Transcript: A Wealth Tax in Canada? | Dec 09, 2019

Steve sits in the studio. He's slim, clean-shaven, in his fifties, with short curly brown hair. He's wearing a gray suit, white shirt, and spotted brown tie.

A caption on screen reads "A wealth tax in Canada. @spaikin, @theagenda."

Steve says MAYBE YOU DON'T SIGN
ON FOR THE SLOGAN, "TAX THE
RICH."
BUT WHAT ABOUT "TAX THE
SUPER
RICH"?
IT'S AN IDEA THAT POPPED UP IN
THE LAST CANADIAN FEDERAL
ELECTION CAMPAIGN, AND THAT IS
CERTAINLY MAKING THE ROUNDS
SOUTH OF THE BORDER.
JOINING US NOW TO CONSIDER THE
MERITS OF SUCH A WEALTH TAX:
BRETT HOUSE, HE'S VICE-PRESIDENT
AND DEPUTY CHIEF ECONOMIST AT
SCOTIABANK AND A SENIOR FELLOW
AT MASSEY COLLEGE...

Brett is in his forties, balding, with a trimmed beard. He's wearing a black suit and blue shirt.

Steve continues AND THEVAKI THEVARATNAM,
DIRECTOR OF RESEARCH AND
EDUCATION AT THE ONTARIO
FEDERATION OF LABOUR.

Thevaki is in her thirties, with long straight black hair. She's wearing a black blazer and a printed blouse.

Steve continues BRETT, IT'S NICE TO WELCOME YOU
BACK TO OUR PROGRAM.
THEVAKI, NICE TO WELCOME YOU
HERE FOR THE FIRST TIME.
GREAT.
LET'S PUT BULLET POINTS ON THE
TABLE TO SET UP THIS DISCUSSION
HERE AND WE WILL ASK THE
TALENTED SHELDON OSMOND TO FLICK
A SWITCH, AND THERE IT COMES.

Steve reads data from the slate and says
ACCORDING TO THE CANADIAN CENTRE
FOR POLICY ALTERNATIVES, THE
WEALTHIEST 87 FAMILIES IN
CANADA... 87 FAMILIES... OWN AS
MUCH WEALTH AS THE BOTTOM
12 MILLION CANADIANS.
IN THIS PAST FEDERAL ELECTION
CAMPAIGN, THE NDP PROPOSED A
WEALTH TAX OF 1 percent ON FAMILIES
WITH ASSETS OF MORE THAN
20 MILLION DOLLARS, WHICH WOULD INCLUDE
ABOUT 6,000 FAMILIES.
AND ONE LAST THING: WHAT DO
CANADIANS THINK ABOUT A WEALTH
TAX?
ABACUS DATA DID A SURVEY AND
FOUND THAT 67 percent OF CANADIANS
SUPPORT OR SOMEWHAT SUPPORT A
WEALTH TAX, INCLUDING 58 percent OF
CANADIANS IDENTIFYING AS RIGHT
WING.
THEY SELF-IDENTIFY AS RIGHT WING
AND 58 percent SAY WE'RE UP FOR A
WEALTH TAX.
I GUESS THE FIRST THING WE
SHOULD DO TO FIGURE OUT WHETHER
WE'RE FOR OR AGAINST THIS THING
IS TO FIGURE OUT WHAT THIS IS.
GIVE US A HANDY DANDY DEFINITION
OF WHEN YOU TALK WEALTH TAX,
WHAT ARE YOU LOOKING TO?

The caption changes to "Thevaki Thevaratnam. Ontario Federation of Labour."

Thevaki says WE'RE LOOKING AT THE NET
WORTH OF PEOPLE'S ASSETS.
MOST OF US PAY INCOME TAXES AND
WHAT THAT LOOKS LIKE IS A TAX ON
YOUR EMPLOYMENT INCOME.
FOR THE SUPER RICH, THEY ALSO
PAY INCOME TAXES AS WELL.
THAT'S ACTUALLY THE TAX THAT
THEY PAY ON THEIR CAPITAL GAINS.
SO, FOR EXAMPLE, IF YOU'RE
SELLING A STOCK IN THE STOCK
MARKET, THAT PROFIT IS TAXED.
NOW, THE DIFFERENCE IS, IF I WAS
TO EARN THAT EXACT SAME MONEY,
LIKE DURING MY WORKING HOURS,
THAT'S TAXED, THAT IS
100 PERCENT TAXABLE.
NOW, THE PROFIT THAT YOU SELL...
THE PROFIT THAT YOU GAIN FROM A
STOCK, ONLY 50 percent OF THAT IS
TAXABLE.
SO THAT'S WHERE WE'RE SEEING A
LOT OF WEALTH ACCUMULATE, AND
MORE SO, CANADA DOESN'T ACTUALLY
HAVE AN INHERITANCE TAX.
SO YOU'RE SEEING WEALTH
ACCUMULATE OVER GENERATIONS AS
THAT WEALTH IS PASSED DOWN.
SO THAT'S WHERE YOU ACCUMULATE A
LOT OF THAT WEALTH.

Steve says THAT'S... WHEN
WARREN BUFFETT SAYS I PAY A
LOWER TAX RATE THAN MY
SECRETARY, THAT'S WHAT IT IS.

Thevaki says EXACTLY.

Steve says SHE IS PLAYING TAX
ON EMPLOYMENT INCOME AND HE'S
PAYING TAX ON HIS CAPITAL GAINS.

Thevaki says EXACTLY.

Steve says WHAT'S THE GOAL OF A
WEALTH TAX?

Thevaki says WELL, I WOULD SUGGEST THAT
THERE ARE PROBABLY THREE MAIN
GOALS, ONE BEING TAXES IN
GENERAL, WHAT THEY DO IS THEY
FUND THE PUBLIC SERVICES THAT WE
ALL USE AND WE ALL SHOULD BE
CONTRIBUTING TOWARDS.
NOW, PUBLIC SERVICES LIKE OUR
EDUCATION SYSTEM, OUR HEALTH
CARE, PUBLIC INFRASTRUCTURE.
BUT IMAGINE WHAT A WEALTH TAX
COULD PRODUCE IN NEW REVENUE?
WE COULD BE FUNDING UNIVERSAL
PHARMACARE, UNIVERSAL DENTAL
CARE, A NATIONAL CHILD CARE
STRATEGY.

Steve says BECAUSE YOU'RE
CONVINCED IT WOULD BRING IN SO
MUCH MORE TAX INCOME?

Thevaki says THE OTHER THING IS WEALTH
INEQUALITY.
NEWFOUNDLAND AND LABRADOR,
PRINCE EDWARD ISLAND, AND NEW
BRUNSWICK COMBINED.
THAT'S A QUESTION OF WHAT WE
WANT TO SEE IN SOCIETY.
WHETHER THAT IS A REFLECTION OF
OUR VALUES.

Steve says THIRD POINT?

Thevaki says THIRD POINT IS, CONSIDER THAT
WHEN YOU HAVE MORE WEALTH, YOU
EXUDE MORE POWER, PARTICULARLY
POLITICAL POWER.
SO WHEN WE'RE TALKING ABOUT
POLITICAL POWER, THESE ARE FOLKS
THAT ARE ABLE TO CONTROL OUR
MEDIA AREAS, THEY HAVE DIRECT
ACCESS TO GOVERNMENT THROUGH
LOBBYING, THAT ARE ABLE TO
INFLUENCE POLICY THINK-TANKS.
BY DOING SO THEY'RE ABLE TO
PERPETUATE AND UPHOLD THEIR
PRIVILEGE.
SO IT'S A QUESTION OF WHETHER OR
NOT OUR DEMOCRACY IS ACTUALLY
BEING DIMINISHED IN THIS WAY.
I BELIEVE A WEALTH TAX WOULD
REDISTRIBUTE DEMOCRATIC POWER IN
THAT WAY AS WELL.

The caption changes to "Connect with us: Twitter: @theagenda; Facebook, agendaconnect@tvo.org, Instagram."

Steve says SO FINANCIAL AND
DEMOCRATIC REASONS, BRETT, WHY
IN THEVAKI'S VIEW WE OUGHT TO
HAVE A WEALTH TAX, IN YOUR VIEW,
WHAT DO YOU SAY?

The caption changes to "Brett House. Scotiabank."
Then, it changes again to "How it works."

Brett says THE QUESTION
YOU POISED WHAT IS THE PURPOSE
OF A WEALTH TAX IS IMPORTANT TO
KEEP IN MIND.
WHEN THIS CONVERSATION GETS
STARTED IN CANADA, IN MANY WAYS
WE'RE BRINGING IN A DEBATE FROM
OUTSIDE THE COUNTRY, FROM THE
UNITED STATES, IN OTHER PLACES
THAT ISN'T QUITE AS RELEVANT
HERE.
WE LOOK AT MEASURES OF
INEQUALITY ON THE INCOME FRONT
IN CANADA, CANADA IS VERY
WELL... OUR INEQUALITY IS
RELATIVELY LOW COMPARED TO MOST
OTHER INDUSTRIALIZED COUNTRIES.
THAT'S IN PART BECAUSE OUR TAX
SYSTEM IS ALREADY FAIRLY
REDISTRIBUTIVE, IN TERMS OF
MOVING RESOURCES FROM RELATIVELY
HIGH INCOME EARNERS TO
RELATIVELY LOW INCOME EARNERS.
THE INITIAL QUESTION, WHAT IS A
WEALTH TAX TO DO?
IN MANY WAYS WE'RE ALREADY DOING
THAT THROUGH OUR TAX SYSTEM AND
FURTHER IMPROVEMENTS IN THE TAX
SYSTEM, THAT COULD BE DEALT WITH
EVEN MORE DEEPLY.
ON THE SECOND FRONT, WILL A
WEALTH TAX DO INDEED IN A
PRACTICAL WAY WHAT IT'S BEING
ASKED TO DO?
I THINK THAT'S QUESTIONABLE.
MOST COUNTRIES THAT HAVE HAD
WEALTH TAXES HAVE REMOVED THEM
OVER THE LAST 15 YEARS OR SO
BECAUSE IN PRACTICE THEY TEND TO
ACTUALLY NOT GARNER ANYTHING
CLOSE TO THE ESTIMATES OF WHAT
THEIR PROPOSERS OR INITIATORS
THOUGHT THEY WOULD BRING IN
IN TERMS OF TAX REVENUE.

Steve says WHY IS THAT?

The caption changes to "Brett House, @BrettEHouse."

Brett says LARGELY BECAUSE OF THE VALUE
ON THE ASSETS OR LIABILITIES FOR
SOMEONE IS REALLY TOUGH TO DO.
IF YOU'RE LOOKING AT HOUSES,
ART, OTHER THINGS PEOPLE OWN,
THOSE THINGS ARE VERY MARKET
CONTINGENT, VERY APPRAISER
CONTINGENT, AND THERE'S AN
INCENTIVE FOR PEOPLE TO TAKE OUT
MORE DEBT TO OFFSET IT.
THAT MAY BE HELPFUL IN TERMS OF
GETTING RESOURCES BACK INTO THE
ECONOMY AND INVESTMENT
PRODUCTIVELY DEPLOYED IN THE
ECONOMY.
IT ALSO MIGHT MAKE AN ECONOMY
MORE VULNERABLE TO FINANCIAL
CRISIS OR FINANCIAL UNCERTAINTY
AS WELL.

Steve says LET'S COME BACK TO
THAT.
WE'LL GO DEEPER ON THAT LATER.
WHAT ABOUT THE ARGUMENT THAT
THEVAKI BROUGHT FORWARD, THAT
THE MORE MONEY YOU HAVE, THE
MORE POLITICAL POWER YOU HAVE,
AND THERE SHOULD BE A WAY IN
CANADA WHICH IS A MORE
EGALITARIAN SOCIETY THAN THE
UNITED STATES TO KIND OF BEVEL
THE EDGES OF THOSE WHO HAVE SO
MUCH POLITICAL POWER?

Thevaki says WELL, I THINK WE ALREADY DO
THAT IN MANY WAYS.
WE HAVE CREATED LIMITS ON
POLITICAL SPENDING AND POLITICAL
DONATIONS IN THIS COUNTRY, AND
THEY'RE ACTUALLY PRETTY TIGHT
COMPARED TO THE REST OF THE
WORLD.
WHEN YOU LOOK AT WHAT IT COSTS
TO FUND A CAMPAIGN FOR A SEAT IN
PARLIAMENT RIGHT NOW, IT'S ABOUT
A TENTH OR LESS OF WHAT IT COSTS
IN THE UNITED STATES.
AND, YOU KNOW, THAT'S NOT JUST A
FACTOR OF OUR POPULATION BEING
SMALLER, IT REALLY IS A FACTOR
OF THOSE LIMITS BEING VERY
EFFECTIVE.
NOW, THAT'S NOT THE ONLY WAY
POLITICAL POWER GETS EXPRESSED,
BUT WE HAVE THINGS THAT
COUNTERACT PRIVATE INTERESTS
WITH THINGS LIKE TVO, YOU KNOW,
THAT PROVIDE AN ALTERNATIVE TO
PRIVATE MEDIA OUTLETS.
SO I THINK WE HAVE CREATED A
SITUATION OR A NUMBER OF CHECKS
AND BALANCES AND ALTERNATIVE
VOICES THAT DO COUNTERACT THE
PARTICULAR VOICE THAT COMES
ALONG WITH HAVING ECONOMIC
POWER.

Steve says THEVAKI, IT IS A
FACT THAT THE MIKE BLOOMBERG
EFFECT THAT WE'RE SEEING IN THE
UNITED STATES RIGHT NOW, WHERE A
BILLIONAIRE ENTERS THE RACE AT
THE 11TH HOUR, JUST DECIDES THAT
HE'S GOING TO OBLITERATE HIS
OPPONENTS BY OUTSPENDING THEM,
THEY COULDN'T DO THAT HERE, WE
HAVE SPENDING LIMITS.

The caption changes to "'If you tax me, I will leave!'"

Thevaki says THROUGH THE LEGISLATION WE
HAVE YOU CAN HAVE THIRD BODY
ADVERTISING.
THAT'S ACTUALLY A BUNCH OF
DIFFERENT GROUPS, POWERFUL
GROUPS THAT ARE ABLE TO
CONSTRUCT A NARRATIVE AND
THROUGH ADVERTISING PUT THAT OUT
THERE TO THE PUBLIC, WHETHER
THAT BE ON FACEBOOK OR YouTube
OR OTHER AVENUES.
SO YOU'RE STILL ABLE... THERE
ARE LOOPHOLES IN THAT
LEGISLATION THAT STILL ALLOW
MONEY TO ENTER INTO POLITICS.

Steve says LET ME PUT ANOTHER
POINT TO YOU, WHICH IS THE
NOTION THAT THE RICH ALWAYS FIND
A WAY TO, LEGALLY, THEY WOULD
SAY, NOT EVADE BUT AVOID PAYING
MORE TAX BY BEING CLEVER.
THEY MOVE MONEY TO THE CAYMAN
ISLANDS, HIRE AN ACCOUNTANT TO
FIGURE OUT EVERY LOOPHOLE IN THE
BOOK.
THAT IT WON'T REALIZE THE AMOUNT
OF INCOME YOU THINK IT WILL.
DO YOU WANT TO COMMENT ON THAT?

Brett says YOU'RE RIGHT, THE WEALTHY
HAVE RESOURCES MOST OF US DON'T
AND THEY CAN PAY THEIR
ACCOUNTANTS.
ULTIMATELY WE HAVE TO ASK... THE
PBO LOOKED AT THE NDP PROPOSAL.

Steve says PARLIAMENTARY BUDGET
OFFICE.

Brett says YES.
THEY FOUND THAT ABOUT A THIRD OF
THAT MONEY MIGHT BE EVADED.
NOW, FOLKS IN THE STATES THAT
HAVE BEEN BEHIND ELIZABETH
WARREN'S PROPOSAL, WHO ARE ALSO
BIG PROPONENTS OF REDUCING
WEALTH INEQUALITY, HAVE FOUND
THAT IF YOU CONSTRUCT A
WELL-DESIGNED, WELL-ENFORCED TAX
SYSTEM, THAT EVASION DROPS TO
ABOUT 16 percent.
SO, YES, THERE'S GOING TO BE
EVASION.
WE HAVE TO LOOK AT THE COST AND
BENEFIT ANALYSIS AS WELL AND THE
BENEFITS FAR OUTWEIGH THE COSTS,
ULTIMATELY.

Steve says SO AT THE END OF THE
DAY, MAYBE IT'S WORTH DOING?

Brett says WELL, I THINK, INEQUITY WAS
BROUGHT UP AT THE BEGINNING.
A WEALTH TAX IMPLICITLY ASSERTS
WE'RE GOING TO TAX THE SAME
INCOME MORE THAN ONCE.
WHEN CAPITAL HAS BEEN
ACCUMULATED BY PEOPLE, IT'S A
RESULT OF SUCCESSFUL DECISIONS,
IT MAY BE THE RESULT OF
INHERITANCE OR MAY BE THE RESULT
OF GOOD LUCK, BUT IT DOES
REFLECT INCOME THAT'S ALREADY
BEEN TAXED ONCE AROUND, AND WE
GENERALLY HAVE A PRESUMPTION IN
OUR TAX SYSTEM THAT WE DON'T TAX
THE SAME INCOME TWO TIMES OR
EVEN MULTIPLE TIMES.
SO I THINK THERE ARE MULTIPLE
EQUITY ISSUES AND FAIRNESS
ISSUES THAT NEED TO BE TAKEN
INTO ACCOUNT HERE, AND THAT ALSO
HAS TO BE SET AGAINST THIS ISSUE
OF TRYING TO, YOU KNOW,
REDISTRIBUTE WEALTH AND INCOME
IN SOCIETY.
IF OUR TAX SYSTEM ISN'T WORKING
WELL RIGHT NOW, WHETHER IT'S ON
THE POLITICAL DONATION OR THIRD
PARTY ADVERTISING FRONT OR ON
LOOPHOLES EXISTING, I WOULD SAY
LET'S FOCUS ON CLOSING THOSE
LOOPHOLES AND DESIGNING THE TAX
SYSTEM MORE EFFECTIVELY.
WE'VE HAD REPEATED CALLS IN
CANADA FOR DECADES TO LOOK
AFRESH AT THE TAX SYSTEM, TO
MAKE IT AS EFFICIENT AND AS
EFFECTIVE AS POSSIBLE...

Steve says AND NO POLITICIAN
WILL GO NEAR IT BECAUSE THEY'RE
TERRIFIED TO.

Brett says NO ONE WILL GO NEAR IT BUT
THE CHANCES OF SOMEONE ACTUALLY
TAKING THAT ON GET GREATER TO
THE EXTENT THAT WE BUILD A
COALITION OF VOICES FROM ACROSS
THE COUNTRY AND ACROSS DIFFERENT
SECTORS OF THE ECONOMY SEEKING
THAT KIND OF REFRESH AND RE-LOOK
TO ENSURE THAT OUR TAX SYSTEM
CORRESPONDS TO OUR 21ST CENTURY
NEEDS.
AND ONE OF THE BIGGEST NEEDS I
THINK WE HAVE TO KEEP IN MIND IS
THAT CANADA IS TRADITIONALLY A
CAPITAL POOR ECONOMY.
WE'RE A SMALL POPULATION ON A
VERY BIG LAND MASS, AND TO
DEVELOP, WE HAVE ALWAYS NEEDED
TO BRING CAPITAL IN FROM ABROAD
IF WE WANT TO ENSURE THAT OUR
TAX SYSTEM CONTINUES TO
INCENTIVIZE THAT RATHER THAN
PUSHES IT AWAY.

Steve says YOUR CONCERN IS A
WEALTH TAX WOULD HAVE A CHILLING
EFFECT ON MONEY COMING INTO THE
COUNTRY AND INVESTING HERE.

Brett says IT ABSOLUTELY COULD.

Steve says DO YOU WANT TO SPEED
TO THAT?

Thevaki says CAN I SPEAK TO A POINT BRETT MADE EARLIER?

Steve says THE DOUBLE TAXATION
ONE?

Thevaki says THE POINT ABOUT... I WANTED
TO CLARIFY.
WE'RE TALKING ABOUT A WEALTH TAX
BUT THIS IS ON THOSE WHO HAVE
LIKE A HIGH, HIGH WEALTH AMOUNT,
AND IT'S THE NDP'S PROPOSAL
20 MILLION DOLLARS, ELIZABETH WARREN IS
PROPOSING 50 MILLION DOLLARS AT THE
THRESHOLD.
I WANTED TO MAKE IT CLEAR THAT
BILLIONAIRES DON'T EXIST ON
THEIR OWN.
THEY HAVE ACCESS TO PUBLIC
INFRASTRUCTURE OVER THE YEARS,
THEY HAVE ACCESSED WORKERS THAT
ARE BEING EDUCATED IN OUR PUBLIC
SCHOOL SYSTEMS, THEY ARE
ACCESSING ROBUST ECONOMIC
MARKETS THAT THE GOVERNMENT HAS
PUT FORTH, OR HELPED INCENTIVIZE
AND CREATE.
SO TO SUGGEST THAT BILLIONAIRES
HAVE CREATED THAT WEALTH THROUGH
INHERITANCE OR LUCK OR
OPPORTUNITY, ABSOLUTELY, THERE'S
HARD WORK THAT GOES INTO IT, BUT
THERE'S ALSO THE ASPECT THEY
HAVE ACCESSED THOSE PUBLIC
SERVICES AND IT'S TIME FOR THOSE
FOLKS WHO PAY THEIR FAIR SHARE
AND REINVEST.

Steve says THEY DO PAY TAXES.

Thevaki says YES, BUT THE QUESTION IS DO
THEY PAY THEIR FAIR SHARE?
EXACTLY.

The caption changes to "The fairness principle."

Brett says IN MANY CASES FOR MUCH OF
CANADA'S HISTORY, INCOME TAXES
FOR THE HIGHEST TAX BRACKET HAVE
IMPLIED A MARGINAL TAX RATE OF
MORE THAN 50 percent.
SO THEY'VE BEEN PAYING
REASONABLE TAXES ON THEIR INCOME
FOR A SUBSTANTIAL PERIOD OF
TIME.
I'M NOT GOING TO DEFEND A
PARTICULAR GROUP OF TAXPAYERS,
BUT I THINK YOU CAN REASONABLY
SAY THAT THERE'S BEEN A PUBLIC
CONSENSUS IN CANADA THAT, UNLIKE
THE THATCHER ERA IN THE U.K.
WHEN SHE FAMOUSLY ASSERTED
SOCIETY DOESN'T EXIST, TAXPAYERS
ACROSS THE INCOME SPECTRUM HAVE
BOUGHT INTO THE NOTION THAT WE
DO WELL WHEN OUR ENTIRE SOCIETY
DOES WELL, AND OUR ENTIRE
SOCIETY DOES WELL WHEN PUBLIC
SERVICES FUNCTION WELL.

Steve says CAN WE JUST TALK
ABOUT THE PUBLIC RELATIONS OF
THIS FOR THE MOMENT BECAUSE, YOU
KNOW, FROM 30,000 FEET UP, IT
LOOKS LIKE SHE IS DEFENDING
PEOPLE WHO DON'T HAVE VERY MUCH
AND IT LOOKS LIKE YOU'RE
DEFENDING PEOPLE WHO HAVE A HELL
OF A LOT.
ARE YOU IN A TOUGHER SPOT HERE
TO TRY TO MAKE AN ARGUMENT THAT
WE SHOULD LAY OFF BILLIONAIRES?

Brett says THAT'S NOT THE CASE I'M
MAKING HERE AT ALL.
WHAT I AM MAKING A CASE FOR IS A
WELL-DESIGNED TAX SYSTEM THAT
TAXES FAIRLY ACROSS THE ENTIRE
RANGE OF INCOMES THAT ARE BEING
TREATED AND ASSETS THAT ARE
BEING TREATED AND WILL ACTUALLY
ENSURE THAT THE RHETORIC WE
BUILD AROUND THAT TAX SYSTEM AND
THE PROMISES THAT WE LABOUR ON
TOP OF IT ARE ACTUALLY MET.
YOU KNOW, IT'S NOT GOING TO DO
US ANY GOOD TO IMPLEMENT
SOMETHING THAT ACTUALLY IN THE
END WILL NOT PRODUCE THE KIND OF
REVENUE THAT WE ANTICIPATE THAT
WE WOULD, AND, YOU KNOW,
SECONDLY, THAT LEADS US TO THE
SITUATION WHERE SPENDING AND
REVENUE ARE MISMATCHED AND WE'RE
ACTUALLY PUSHING OR DISSUADING
CAPITAL FROM COMING INTO THE
COUNTRY.

Steve says COULD WE SAY,
THEVAKI, THAT YOUR INTENTIONS
ARE GOOD, BUT WHEN THE RUBBER
HITS THE ROAD, RICH PEOPLE WILL
LEAVE?
RICH PEOPLE WILL FIGURE OUT A
WAY TO HUSBAND THEIR RESOURCES
IN SUCH A WAY TO KEEP THEM AWAY
FROM REVENUE CANADA.
THEY WILL FIGURE THIS OUT.
SO EVEN THOUGH YOU'VE GOT... YOU
KNOW, YOUR HEART MAY BE IN THE
RIGHT PLACE, THE REALITY IS,
IT'S NOT GOING TO WORK.
IS THAT POSSIBLE?

Thevaki says I DON'T BELIEVE SO.
BECAUSE I THINK WHAT WE'RE
ACCEPTING THE PREMISE IS THAT
PEOPLE COME TO CANADA, STAY IN
CANADA FOR THE MONEY, FOR THE
TAX SYSTEM.
AND I DON'T THINK THAT'S TRUE.
THERE'S SOME ASPECT OF IT THAT
MAY BE TRUE, BUT LARGELY, PEOPLE
HAVE STRUGGLED TO COME INTO THIS
COUNTRY.
PEOPLE HAVE STAYED IN THIS
COUNTRY FOR THE PERSONAL
CONNECTIONS, FOR THE COMMUNITY
THEY'VE BUILT, FOR THE VALUES
THAT CANADA HOLDS, FOR THE
COUNTRY THAT IT IS.
AND SO TO SIMPLY SAY THAT IF
THERE WAS A WEALTH TAX ON THE
UBER RICH, THAT THEY WOULD
SUDDENLY LEAVE... I DON'T THINK
SO.
AND LET'S TALK ABOUT THE FACT
THAT WE'RE TALKING ABOUT ASSETS
AS WELL.
YOU CAN'T JUST PICK UP A FACTORY
AND LAND AND SIMPLY MOVE.
AND IF YOU CHOOSE TO, WELL, THAT
CAPITAL STILL REMAINS IN THIS
COUNTRY AND STILL GETS USED.
AND ELIZABETH WARREN'S PLAN
ACTUALLY ADDRESSES THIS POLICY
BY INTRODUCING AN EXIT TAX, AND
THAT EXIT TAX IS LIKE A 40 percent TAX
ON FOLKS THAT HAVE A NET WORTH
OF 50 MILLION DOLLARS THAT CHOOSE TO
RENOUNCE THEIR AMERICAN
CITIZENSHIP.
AND SO THERE ARE AVENUES TO
ACTUALLY COUNTER THIS IDEA OF
FOLKS LEAVING THE COUNTRY.

Brett says I'D JUST LIKE TO SAY, I THINK
WE'RE REALLY IMPORTING AN
AMERICAN DEBATE HERE THAT IS A
BIT AT ODDS WITH THE FACTS ON
WHERE THE ECONOMY AND WHERE OUR
TAX SYSTEM STANDS IN CANADA.
YOU KNOW, WE ARE LOOKING HERE AT
THE QUESTION OF... YOU KNOW, DO
WE BRING IN A WEALTH TAX OR NOT
BECAUSE THERE MIGHT BE EVASION?
I DON'T THINK THAT'S THE RIGHT
QUESTION AT ALL.
I REALLY AGREE WITH THE COMMENTS
YOU MADE.
PEOPLE WHO MIGHT BE AFFECTED BY
A WEALTH TAX ARE NOT ABOUT TO
FLEE AND GIVE UP THEIR
COMMITMENT TO THE SOCIETY SIMPLY
BECAUSE A TAX HAS BEEN BROUGHT
INTO PLACE.
WE'VE SEEN CONSISTENTLY OVER
TIME THAT EVEN WHEN TAX RATES
WERE MARGINALLY MUCH HIGHER IN
CANADA THAN ELSEWHERE, THAT
PEOPLE STAYED BECAUSE OF THEIR
COMMITMENT TO THE SOCIETY.
THE BIGGER ISSUE IS THE CHILL ON
WHICH IT WOULD PLACE ON
POTENTIAL CAPITAL COMING INTO
THE COUNTRY AND, YOU KNOW,
INVESTMENT DECISIONS BEING MADE
OUTSIDE THE COUNTRY GOING
FORWARD.

The caption changes to "The Americanization of our inequality."

Steve says I APPRECIATE THAT,
BRETT.
I THINK THE TWO OF YOU WOULD
AGREE THAT THERE IS INCOME
INEQUALITY IN OUR SOCIETY.

Brett says ABSOLUTELY.

Steve says AND THE QUESTION IS:
HOW MUCH... HOW MUCH IS
ACCEPTABLE IN WHAT STILL FEELS
LIKE A FREE AND DEMOCRATIC AND
EQUITABLE AND SENSIBLE SOCIETY?

The caption changes to "tvo.org/theagenda; agendaconnect@tvo.org."

Brett says ON THAT POINT, THERE'S SOME
REALLY GREAT WORK THAT MILES
CORAK HAS DONE ON INCOME
INEQUALITY AND INCOME MOBILITY
ACROSS GENERATIONS.
THE PUNCH LINE FROM ALL THAT
RESEARCH IS THAT THE AMERICAN
DREAM STILL LIVES IN CANADA, IN
FACT.
AND SO IT LOOKS AT THE
CORRELATION BETWEEN THREE
GENERATIONS OF INCOMES IN THE
SAME FAMILY.
AND SO THE GRANDPARENTS'
GENERATION IS CLOSELY CORRELATED
WITH THE KIDS' GENERATION IN
TERMS OF INCOME.
AND YOU'VE HAD VERY LITTLE
MOBILITY WITHIN THE SOCIETY.
AND IT COULD BE UP OR DOWN.
AND CANADA HAS MUCH LESS
CORRELATION ACROSS THOSE THREE
GENERATIONS THAN IN THE UNITED
STATES.
WHAT IT IMPLIES IS THAT YOU'VE
GOT OPPORTUNITY, YOU'VE GOT THE
POSSIBILITY OF EARNING MUCH MORE
THAN YOUR GRANDPARENTS HERE MUCH
GREATER THAN THE U.S., THAT
APPLIES IN BELGIUM, AUSTRALIA,
AND THE NORDIC COUNTRIES AS
WELL.
I THINK WE'RE DOING WELL ON THE
INCOME INEQUALITY FRONT.

Thevaki says CAN WE LOOK AT THE BOTTOM
HALF OF FOLKS IN THIS COUNTRY,
ESPECIALLY IN THIS PROVINCE.
THERE ARE PEOPLE WHO CAN'T
ACCESS HOUSING, LET ALONE
AFFORDABLE HOUSING.
THERE ARE PEOPLE MAKING
DECISIONS ON WHETHER THEY CAN
AFFORD THEIR PRESCRIPTION DRUGS.
THERE ARE PEOPLE WORKING
MULTIPLE PRECARIOUS JOBS.

Steve says WOULD A WEALTH TAX
CHANGE ANY OF THAT?

Thevaki says IT'S THE REDISTRIBUTION OF
WEALTH AND YOU ARE SEEING
GOVERNMENT BEING ABLE TO ACCESS
NEW REVENUES THEY HAVEN'T
BEFORE.
OFTEN GOVERNMENT IS FOCUSED ON
ONE SIDE OF THE BALANCE SHEET,
WHICH IS CUTTING SPENDING OR,
SORRY, THE INCOME STATEMENT.
BUT THEY'RE NEVER REALLY FOCUSED
ON HOW DO WE GENERATE MORE
REVENUE, CONSISTENT REVENUE.
SO THIS WEALTH TAX ALLOWS FOR
THAT.
BUT LET'S LOOK AT PEOPLE ON THE
OTHER END OF THE SPECTRUM
BECAUSE THEIR REALITIES ARE
MUCH, MUCH HARSHER THAN WE'RE
GIVING THEM CREDIT FOR.
THIS IS THE LIFE THAT THEY LEAD.
THIS IS THEIR LIVED EXPERIENCE.
LET'S TALK ABOUT MARGINALIZED
COMMUNITIES AND FOCUS ON WHAT
THOSE FOLKS ARE GOING THROUGH.

Brett says I THINK THAT'S EXACTLY THE
RIGHT PLACE TO PUT OUR CONCERN.
NO QUESTION WHATSOEVER.
I THINK RATHER THAN GETTING
DISTRACTED BY THE WEALTH TAX
DEBATE IN THE UNITED STATES,
LET'S FOCUS ON THE POLICY
MEASURES WE CAN TAKE IN CANADA
THAT WILL DIRECTLY ADDRESS THOSE
PROBLEMS.
ON HOUSING AFFORDABILITY.
WHEN WE LOOK AT THAT IN TORONTO
AND VANCOUVER, TO ME THE THING
THAT WE NEED TO ACT ON THERE IS
GETTING SUPPLY UP, NOT ON, YOU
KNOW, SECOND ORDER OR THIRD
ORDER ISSUES THAT ARE SOMEWHAT
DETACHED ON IT ON THE TAX
SYSTEM.
IF WE GOT SUPPLY UP IN TORONTO
AND VANCOUVER, WE WOULD DEAL
WITH THOSE AFFORDABILITY ISSUES
MUCH MORE DIRECTLY THAN THROUGH
SOMETHING LIKE A WEALTH TAX.

Steve says LET'S TRY THIS.
IF YOU WANTED TO DO A UNIVERSAL
BASIC INCOME ACROSS THE COUNTRY,
45 BILLION DOLLARS TO 50 BILLION DOLLARS,
PHARMACARE, YOU'VE GOT TO FIND
15 BILLION DOLLARS.
WOULD A WEALTH TAX GET YOU SOME
OF THE WAY TOWARDS THAT?

Brett says BASED ON THE EXPERIENCE OF
THE EUROPEAN COUNTRIES THAT HAVE
HAD WEALTH TAXES, PROBABLY NOT.
IT WOULDN'T TAKE YOU VERY FAR
AND IT WOULD PROBABLY... GROWTH
GOING FORWARD BECAUSE OF THE
CHILL GOING FORWARD.

Steve says THEVAKI, APPARENTLY
THREE DECADES AGO, EUROPEAN
COUNTRIES HAD A WEALTH TAX.
TODAY THERE ARE BASICALLY THREE
THAT LEVY A BROAD WEALTH TAX,
NORWAY, SWITZERLAND, SPAIN.
THIS SUGGESTS THAT THE IDEA HAS
BEEN TRIED, FOUND WANTING, AND
THERE ARE VERY FEW PEOPLE DOING
IT ANYMORE.
IS THAT INSTRUCTIVE TO YOU?

The caption changes to "The European experience."

Thevaki says SURE.
I WOULD THINK OF THIS QUESTION
IN TWO WAYS.
ONE, LET'S LOOK AT THE SPECIFIC
CASE IN THE EUROPEAN UNION AND
LOOK AT THE GENERALITY AROUND
THE WEALTH TAX.
IN TERMS OF THE COUNTRIES THAT
LEVIED A WEALTH TAX IN THE E.U.,
ONE OF THE DIFFERENCES... IT'S
SO MUCH EASIER TO MOVE AROUND
WITHIN THE EUROPEAN UNION AND
ESCAPE YOUR TAXES.
THAT'S NOT THE CASE IN THE U.S.
OR CANADA.
TAXES ARE STILL LEVIED ON
CITIZENS, WHETHER THEY ARE
WORKING HERE OR WORKING ABROAD.
SO THAT'S ONE ASPECT THAT'S
DIFFERENT.
ANOTHER ASPECT IS THE WEALTH
TAX... THE WEALTH AMOUNT, THAT
THRESHOLD HAS CHANGED AS WELL.
SO IN THE EUROPEAN UNION, IN
DIFFERENT COUNTRIES, IT WAS
ACTUALLY MUCH LOWER THAN WHAT IS
BEING PROPOSED BY THE NDP AND
SOUTH OF THE BORDER AS WELL, AND
SO WHAT YOU'RE SEEING IS THAT...
OR WHAT THEY SAW WAS YOU WERE
KIND OF HITTING THE PEOPLE THAT
HAD FAMILY BUSINESSES BUT DIDN'T
HAVE THE INCOME, THE CASH TO PAY
THE TAXES.

Steve says I MEAN, THAT IS ONE
OF THE CONCERNS HERE IS THAT
THERE WERE SOME FARMERS THAT
WERE GETTING HELD UP IN THIS
THING BECAUSE THEIR LAND HAD
SUDDENLY APPRECIATED IN VALUE
AND THEY WERE SUDDENLY BEING HIT
WITH THE WEALTH TAX.

Thevaki says IT'S SO IMPORTANT THAT WEALTH
THRESHOLD IS SET PROPERLY IS
HIGH ENOUGH SO WE'RE SITTING
THOSE BILLIONAIRES OR THOSE
HUNDREDS OF MILLIONS OF DOLLARS OF MILLIONAIRES.
SO THAT'S WHY WE NEED TO BE
COGNIZANT OF THAT THRESHOLD.
I'D ALSO ARGUE THAT, AS BRETT
MENTIONED BEFORE, THERE WERE
EXEMPTIONS.
SO SOME OF THE COUNTRIES IN THE
EUROPEAN UNION EXEMPTED ART AND
ANTIQUES BECAUSE THEY FOUND THEM
HARD TO VALUE.
WHAT DID FOLKS DO?
THEY BOUGHT A BUNCH OF ANTIQUES
AND ARTWORK.
SO WHEN YOU HAVE EXEMPTIONS LIKE
THAT... ELIZABETH WARREN'S PLAN
DOESN'T HAVE EXEMPTIONS, SO THAT
COUNTERS THAT.

Steve says WE HAVE A MINUTE
LEFT.
DO YOU WORRY YOU'RE ON THE WRONG
SIDE OF THIS ARGUMENT INASMUCH
AS WE HEAR BILLIONAIRES LIKE
WARREN BUFFETT AND GEORGE SOROS
SAY IT'S TIME FOR A WEALTH TAX.

Brett says THE REASON THEY'RE SAYING
THAT IS BECAUSE THE TAX SYSTEM
IN THE UNITED STATES IS NOT
WORKING EFFICIENTLY AND
EFFECTIVELY ON THE TAXATION OF
INCOME.
SO ONE OF THE CLEAREST WAYS TO
ENSURE WE DON'T SWEEP SMALL
BUSINESS OWNERS, FARM OWNERS,
OTHER PEOPLE WHO ACTUALLY
WOULDN'T HAVE THE LIQUID INCOME
TO PAY A WEALTH TAX AND WOULD BE
UNFAIRLY HIT BY ONE, THE
CLEAREST WAY TO AVOID DOING THAT
IS TO TAX INCOME PROPERLY RATHER
THAN TRYING TO TAX ASSETS IN THE
WAY THE WEALTH TAX PROPOSES.
SO I THINK WHAT WE NEED TO DO IS
FOCUS ON FIXING THE TAX SYSTEM
THAT WE'VE GOT, ENSURING WE
SPEND MORE EFFECTIVELY THAN WE
DO NOW, USING THE RESOURCES WE
HAVE AT OUR DISPOSAL MORE
EFFECTIVELY.

Steve says LET ME SAVE 20
SECONDS TO ASK YOU WHETHER YOU
THINK A LIBERAL GOVERNMENT,
SUPPORTED BY A NEW DEMOCRATIC
BALANCE OF POWER IN THE CURRENT
MINORITY PARLIAMENT, MIGHT BRING
THIS IN?

Thevaki says I WOULD VERY MUCH HOPE SO.
I THINK IT'S AN EXCELLENT
OPPORTUNITY TO REDUCE WEALTH
INEQUALITY IN THIS COUNTRY.
IT'S ALL ABOUT POLITICAL WILL.
ULTIMATELY GOVERNMENTS MAKE
CHOICES.
THEY MAKE CHOICES ABOUT WHERE
THEY WANT TO INVEST AND WHO THEY
WANT TO INVEST FOR.
ARE THEY INVESTING FOR THE 99 percent
OF US OR INVESTING FOR THE 1 percent?

The caption changes to "Producer: Eric Bombicino, @ebombicino."

Steve says I WANT TO THANK BOTH
OF YOU FOR COMING IN TO TVO
TONIGHT AND HAVING THIS DEBATE,
BRETT HOUSE FROM SCOTIABANK,
THEVAKI THEVARATNAM FROM THE
ONTARIO FEDERATION OF LABOUR.
THANKS TO YOU BOTH.

The caption changes to "Subscribe to The Agenda Podcast: tvo.org/theagenda."

Thevaki says THANKS SO MUCH.

Brett says THANK YOU.

Watch: A Wealth Tax in Canada?