Skip to main content

The Globe and Mail

Taxing the rich akin to 'ethnic cleansing' - seriously?

The spirit of the Occupy movement lives on.

François Hollande is leading France's presidential race with a promise to slap a 75-per-cent levy on everyone earning more than €1-million ($1.3-million).

In the United States, President Barack Obama has latched onto income inequality as a key wedge issue to go after Mitt Romney, his likely opponent in November's presidential election. Mr. Obama is touting the so-called Buffett rule – a 30-per-cent minimum tax on millionaires inspired by billionaire investor Warren Buffett's sheepish acknowledgment that he's taxed at a lower tax rate than his secretary.

Story continues below advertisement

Closer to home, Ontario New Democratic Party Leader Andrea Horwath has made a 2-per-cent levy on people earning at least $500,000 a make-or-break condition for backing Liberal Premier Dalton McGuinty's minority budget. No tax, and Ontarians could be headed for the polls again.

The idea of taxing the rich is suddenly in vogue. But are these simply populist attacks on an easy target? Sure, there's a dose of that.

But the recession and the financial crisis have left a lot of people feeling vulnerable, bitter and more conscious than ever of the widening gap between haves and have-nots.

"It's a very legitimate discussion to have in the context of that type of inequality," pointed out Miles Corak, an economics professor and income inequality specialist at the University of Ottawa.

Not surprisingly, the Bay Street crowd isn't amused by the New Democrats' tax-the-rich gambit. Money manager Jim Doak of Megantic Asset Management, a former chairman of the Toronto Society of Financial Analysts, has likened Ms. Horwath's proposal to "ethnic cleansing."

"It's nasty," Mr. Doak complained to CTV News last week. "She's defined a group, not by culture or by language, but by how much money it makes, and she wants to get rid of them."

The vast majority of Canadians agree with Ms. Horwath. More that 80 per cent approve the idea of a tax on the wealthy and two-thirds are ready to take a personal tax hit, according to a new poll of 2,000 people by Environics for the Broadbent Institute, a left-leaning think tank. Seventy-seven per cent worry that the growing income gap is "a big problem" for society.

Story continues below advertisement

The unease felt by many Canadians is rooted in an uncomfortable reality. Recent work by economists Mike Veall of McMaster University and Emmanuel Saez of the University of California, Berkeley show "an explosion in the earnings of the top 1 per cent" in Canada from the early 1980s to 2007. The top 1 per cent of Canadians pocketed nearly 14 per cent of all income in 2007, compared with 8 per cent in 1982.

The growing concentration is most evident in Ontario, British Columbia and Alberta, where the top 1 per cent now takes in 17.6 per cent of income – more than twice what it did in 1982.

In the United States, where the concentration of income at the top is even more pronounced than in Canada, there's a growing clamour for rebalancing a tax system that has shifted an unfair share of the spoils to the ultrarich.

And it isn't only flakes and marginal voices making the case. MIT's Peter Diamond and Stanford's Kenneth Arrow – both Nobel Prize winners in economics – have joined Mr. Obama in calling for a tax on high income earners.

The most commonly heard argument against taxing the rich is that it's an attack on wealth-creators; the rich will simply move to lower tax jurisdictions or work less.

It's also true that taxing the rich isn't a panacea for indebted governments. The 2-per-cent Ontario tax, for example, would bring in roughly $500-million in a province that's running a $15.3-billion deficit.

Story continues below advertisement

But consider this: Governments everywhere are in austerity mode. The middle class is being squeezed by stagnant incomes, pension clawbacks and the steady erosion of government entitlements, such as Old Age Security.

Basic fairness suggests all segments of society should share the burden.

Report an error Licensing Options
About the Author
National Business Correspondent

Barrie McKenna is correspondent and columnist in The Globe and Mail's Ottawa bureau. From 1997 until 2010, he covered Washington from The Globe's bureau in the U.S. capital. During his U.S. posting, he traveled widely, filing stories from more than 30 states. Mr. McKenna has also been a frequent visitor to Japan and South Korea on reporting assignments. More

Comments are closed

We have closed comments on this story for legal reasons. For more information on our commenting policies and how our community-based moderation works, please read our Community Guidelines and our Terms and Conditions.

Combined Shape Created with Sketch.

Combined Shape Created with Sketch.

Thank you!

You are now subscribed to the newsletter at

You can unsubscribe from this newsletter or Globe promotions at any time by clicking the link at the bottom of the newsletter, or by emailing us at privacy@globeandmail.com.