Tax fairness has potential to be a political winner

Make the rich pay!

It sounds like a winning slogan.

Income inequality is growing. The rich are literally getting richer and the poor poorer. Young people can’t afford a house or even pay rent. Homeless encampments are increasingly becoming commonplace and news of huge profits by companies like Loblaw have resulted in a boycott movement.

You would think that any politician demanding that the wealthy pay more would be wildly popular.

And yet they are not. Exhibit A, the most recent Trudeau budget. Hoping to move the needle in their favour, the government announced that wealthy individuals and businesses would pay more in capital gains taxes.

Although polling shows a very slim majority of Canadians support the new tax changes, the move hasn’t been greeted with much enthusiasm. The voices of critics have grown louder and the budget failed to give the Liberals a bump in the polls.

Some may argue this is more about the basic unpopularity of the Trudeau government. But then why hasn’t the NDP, which consistently proposes increasing taxes on the wealthy, seen its popularity grow? Why has Pierre Poilievre not gone after rich “fat cats” as part of his populist agenda?

Are Canadians really that concerned about the plight of those at the top?

I think it’s much more complicated than that.

Let’s start at the beginning. Few understand our tax system. Many of us may have a vague notion that the wealthy can manage their money in a way that lessens their tax burden, but do we really grasp the details? Did we all shout “it’s about time” when we heard that the capital tax inclusion rate was increasing?

On that note, have politicians made tax fairness a core message?

There is an adage, associated with former Ontario premier David Peterson, that when a politician says something so often that they feel they might throw up if they say it again, that is the point that voters start to notice. And yet we haven’t exactly seen the prime minister or his ministers mentioning tax fairness so often that they look pale and sweaty.

Then there are the critics. Canada boasts a well-financed group of organizations, thinktanks and industry associations who represent those at the top, always at the ready to argue that tax increases will deter investment and hurt productivity, drowning out other experts who have a different perspective but no ready-made platform.

Perhaps the biggest issue, to paraphrase John Steinbeck, is that many poor Canadians don’t see themselves as exploited but simply as potential millionaires down on their luck. Why would they favour taxing the rich when they expect to join their ranks some day?

Many may chuckle at that notion, but why do we continue to allow the transfer of large inheritances tax free? Why have we never seriously talked about taxing lottery winnings?

Think about it. The odds of you needing a nurse or doctor are infinitely higher than the chances of you winning a lottery and yet we can all predict the outrage that would accompany any plan to tax lottery winnings to subsidize health care — we all seem proud that unlike the U.S., lottery winnings are tax free in Canada.

Tax fairness has the potential to be a political winner, but any politician wanting to tackle the issue needs to realize that convincing voters to make the rich pay involves overcoming some major obstacles and lots of hard work.