Over time, if left unchecked, capitalism facilitates the pooling of wealth — cash, property, business ownership, investments — among a select few. This is as true in Canada as anywhere else. That pooling implies not just the concentration of wealth but also the concentration of authority, influence, proximity to decision-makers, and all the other tactical tools it takes to get things done the way you want them done.
That concentration of power ultimately undermines democracy. When a small elite hog the wealth and the power, the rest of the people are either marginalized or shut out altogether.
The most obscene way that wealth is made is through large-scale inheritance. Passing along wealth facilitates the concentration of resources in the hands of the few, generation over generation. In Canada, inheritance is a serious problem that prevents not just equal outcome but even equal opportunity. Imagine each of us is born into a footrace. Many of us are born on or near the start line. Some of us are born behind it. Some are born halfway down the road. But a select few are born next to the finish line.
The Canadian Centre for Policy Alternatives released a report last month titled “Born to Win: Wealth Concentration in Canada since 1999,” which found that the wealthiest 87 families in the country are worth 259 billion Canadian dollars, up 37 percent between 2012 and 2016. That makes those families about as wealthy as the people in the provinces of Prince Edward Island, New Brunswick and Newfoundland and Labrador combined. And far from being fully reflective of the (rare, quasi-mythical) self-made, entrepreneurial-champ types, almost half of those fortunes were inherited — not earned.
Part of the reason wealth is becoming so concentrated in Canada is that the country doesn’t have an inheritance or gift tax. Nothing. The gentle, progressive, egalitarian country of foreign lore doesn’t redistribute inherited or gifted wealth even though each and every one of its Group of Seven counterparts does, including the United States, Britain, France and Japan. Years ago, the country did have such a tax. But “progress” prime minister Pierre Trudeau, father of the current prime minister, did away with it in the 1970s.
In its report, the Canadian Centre for Policy Alternatives made the modest recommendation that Canada introduce a maximum 45 percent inheritance tax on fortunes above 5 million Canadian dollars. The center calculated that such a tax would send 2 billion Canadian dollars a year to Ottawa. That money could help fund social programs such as a basic income amd universal pharmacare. (It’s a myth that no Canadian is denied care or goes broke because of medical costs — prescription drugs often devastate patients financially.)
Writing in Vice, columnist Drew Brown points out that some of the inherited wealth in Canada stretches back generations and some of it was built off the practice of chattel slavery. He dispatches in a few lines the idea of “self-made” fortunes and reminds us that an economy is something we do together. “All economic activity is social activity; billionaires hoard the lion’s share of our collective, socially-produced power because the capitalist legal system privileges the rights of property owners over the lives of those who actually work those properties.” In short, those who are inclined to say “those folks earned that!” are misreading history and misunderstanding how the economy works.
There are plenty of economic and moral reasons to adopt an inheritance tax and redistribute wealth. But there’s also a key reason that everyone, including the wealthy, should support an inheritance tax: self-preservation.
Inequality is the beginning of the end for democracy. Looking back, history is the story of collapse, and collapse is all too often the story of a top-heavy society falling in on itself. The French Revolution and, to some extent, the American Revolution come easily to mind as critical moments at which the masses decided they had quite decisively had enough. But nearer to our own day, the financial collapses of the 1920s and 1930s contributed to the downfall of democracy in Europe and its erosion in America. Less than a century later, in 2008, the failure to learn from past mistakes threatened self-government once again.
Today, democracy is up against the wall all over the world. This is precisely the moment at which we should double down on including people in the political system. But that requires including them in the economic system, too. That means redistribution. One fine way of doing that is taxing extreme wealth through an inheritance tax and using those funds to invest in something far more valuable than a vacation home or luxury yacht: the preservation and expansion of democracy.