Taxing the billionaire class is nowhere near enough
Updated: Dec 3, 2020
Building a "fairer" capitalism is an illusion. The most important thing any of us can do to begin a serious fight to end inequality and the wealth and power of the billionaire class, corporations and the wealthy, would be to work to build an anti-capitalist movement and party.
"Make the rich pay for the pandemic". This certainly has a nice ring to it. And, given that both government spending and the wealth of the billionaire class are soaring due to the circumstances of Covid-19, many are raising the battle cry of late.
Leadnow's petition We need a wealth tax for Canada's super-rich is an excellent example. After noting that a "super majority of Canadians support a wealth tax on multimillionaires" it outlines that:
While half of Canadians are living paycheque to paycheque, just 87 families own over $259 billion -- over half the country’s wealth. Without proper and fair taxation, these fortunes continue to skyrocket as our wages stagnate, our jobs disappear, and our public services crumble.
We have an opportunity to re-build Canada’s economy in a way that works for everyone -- not just the wealthy few. Trudeau’s Liberals are planning how to recover from the Covid crisis -- and they’re paying close attention to what the public wants.
Canada's social democratic party is getting in on the act too. With leader Jagmeet Singh in front of what, oddly, appears to be a photo of Amsterdam, they issued a call to "take action", with the tagline that you "shouldn’t have to pay for the pandemic, those who have profited from it should." The "action" you can take appears to be joining the NDP's mailing list.
The statement notes "Canadian billionaires are $37 billion richer since the March 2020 COVID-19 lockdown" the appeal goes on to say:
Instead of cutting services and help for people, Trudeau needs to make the wealthiest and those who excessively profit from the pandemic pay their fair share, so we can better deliver help to the people who really need it.
This is followed by a set of proposals that includes applying a "1% wealth tax every year to families with fortunes over $20 million", making "web giants like Amazon, Google and Facebook pay their fair share" and introducing "a temporary COVID-19 Excess Profit Tax that at least doubles the tax rate on excess profits", in addition to the usual NDP talk of closing tax loopholes and greater corporate tax enforcement.
As the group Canadians for Tax Fairness noted in a media release November 26, the latest numbers show that Canadian billionaires have gotten even more wealthy than the NDP knew when issuing its call. Their wealth has, in fact, increased "by more than $50 billion between April and October of this year".
Billionaires have benefited from tax loopholes for the rich, corporate tax cuts, tax havens and the absence of wealth and inheritance taxes in Canada. The Trudeau government now has a golden opportunity to both reduce extreme wealth inequality and generate billions in revenue to help pay for the crisis and the recovery.
There is little doubt that the burden of the pandemic is not falling at all equally. And it is also clearly true that the rich are getting richer and that some types of corporations are seeing their profits soar, sometimes at the direct expense of workers.
Loblaw is a case in point. Their profits have been up every quarter so far this year, they increased the dividends of stockholders and from "March to September, during the first wave of COVID-19, the Weston family’s net worth increased a whopping $1.6 billion dollars." Meanwhile, the company cancelled the $2/hour pandemic premium pay for workers and played hardball to defeat the strike by Dominion workers in Newfoundland.
Obviously increasing taxes on the wealthy and the billionaire class is something that any progressive party should advocate and that should be done by governments across Canada and elsewhere. But will relatively minor tax increases on the ultra-wealthy really have a dramatic impact on income inequality and help to "re-build Canada’s economy in a way that works for everyone -- not just the wealthy few"?
The short answer is no.
First, the levels of taxation being proposed are actually not that high.
According to the Huffington Post the proposals of the Canadians for Tax Fairness would create a "wealth tax of one per cent on fortunes above $20 million, rising to 2 per cent on wealth over $100 million and 3 per cent on wealth above $1 billion, would raise some $20 billion annually".
Meanwhile the less ambitious NDP plan would introduce "a flat rate of one per cent on all fortunes over $20 million. The Parliamentary Budget Office estimated earlier this year that the NDP’s proposed tax would raise $5.6 billion."
Clearly either plan is an improvement over nothing, and $20 billion in extra revenues could be used for many positive programs by the government, though in the short term there is a strong chance it would simply be used towards paying down the covid deficit.
These taxation plans, however, would not even come close to reversing decades of deep tax cuts for the billionaire class, the wealthy, upper income Canadians and corporations. The neo-liberal logic of these tax cuts were an intrinsic part of the decades long campaign of austerity, privatizations and cutbacks that have fueled the staggering growth of inequality since the 1980s.
If the goal is to have a significant impact on income inequality even the more robust of these plans will do little to do that. This does not mean that they could not be used to fund initiatives and programs that would have a very beneficial impact on people's lives and that could help to reduce poverty, but that is not the same as tackling income inequality. To put a serious dent in the wealth of, or the ever growing inequality between, the very wealthy, the wealthy or even the top 10% of income earners and the rest of the population, tax plans would have to go much, much further.
The tax plans would also be more beneficial if seen in conjunction with efforts to promote unionization and to legislate higher minimum wages and better benefits for workers. The importance of unionizing workers is highlighted by the extreme lengths that companies like Amazon will go to to prevent it.
Even then, though, the plans are firmly rooted in a capitalist economic context and reflect the social democratic desire to build a "nicer" and "fairer" capitalism as if such a thing is possible in a meaningful way. Often it is tied to a nostalgia for the "post-war compromise" in the west of the 1950s and 1960s without any serious acknowledgement of the very specific conditions under which that arose.
It always bears repeating that income inequality is not an aberration of capitalism, it is essential to it. With the threat from the Socialist Bloc long gone and with no serious domestic mass anti-capitalist left threatening to take power, the growth of income inequality and in the power of the billionaire class, the wealthy, CEOs and the corporations will not be stopped by band-aid, comparatively small wealth taxes.
As hard as it is for progressives, social democrats and left liberals to accept, inequality in wealth and economic and social power has grown to where minor changes to taxation rates --even assuming they are fully collected given that they will result in some capital flight and new methods of tax avoidance -- are nowhere near enough to build anything remotely akin to a fair economy.
Fighting grotesque inequality and the very existence of a predatory billionaire class and predatory corporations requires a rejection of capitalism and the nature of the capitalist economy as a starting point.
Only by fundamentally changing how the economy functions and who controls and owns it -- the means of production and natural resources -- can we hope to really tackle these stains on society and the cruelty and misery they result in. A serious approach would involve calling for mass democratic nationalizations and expropriations and for rational economic planning and direct worker ownership where possible.
While the NDP could not be further from it and it is a futile pipedream to think they will ever return to a program remotely like it, the Regina Manifesto of its CCF past understood this essential truth. This was the basis of its calls for planning, the socialization of finance and social ownership.
In a era akin to our own in terms of economic disparities its authors wrote right at the beginning:
We aim to replace the present capitalist system, with its inherent injustice and inhumanity, by a social order from which the domination and exploitation of one class by another will be eliminated, in which economic planning will supersede unregulated private enterprise and competition, and in which genuine democratic self-government, based upon economic equality will be possible. The present order is marked by glaring inequalities of wealth and opportunity, by chaotic waste and instability; and in an age of plenty it condemns the great mass of the people to poverty and insecurity. Power has become more and more concentrated into the hands of a small irresponsible minority of financiers and industrialists and to their predatory interests the majority are habitually sacrificed. When private profit is the main stimulus to economic effort, our society oscillates between periods of feverish prosperity in which the main benefits go to speculators and profiteers, and of catastrophic depression, in which the common man's normal state of insecurity and hardship is accentuated. We believe that these evils can be removed only in a planned and socialized economy in which our natural resources and principal means of production and distribution are owned, controlled and operated by the people.
Whatever the flaws of the CCF that flowed out of this manifesto, this was correct then as an ideological starting point and it is correct now.
The best thing any of us can do to begin the struggle to end inequality and the wealth and power of the billionaire class, corporations and the wealthy would be to work to build a modern anti-capitalist movement, program and party dedicated to these basic ideological goals.