Tax the wealthy, don’t bash them
Re Canadian tax hypocrisy that favours the rich must end, Opinion, Nov. 13 Canada must do a much better job of tracking down and prosecuting Canadians who use complex offshore structures to hide wealth and earn untaxed income. There is no question the CRA should go after these people and their advisers aggressively.
Ed Broadbent is correct that awarding stock options to public company executives is an abuse of the tax system. Taxing what is in fact salary as a capital gain is preposterous and should be stopped immediately. Stock options are fine for early stage private companies that are unable to pay market rates for salary, but should be fully taxed for public companies whose senior executives are already richly rewarded. While the argument is that by awarding stock, an executive’s interests are more closely aligned with shareholders, in reality it is just a cheaper form of employment income. For proof, just look at how many executives cash in their options as soon as they are awarded.
However, Broadbent goes too far when he claims that all capital gains and dividends should be fully taxed like employment income. The lighter taxation of capital gains is a fair reward for those who risk capital to grow businesses and create jobs. Dividends, on the other hand, are already fully taxed. Dividends are paid out of a company’s tax-paid earnings and are then taxed again when received by a shareholder. In fact, it can be argued that dividends are already taxed more highly than employment income.
Finally, although I fully agree that the wealthy should be taxed fairly, when he says, “These tax loopholes are costly. Money needed for hospitals, schools and infrastructure is unfairly left in the hands of the rich,” he fails to mention that without wealthy philanthropists, our hospitals and schools would be much worse off.
Not only do these people contribute significant money to these institutions, many of them provide their time and expertise as volunteers.
So before we just go ahead and bash the wealthy, we should also acknowledge that they contribute significantly to the well-being of all Canadians. David Howard, Toronto