Three steps we can make toward reducing the disparity
This week world leaders – including Canadian Prime Minister Mark Carney – descend on Davos, Switzerland for the annual World Economic Forum.
The agenda is focused on themes like global cooperation in a volatile world, technological transformation and AI, and the impacts of trade wars and inflation. But the most pressing challenge across the world today is not on the agenda – rising inequality.
Canada is no exception as a new analysis by Oxfam Canada highlights.
There’s no hiding the fact that the globe over, the rich are getting richer at the expense of everyday people and that the resulting inequality reverberates negatively through economies, society and politics.
In Canada, the richest 0.01 per cent – just 1,800 families – hold over $1 trillion in total wealth. That’s nearly six per cent of the wealth in the country. Compare that to the bottom 40 per cent of Canadians – seven million families that between them hold just over three per cent of total wealth. Their average net-worth is under $87,000 – a sum an average billionaire today makes in less than one hour.
This isn’t just a wealth gap but a wide, deep and growing wealth chasm.
On one end of that chasm, more than 25 per cent of Canadians are living in food-insecure households, hundreds of thousands are experiencing homelessness, foodbank usage has doubled nationwide since 2019 and a record 1.4 million children are living in poverty.
At the other end, Canada’s 40 richest billionaires – who have a combined net-worth greater than the GDP of countries like South Africa, Finland or Chile – saw a 20 per cent increase in their wealth last year.
Inequality at this scale isn’t just harming individuals – the impacts are broader. Inequality breeds polarization and perceptions of unfairness that are deeply destabilizing to democracy. A recent survey of over 2,300 millionaires highlights that they agree – over half think that extreme wealth is a threat to democracy.
Further, how can our economy truly thrive when it’s so top-heavy that much of our workforce can’t afford to meet their basic needs? Consumption? Productivity? Those are moot metrics when Canadians can’t put food on the table or afford their rent.
What can we do about the growing disparity? A lot actually.
First, we need a wealth tax.
To slow rising inequality, Canada should establish a progressive wealth tax that applies to those with a net worth of $10 million and above. This could raise an additional $121 billion in tax revenues over the next five years that could be used to redistribute wealth to support the most vulnerable and fund essential services to build a thriving economy like child care, health care and affordable housing.
The most interesting part about this proposal? There’s actually a large and growing number of the ultra-rich that support wealth taxes, including new polling of millionaires in G20 countries that indicates 63 per cent would be in favor of a two per cent wealth tax.
Second, we need to crack down on tax havens.
Large corporations and wealthy Canadians hold at least $682 billion of their savings outside of Canada. Canadian investments in Bermuda alone grew by $120 billion between 2011 and 2023, even though there is often no real business reason to move money there. By overlooking tax haven abuse, Canada is leaving $15 billion annually in tax revenue on the table.
Finally, we need to collaborate globally.
One of the world’s foremost experts on inequality, Joseph Stiglitz, recently led a report that was presented to the G20 at the end of last year. The priority recommendation from the report is the formation of a new body, an International Panel on Inequality (IPI). The IPI would bring together the best evidence to clearly show how inequality is harming people, democracies and economies, and what governments can do about it.
Just like other complex challenges, we need the best minds working together on inequality – and this model, which is similar to the UN body charged with fighting climate change, is a great place to start.
Extreme wealth inequality is too often treated as an inevitability – it’s not. It’s a policy choice, and one that our federal government continues to make every day that our tax code remains the same. If Canada has any hope of closing the widening wealth chasm we have today, and all of the challenges that come with it, we need to start by taxing the super-rich.
Photo courtesy of DepositPhotos
