Let’s turn wealth into health with a 1% tax on the rich
Long before COVID-19, the gap between the rich and the poor was already a fault line in Canadian society. Since the pandemic started, it’s become a chasm.
How do we move forward?
Tax the wealthy. It’s not something you expect to hear from a pair of doctors with high incomes, but we understand that healing economic inequity can promote better health for everyone. It’s a policy prescription that most Canadians support, but as recently as November’s fiscal update, it’s one the government keeps failing to fill.
During the pandemic’s first six months, Canada’s 20 wealthiest people added another $37 billion to their fortunes: enough to put $1,000 into the pockets of every person in Canada. Meanwhile, people around us are living paycheque to paycheque like never before. Nearly half of Canadian households are $200 or less away from not being able to pay their bills at the end of the month.
Check your bank balance. If you’re lucky enough to have one, check your investment portfolio, too. What you find there reveals a lot about your health. From statistics over the past 30 years, we know that the more money you have, the more likely you are to live longer. This is backed up by the Canadian Medical Association and years of research showing that many health outcomes, from infant mortality and heart failure to life expectancy, are linked to the degree of economic inequality within a country. If you’re from a racialized or Indigenous community, this inequality is more likely to affect your health.
Even if you’re wealthy, though, you’ll find that people live longer and healthier lives in countries with smaller gaps between the rich and the poor. Beyond health, inequality also harms investment, both in people and in the economy.
Countries with less economic inequality arrived there in different ways. In Japan, it is the result of more balanced pre-tax incomes. Sweden, on the other hand, sets higher taxes to invest in high quality social programs that level the playing field. In Canada, we do neither particularly well.
Our policies have been promoting an unequal society for a long time. The past 30 years have seen a drop in tax contribution from the wealthiest as our top income tax bracket slid from 43 per cent to 33 per cent and corporate taxes plummeted from 36 per cent to 15 per cent. Meanwhile, our public social spending lags much of Europe, Japan and even the United States.
What can we do to build a healthier society?
Families who have been fortunate enough to accumulate great wealth can contribute to the social infrastructure that helped them get there. Teams from both the Broadbent Institute and Canadians for Tax Fairness have proposed, among a host of other reforms, a widely supported tax on extreme wealth. Recently, the federal NDP picked up on these ideas, proposing a one per cent tax on net wealth of more than $20 million. While this has the potential to raise more than $5 billion for public investment, one per cent is still a far cry from the wealth taxes of up to eight per cent proposed by previous contenders for the U.S. presidency.
There’s a strong case for linkages between inequality and health outcomes through phenomena such as toxic stress in children. A tax will not only improve health by addressing economic inequality at its roots, but will also provide badly needed financing for social infrastructure we can all benefit from. For example, Canada is the only high-income country with a universal healthcare system that does not have a universal drug plan. The economic shock of the pandemic is disproportionally affecting women, shining a spotlight on our lack of a national childcare program. And the Canada Emergency Response Benefit has demonstrated the power of what robust social assistance can do.
While the NDP proposal for a one per cent wealth tax was blocked by Liberal and Conservative MPs, Canadians still want bold action.
Support for a one per cent wealth tax is wide and deep, with 79 per cent of Canadians in favour. Among Conservatives, those in favour outnumbered those opposed by almost two to one. Support was even more overwhelming from Liberal voters.
A more inclusive economy is wishful thinking while the wealthiest in Canada disproportionately benefit from the pandemic. The government has a historic opportunity to tilt the playing field towards fairness for the many in Canada who, now more than ever, are struggling to make ends meet and stay healthy. A one per cent wealth tax would lay the foundation for a thriving, healthy recovery.