Ok, sooo I get that wealth taxes are popular, but that doesn’t mean they are in any way a good idea ... thread coming: 1/ #cdnpoli https://twitter.com/davidcoletto/status/1264209703233638402
-First: define “wealthiest”. If you mean billionaires only there are so few of them, the total amount you’d raise would be so small (the total net worth of all 41 billionaires in Canada is less than the deficit will be this year). 2/n #cdnpoli
Even if you go down to $10mm net worth there still aren’t that many people and therefore not that much money to raise, and if you go down to $1mm you get into a lot of regular people who’ve saved all their lives. 3/n
-Define “wealth”:
RRSPs? Old folks who saved all their lives have to give up some of their retirement savings that probably already got whacked by the downturn?
Primary residences? What about an old guy with low income who bought a house in Toronto 40 years ago? 4/n #cdnpoli
Secondary residences? If primary but not secondary residences are exempt why is someone with one $5mm house exempt but not someone with one $1mm house and a $500k cottage? 5/n #cdnpoli
-How do you even measure wealth accurately and fairly enough to levy a tax on it?
Mark to market on December 31, or some how average through the year?
Values of private securities and privately held companies? 6/n #cdnpoli
Exchange rates for foreign or crypto assets?
The accounting games and legal battles would be insane. 7/n #cdnpoli
-It would be fundamentally unfair to punish savers and people who bought assets over people with same income over the years who spent their money on travel/entertainment instead. 8/n #cdnpoli
-I’ve seen lots of comments saying “why only 1-2%, make it 10% (or more)!”:
I think some of these come from people who don’t know a wealth tax is not “extra income tax on the wealthy” but a tax on the value of all their assets.
9/n #cdnpoli
While most billionaires probably could sustain paying 1-2% of their net worth each year, we already said that wouldn’t raise enough money to make any real difference to the federal budget.
10/n #cdnpoli
If it was 10%, you’d eventually be raising 0 because any who didn’t just leave the country would’ve all been taxed out of existence (I realize some would call that a good thing, but from the point of view of a sustainable source of tax revenue it definitely isn’t).
11/n #cdnpoli
On top of all that, most wealthy people do not have much of their wealth in cash. Paying a wealth tax would mean selling assets, and with all other wealthy people trying to do the same, it would depress the market and hurt middle class retirement savings anyway.
12/n #cdnpoli
TL/DR: I don’t think there is a realistic intersection of “high enough wealth cutoff to avoid taxing middle class savers”, “low enough percentage to be sustainable and avoid tanking markets”, and “raises enough money to make a difference to the budget”.
13/13 #cdnpoli
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