Inheritance taxes: the time has come study finds

Inheritance taxes are not a factor in Canadian lives yet. But a new report from the left-leaning Canadian Centre for Policy Alternatives,(CCPA) suggests it is time to implement them.

David Macdonald, an economist with the CCPA, says a lot of attention is paid to income inequality but not wealth inequality which is now creating a much larger gap in Canadian society.

“It’s a tremendous concentration of wealth in very few hands”

“Inheritances become a more important part of driving that wealth at the very top” MadDonald says.

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Across the provinces and territories there are capital gains taxes and various probate fees to be paid when someone inherits real estate or other investments but Canada has no formal inheritance tax or gift tax at the federal or provincial level.

MacDonald’s study, looking at the 87 wealthiest families, revealed some interesting developments in Canada.

“These 87 famiiies have the same wealth as 12 million Canadians,” MacDonald says. “It’s a tremendous concentration of wealth in very few hands.”

“4,000 times more than the average Canadian”

“The amounts of wealth that they have is staggering: the families’ average is three billion dollars, that billion with a “b” which is 4,000 times more than the average Canadian”

Inheritance taxes: David Macdonald, an economist with the CCPA,, says Canada should consider implementing them on estates of more than $5 million (Cdn). (www.policyalternatives.ca)

“In 1999 just under half of the wealthiest 87 families got on the list because of inheritance,” MacDonald says, “but today it’s just over half, and so we’re seeing inheritance being the primary route by which these wealthy 87 families get on that list, in essence creating dynastic families, generational family wealth, that’s passed down generation to generation and compounds over time it appears.”

“It’s not purely that the income that you gain from wealth is taxed at a lower rate, which it is, but there’s also an interesting overlap between the wealthiest famiiies and the list of the top-paid CEO’s. There’s a big overlap between the two. So it’s not at all uncommon to find the top-paid CEO’s who get these exorbitant pay packages with insane incentive pay in the ten to twenty million dollar range, also are members of these wealthiest families either because they’re the founder of the company, or they’re the child of the founder of the company, end up being among the top-paid CEO’s.

“Which is another way,” MacDonald says, “that wealth perpetuates itself is that you can not only be extremely wealthy but get paid extremely well at the company that’s making you extremely wealthy.”

MacDonald suggests it’s time for “a type of wealth tax that can reduce the wealth gap but also raise in the neighbourhood of $2 billion dollars (Cdn) a year, that you could spend say, eliminating poverty on First Nations reserves, or improving the childcare healthcare systems in Canada.”

With a federal election looming in 2019, and the “election budget” to be released in the spring, MacDonald is hoping to start the conversation.

“Hopefully the governments are looking at ways of generating revenue to pay for new programs and I think this is one of the tax measures they could consider.”