eating the rich two per cent at a time

A recent poll conducted by Environics for the Broadbent Institute found that 83 per cent of Canadians favour higher taxes on the ultra-rich.

A recent poll conducted by Environics for the Broadbent Institute found that 83 per cent of Canadians favour higher taxes on the ultra-rich.

Ontario NDP Leader Andrea Horwath scored a victory for that majority this week when she pushed Liberal Premier Dalton McGuinty to raise some desperately needed funds by imposing a two per cent surcharge on incomes over $500,000. To no one’s surprise, the move has met heavy opposition from the very wealthy.

On Monday night, president and managing director of Megantic Asset Management Jim Boak told a CTV audience that the tax proposal amounts to “ethnic cleansing,” because the rich will flock to Alberta rather than accept the loss of income.

Oh, those cruel, subtle Canadian socialists!

The UN Refugee Agency Panel of Experts found that ethnic cleansing is achieved by means of “murder, torture, arbitrary arrest and detention, extra-judicial executions (and) rape,” but the NDP are going to do it with a simple two per cent surtax. Why didn’t Milosevic think of that?

But will it work? Are Toronto’s one percenters out today en masse, putting the mansion on the market and shopping for cowboy boots? Or does Monday’s collapse of the Wild Rose Party take some of the sweetness out of the Prairie air? It seems likely most wealthy Ontarians will decide that, Ontario being the place that butters their bread, it might be easier to let two per cent of the butter go than to pick up stakes and head for the uncertain future of life under a “Progressive” Conservative provincial government.

Horwath entered negotiations with McGuinty in a position of strength. Only an agreement with the NDP could have saved the Liberal minority government from collapse over the recent budget. She went in demanding a two per cent surtax on the rich be applied to spending on social programs, but negotiations are about compromise, and in the end what she got was a two per cent deficit-killing surtax, to be dropped once its purpose is served. It’s disappointing, but at least the poor don’t have to bear the burden of defeating the deficit alone.

According to the Conference Board of Canada, “Income inequality in Canada has increased over the past 20 years” with most of the benefits going to “a very small group of the super-rich.” One per cent of Canadians, 246,000 people, make more than $450,000 a year. Their share of the national pie has increased by 30 per cent since 1998. During the boom years of the ‘50s and ‘60s, the one per cent took home only eight per cent of income growth.

In a study for the Centre for Policy Alternatives, economist Armine Yalnizyan found that it is not investment, but salaries, that are fueling the incredible income surge among the very rich. Top executives, even in unsuccessful companies, make staggering amounts of money, while the top tax rate keeps dropping – now at its lowest since the 1920s, just before the stock market crash that led to the Great Depression.

Economic instability is one result of rising income inequality, but there are others, just as frightening. In their 2009 book The Spirit Level, Richard Wilkinson and Kate Pickett demonstrate, using a daunting array of graphs, that at every level of income and by almost every metric people fare better in more equal societies. Unequal societies face higher murder rates, worse general health, poorer education, more illiteracy, higher rates of incarceration, and a host of other ills which, though hardest on the poor, affect everyone.

Even in the unlikely event that Doak and his ilk all move to Calgary, they will continue to heap scorn, albeit from a distance, on Ontario’s decision to make the rich pay a small portion of their fair share. That may be why McGuinty and his ministers have taken to calling the new tax measure “the NDP surtax,” positioning themselves to take credit for conquering the deficit while sidestepping the inevitable attacks from the top.

Wealth is power, and wealthy Canadians will exert what power they can to protect their position. But numbers are also power, and the 83 per cent of Canadians who recognize the danger as well as the injustice of the growing income gap are not without influence. Horwath’s two per cent solution is a very small step, but it’s a step in the right direction.

Al Pope won the Ma Murray Award for Best Columnist in BC/Yukon in 2010 and 2002. His novel, Bad Latitudes, is available in bookstores.