Canada can look to Democrats for tax fairness ideas

In the early stages of the 2020 presidential election, the U.S. political scene is abuzz with conversations seldom heard in recent decades.

After the Trump Republicans’ tax cuts for the richest few proved to be a political millstone and a policy disaster, Democratic challengers are exploring the flip side of that reality by proposing that wealthy Americans pay their fair share to maintain a functional society.

A hypothetical question to Rep. Alexandria Ocasio-cortez first gave rise to talk about marginal tax rates of up to 70 per cent on extremely high-income individuals — with the foreseeable effect of substantially reducing extreme inequality, while also offering funding for transformative policy ideas such as a Green New Deal.

In launching her presidential campaign, Elizabeth Warren offered another possibility by floating the idea of a wealth tax on assets over $50 million. And Bernie Sanders focused on the transfer of unearned fortunes between generations with a plan to substantially increase the estate tax in the U.S.

So far, all indications suggest that those plans for a more progressive revenue system are both popular with the public, and viable economically.

Contrary to the assumption by far too many pundits that any tax increases whatsoever are political poison, the concept of raising more revenue through either income taxes or wealth taxes is actually broadly popular among voters from across the political spectrum — even achieving substantial support among Republican backers.

If there was any doubt as to where the American public stands given the choice between more progressive taxes and deference to the wealthiest few, another presidential run aimed at criticizing more progressive taxes provided a conclusive answer. When former Starbucks CEO Howard Schultz launched an independent campaign, he framed his run largely around the claim that more progressive taxes are too extreme to merit consideration. But the limited constituency for that position was exposed by Schultz’s stunningly poor approval ratings, with 10 times as many voters disapproving of his candidacy as approving.

Meanwhile, even as talking heads predictably clung to tired trickle-down tropes, leading economists pointed out how a fairer tax system is entirely feasible — in some cases going so far as to point out that Ocasio-cortez’s and Warren’s proposals could be more ambitious without any ill effects.

To be sure, there’s a large gap between talk and action. And the easily gridlocked U.S. political system will make it difficult for any single politician’s plan to be enacted federally.

But after being told we had no choice but to follow Donald Trump’s lead toward regressive tax policy, Canada should take the opportunity to look to the U.S. backlash for inspiration of our own.

There may be some ways in which we’re more limited in our range of action, as our smaller economy might leave us with less room to move on the income tax side. But our lack of any estate tax in particular looks all the more absurd as the U.S. discusses enhancing its own.

Moreover, any conversation about boosting high-end tax revenue can also include a discussion of what it can fund.

The fortunes that serve little purpose but to drive up the price of positional goods and entrench intergenerational unfairness can instead invest in economic development and social progress, which are too often dismissed as being beyond our means.

We do have a long way to go in building a fair tax system. But as we see what’s possible and popular in the U.S., there’s an ideal opportunity to discuss how we can build a stronger country by seeking out more revenue where the money is.

There’s an ideal opportunity to discuss how we can build a stronger country...