Scandalized by the tax advantages enjoyed by multinationals, the populations forced their governments to adopt new rules intended to correct the situation. What if the same kind of rules were now applied to multi-millionaires?
The idea was raised Thursday by tax specialist Brigitte Alepin, in an interview with Duty. Known for years against the tax avoidance of multinationals, the co-founder of the Quebec forum on competition and international tax cooperation TaxCOOP pointed out that the case of these huge companies that engage in accounting acrobatics in order not to pay their fair share tax share was not that different from that of the roughly 3,000 billionaires around the world, who have a total wealth of almost US $ 15 trillion and are subject to an effective tax rate (23%) lower than that of ordinary workers (24%).
As luck would have it, the Parliamentary Budget Officer in Ottawa released at the same time an update of his estimate of the net worth of the richest households in Canada. Forced to resort to all kinds of tricks to plug the holes in official statistics, Yves Giroux concluded that the 1.6 million families belonging to the wealthiest 10%, with their net worth of at least 1.9 million dollars, held this spring more than half (56%) of the total family wealth in the country. By themselves, the 162,000 households with the minimum of $ 7.3 million necessary to belong to the select club of the richest 1% enjoyed a quarter (24%) of this national heritage, against only 1.7% for the The poorest 40% of Canadians, with their net worth less than $ 200,000.
We may take comfort in learning that wealth inequalities are generally worse in the rest of the world. Another coincidence wanted the Laboratory on Global Inequalities (LIM) to publish its annual report on Wednesday. It is revealed that the COVID-19 pandemic has contributed to widening the gap between rich and poor, with the wealthiest 1% grabbing 19% of all income, the 10% more than half (52%), and the poorest 50%, only 8%.
But the differences are much larger when comparing the accumulated wealth, underlined the LIM: 38% of the total belongs to the only 1% the richest, 76%, to the richest tenth, and a meager 2% is shared by the the poorest half of the population. In this regard, Canada is closer to European countries than to its American neighbor, where the richest 1% controls 35% of total wealth, and the 10%, double (71%), observe the experts grouped around by economist Thomas Piketty.
The missing billions
We know that such inequalities can have all kinds of harmful consequences on economic dynamism, health, social cohesion, the crime rate and many other factors that make up the quality of life. The increase in wealth inequalities is even worse than that of income because it tends to reproduce and widen from generation to generation, warn LIM experts.
However, while the richest often benefit from different types of income (dividends, capital gains, etc.) which are proportionately less taxed than workers’ salaries, to which income tax applies, the tax distribution mechanisms of wealth become even more timid when it comes to accumulated wealth. Canada does a little better than the others in this regard, however, a report by the Organization for Economic Co-operation and Development (OECD) pointed out this spring.
The reality is even darker, because the richest families are also the most prone to trickery with the tax, in particular by putting part of their fortune to the shelter in the tax havens. The specialized NGO Tax Justice Network recently estimated that US $ 171 billion in tax revenues are lost each year, including 1.8 billion (C $ 2.2 billion) in Canada alone. Ultimately, no more than 3% of the wealth accumulated by billionaires would actually be taxed each year, LIM estimates.
The example of multinationals
In this context, the LIM experts propose that we proceed with wealthy individuals as 137 countries agreed to do recently with large multinationals, which are now required to report, country by country, their income, their number of workers, their profits and the taxes paid with the intention that they pay, at the very least, a minimum tax of 15%.
Armed with a new rule concluded at the OECD, supposed to lift banking secrecy everywhere, governments should start by drawing up a portrait of all the wealth accumulated by each of their nationals and of all taxes. and the taxes they had to pay. Armed with this overall picture, public authorities would be better able to detect not only abuses, but also the relevance of levying a wealth tax. Whether it is every year, just once to give a financial hand in the aftermath of a crisis like the COVID one, or to institute a carbon tax proportional to the individual climate footprint, greater among the rich than the others.