As the U.S. slide into authoritarianism continues, Canadians must look in the mirror. It is not enough to simply acknowledge that the rules-based international order is ending – we must think long and hard about why it failed and how we can forge a different path.
One thing that should be clear is the intimate link between economic wealth and political power. It is no coincidence that authoritarianism is rising in one of the countries with the highest levels of income and wealth inequality in the world, and the greatest number of billionaires. Extreme wealth gives rise to extreme power, undermining democracy.
To protect our democracy, we should be deeply concerned about the rise of wealth concentration in Canada. A new report from Canadians for Tax Fairness and BC Policy Solutions shows that the wealth share of the wealthiest top one per cent has increased from 19.3 per cent to 22.7 per cent between 1999 and 2023, a total increase in wealth of $3 trillion for the wealthiest one per cent.
When we zero in further on the 1,685 families that make up the wealthiest 0.01 per cent, they now have an average of $448.5 million in wealth, over 4,000 times the wealth held by an average family in the bottom 50 per cent of the wealth distribution. In 1999, this group had “only” a little over $100 million in wealth, on average.
Although our wealth concentration is not yet at the level of the U.S., we must take what is happening south of the border as a dire warning of the consequences of failing to rein in extreme inequality. Billionaires in the U.S. have disproportionately secured political office, have used those positions to enrich themselves, and exploit their control of the media to prevent criticism and gut journalism. This is not what democracy looks like.
If we want to build an independent, sovereign, democratic Canada, we cannot follow this path. We must consciously institute policies that ensure economic wealth — and the power that comes with it — are more equitably distributed throughout society. We cannot allow our public institutions, our key industries, and our media to be perpetually captured by a few wealthy families.
Academic research suggests that this wave of wealth concentration began around the 1980s. It is no coincidence that this is the same period when Canada took a neoliberal turn, characterized by free trade agreements that benefitted capital over workers, growing privatization, and the end of federal support for non-market housing. All of these policies made it easier for wealthy private actors to accumulate wealth at the expense of everyone else.
Without intervention, there is no reason to believe that this ongoing trend of increasingly extreme wealth concentration will come to an end. People with more wealth tend to get higher average returns on that wealth than those with less. The proliferation of double non-taxation agreements has meant that the wealthy and the corporations they control, can funnel much of their income through tax havens where it faces far lower taxation. The wealthy are also far more likely to earn income through capital gains, which is taxed at half the rate of income from work. In our present system, the wealth of the ultra-rich grows faster, and is taxed at a lower rate, than everyone else’s.
The good news is that we have successfully tackled this challenge before. The late 19th and early 20th centuries in Canada were also times of extreme wealth concentration. But, in part through strengthening progressive taxation, supporting labour organizing, and establishing public options in key industries, wealth inequality fell significantly by the late 1960s. We must explore these options again to roll back extreme wealth concentration and strengthen our democracy.
There are further benefits to tackling wealth concentration. Economic inequality is linked to a wide range of negative social outcomes, including lower life expectancy and higher rates of infant mortality, mental illness, homicides, and gender inequality. Inequality even makes economic growth less sustainable.
Closest to home, tackling wealth concentration is a huge opportunity to raise much-needed public revenue. There is broad agreement across the political spectrum that Canada urgently needs to invest in nation-building. Now is the time to acknowledge that whether we want to invest in clean electricity, build affordable housing, expand universal public child care, or insulate our national defence from great power rivalries, we can afford it. The money is already here, in the hands of Canada’s ultra-wealthy — and our largest corporations, which have made tax avoidance part of business as usual.
A modest wealth tax that affects only Canadians with over $10 million in net wealth could raise nearly $40 billion annually. Ninety-nine per cent of Canadians would not pay it. Similar taxes are already in place in Norway, Switzerland and Spain, and California is currently considering a one-time wealth tax on billionaires.
Canada is also the only country in the G7 without an inheritance or estate tax. The current patchwork system is ineffective, allowing the same families to be among the wealthiest in Canada generation after generation. It is no coincidence that the Thomson family, which was Canada’s wealthiest family in 1999, is still our wealthiest family today. Closing the capital gains loophole, and engaging in international coordination to ensure the effective taxation of the ultra-wealthy around the globe, would also help prevent continued wealth concentration.
As for the worn-out argument that the wealthy will flee when their taxes are increased? In Massachusetts, a newly implemented tax on millionaires raised $2 billion more than expected last year. Spain successfully raised its wealth tax in 2023. The wealthy do not migrate in response to taxes at nearly the rate that some would have us believe. In Canada, millionaires themselves are even calling for higher taxes on the wealthy.
The time to act is now. We are all seeing the consequences of extreme inequality with our own eyes. It is time to rid ourselves of the neoliberal myth that economic wealth and political power are separate entities. The two are deeply intertwined, and the concentration of one leads to the concentration of the other. If we want to put Canada on a more democratic, more sovereign, and more humane path, we must address extreme wealth concentration before it’s too late.
This article originally appeared in The Tyee.
