Op-Eds

The idea of an annual wealth tax has taken on new prominence since French economist Thomas Piketty famously proposed a global wealth tax in 2013. Senator Elizabeth Warren has made a national wealth tax a plank in her campaign to become the Democratic presidential candidate in 2020. And, the NDP recently announced that its election platform would include a one percent tax on the net worth of Canadians in excess of $20 million. The current interest in wealth taxation is a response to the increase in wealth concentration and income inequality that has occurred in most OECD countries. It has been well documented that both income and wealth inequality have risen significantly in recent decades. An annual wealth tax might seem like a...
Canadians may have recognized by now that our economy has entered a period of structurally slower economic growth, due principally to an aging population. Immediate economic factors often capture the headlines, such as the U.S.-China trade dispute, whether the U.S. Congress will pass the United States-Mexico-Canada Agreement (USMCA), high levels of personal debt or higher interest rates. These factors combined have increased uncertainty and reduced the consensus growth outlook for Canada to well below 1.5 per cent in 2019. Aging demographics and sharply slower growth in the labour force, however, are the real culprits. Canada’s sustainable long-term growth rate has fallen below 2 per cent annually, with growth potential a bit higher for...
Canada’s tax system should be a cornerstone of strong economic performance, encouraging private investment, higher personal savings and high levels of labour force engagement and work effort while also addressing social priorities such as reducing child poverty. However, populist and opportunistic politics too often drive changes to the tax system, not considered analysis about what is best for long-term economic and employment growth and a healthy society. Is it possible to change how tax policy is made and refocus on the potential benefits to the economy and society? All too often, proposed changes to the tax system have been designed first and foremost to win popular support, regardless whether there is any hard evidence that it...
Our federal fiscal masters are deeply inconsistent. They freely spend billions in revenue windfalls on one hand, but are obsessive about every nickel of tax they might fail to collect, no matter the cost to Canadians. The 2019 budget features yet another revenue bonanza of scattered handouts, many clearly contrived in haste. That is bad. What is worse is how the government simultaneously tightens the screws, making tax compliance harder over amounts of money that are often derisory, and citing the integrity of the tax system in resisting reforms that could do Canadians much good. Start with the big spending. The 2019 budget started from a fiscal baseline that, over the six-year projection period, was better than anticipated in last...
We already know that Canada’s population aging will drag down government revenue and blow up social and health spending, but its long-term impact on fiscal sustainability and intergenerational fairness greatly depend on future government policies. While this demographic change substantially shifts the tax burden away from baby boomers and their children − the baby busters or Generation X – to the boomers’ grandchildren, achieving long-term fiscal sustainability can be possible. In my recent study for the C.D. Howe Institute, I estimate average lifetime tax burdens for the current generations by birth cohort, and for an unborn future generation. Lifetime tax burdens are simply the total amount of taxes minus cash benefits and...