example, capital gains are taxed at half the rate of ordinary income, and income from dividends paid by Canadian corporations to shareholders qualifies for tax credits under the current system.
Meanwhile, despite the rise of real estate investors and speculators in Canada’s most expensive housing markets, the report argues against raising taxes on property.
For Canadians within the middle class, a higher proportion of wealth is tied up in real estate – 49 per cent, compared to 19 per cent for the wealthiest 87 families.