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Who and how much:

Consider an annual tax on the net wealth of families with rates of one per cent above $10 million, two per cent above $50 million and three per cent above $100 million.

This means the first $10 million of any family’s wealth is entirely unaffected by the wealth tax. Based on modelling of the first year of this wealth tax, the bottom 99.4 per cent of Canadians would pay nothing, while only the richest 0.6 per cent would pay any amount. This means that only about 100,000 families across the country would pay any amount under the wealth tax, with 10,000 wealthy enough to fall into the second-highest bracket and 3,700 in the highest bracket.

This narrow tax on the wealthiest few would raise an estimated $39 billion in its first year, $62 billion by its 10th year and $495 billion cumulatively over a 10-year window.

How:

an effective wealth tax must make use of extensive third-party reporting of assets, particularly from financial institutions, rather than relying too heavily on self-reporting as in the case of some older wealth taxes.

  • CanadaPlus
    2·
    8 days ago

    Also important bits:

    First, a well-designed wealth tax must apply to all types of assets equally (rather than exempting certain types of assets such as real estate, which would make tax avoidance by shifting between asset classes easy and likely).

    Another concern is that the wealthy may move abroad in response to a wealth tax. Even if some do, that does not mean they can avoid the wealth tax. To reduce the incentive, either a substantial exit tax can be imposed or annual wealth tax obligations can continue to be applied after expatriation for a set number of years. This would be a fair recognition of the broader society’s contribution to creating and enabling these fortunes.

    A hard cap would also have none of these possible weaknesses, although it may be seen as too radical.