Singh’s self-defeating tax-the-rich mania
With Justin Trudeau’s Liberals floundering early in an election campaign that no one wanted, but which according to the prime minister is the most important since 1945, Liberal voters disaffected with the election-for-the-sake-of-a-majority may set their sights elsewhere. Right-leaning Liberals displeased with Trudeau may choose to look right and vote Conservative, and this is perhaps one reason why the Tories have caught up with the Liberals in Ontario and are now in a statistical tie in top spot according to the latest poll by Nanos Research as of Monday.
Left-leaning Liberals equally disaffected with the “natural governing party” might look even further left at the New Democratic Party. If the Liberal minority shrinks further, NDP leader Jagmeet Singh, who propped up the previous minority, could well play the role of kingmaker. According to a new IPSOS poll, the Tories actually lead Ontario at 35 per cent, the Liberals have dropped to 31 per cent and the NDP has improved to 23 per cent. What the NDP stands for is therefore finally consequential.
As you would expect, Singh’s platform is littered with populist giveaways even more outlandish than Trudeau’s. So apart from his big promises of pharmacare and dental care, carried over from the last election, you can add “affordable” in just about everything, whether housing, education, or high speed Internet. Unlike the other parties, the NDP are refreshingly honest that it is going to be taxpayers, especially wealthy taxpayers, who are going to foot the bill for their largesse.
Specifically, the NDP has proposed a wealth tax on the super rich. Anyone whose worth is more than $10 million will be forced to pay one per cent of all of their wealth over that threshold every year. What’s more, the NDP would raise the marginal tax rate to 35 per cent for anyone earning more than $210,000. Further, they propose to increase the inclusion rate on capital gains tax to 75 per cent. That would be a big increase from 50 per cent at present.
Singh’s plans to soak the rich reflect his obvious disdain for the wealthy. He reserves his particular ire for the super rich. Speaking at a news conference to launch the platform, he said: “We know that the billionaires of this world are not paying their fair share. They’re spending their time up in space going on luxury rides in rocketships.”
Leaving aside the fact that none of the billionaires who went up to space recently are Canadian, and thus need have no fear of an NDP victory, Singh’s frequent rhetoric points to importing the tropes of American class and culture warfare to Canada. Indeed, the billionaires in space analogy might as well have come from Alexandria Ocasio-cortez, the firebrand Democratic Congresswoman on the far left of her party. As it happens, Singh and AOC, as she’s popularly known, went head to head in a live streamed video game to raise funds for socially desirable causes, at the end of which she tweeted that “another world” is possible and is only a few hours drive from New York City.
Ironically, AOC may be right but not in the way she or Singh thought she was. While Canada is not the socialist paradise dreamed of by the far left, sensible, progressive taxation, forged around a centrist consensus involving both Liberal and Conservative governments, has led to a tax structure that is remarkably progressive. A 2019 research paper by University of Toronto economics professor Michael Smart, demonstrates that the average effective tax burden rises steadily from the bottom to the top decile, thus, while the poorest have an effective tax rate close to zero, those in the top tax bracket fork over about a third of their income, which is also the national average. Singh clearly is in denial of how progressive Canada’s tax system already is.
What’s more, Singh’s “tax the rich” mantra ignores the fact that Canada’s wealthy are not like America’s “robber barons” of yore. According to a 2013 study by BMO Harris private banking, fully 67 per cent of Canada’s millionaires earn their riches themselves, with only 20 per cent claiming they got rich in part because of an inheritance, and the remainder making their money through one off events like divorce settlements or marrying a wealthy spouse. Further, according to the same report, almost half of Canada’s millionaires are either first generation immigrants or have at least one parent who was born outside of Canada and, of this group, 68 per cent say their wealth is self-created.
The bottom line is that Singh’s mania for taxing the rich to finance his extravagant spending plans is a little like killing the golden goose. Punitive taxation on the wealthy will only lead to exit or tax avoidance, possibly both, and will be self-defeating. In the aftermath of a pandemic, in which the economy is limping back to normalcy, this would kill the roots of innovation and productivity that lead to job creation and middle class prosperity.
Among other accomplishments, Singh is a star on Tiktok, and this has spread his message to many young Canadians. Ironically, the Chinese app has been used by young folk all over the world to catapult to fame and fortune through their creative use of the medium. Such folk, while they might enjoy Singh’s antics on Tiktok, are unlikely to go for his soak the rich message, because they too hope to join the creative, wealthy, self-made elite at some point.
IN DENIAL OF HOW PROGRESSIVE CANADA’S TAX SYSTEM ALREADY IS.