Ed Broadbent has the numbers on what a tax structure tilted towards the rich costs:
According to a recent study in the Canadian Tax Journal, the top 1 per cent of individual taxpayers earn 11.7 per cent of all income, but receive almost all of the benefit of the stock options deduction and 87.4 per cent of the benefit of the capital gains deduction. In the case of both stock options and capital gains, only 50 per cent of income is liable to tax.
The top 1 per cent also receive almost one half (47.8 per cent) of the benefit of special tax treatment of dividends. Even within the top 1 per cent, benefits are heavily tilted to the very rich.
These tax loopholes are costly. Money needed for hospitals, schools and infrastructure is unfairly left in the hands of the rich. Partial inclusion of capital gains in taxable income costs the federal government alone $3.6 billion per year; partial inclusion of stock options costs $725 million per year; and special tax treatment of dividends costs $3.7 billion per year.
The Paradise Papers make clear that Canada treats the rich like most so called "advanced" democracies. And they explain why these democracies are in trouble:
Tax avoidance and evasion by the rich ultimately undermines democracy: it starves social programs and public services, increases after tax income and wealth inequality, and further concentrates economic resources in the hands of a few. The overall message to a majority of Canadians is that the rules of the economic game are rigged against them.
The Liberals campaigned on a platform to restore democracy. But, Broadbent writes, their hypocrisy is "stunning."
Image: taxfairness.ca
