A mere 87 families in Canada have the same wealth as Canada's 12 million lowest earners combined. On average they have 4,448 times more wealth than the average family.
Ottawa (02 Aug 2018) — The gap between the wealthiest 87 families in Canada and the rest of us has increased dramatically over the last 17 years. A mere7 families in Canada have on average a staggering 4,448 times more wealth than the average Canadian family. They own the same amount of wealth as Canada's 12 million lowest earners combined. These are the astonishing findings of a new report garnering global media attention, published by the Canadian Centre for Policy Alternatives (CCPA), entitled Born to Win—Wealth concentration in Canada since 1999.
According to the report, the average net worth (the value of assets minus debts) of the wealthiest 87 families is almost $3 billion. In comparison, the median net worth (the middle point) for Canadian families was $295,100.
Net worth of wealthiest 87 families growing faster than average
In the last 17 years the net worth of the very wealthy has increased at a faster rate than the average net worth of all Canadian families. In 1999, the average net worth of the wealthiest 87 families was 4,265 times that of the average family. By 2016, the net worth of the richest 87 families had risen to 4,448 times the net worth of the average family.
While a drop in share prices meant the gap between the very wealthy and the rest of us narrowed slightly after the 2008 economic downturn, the very wealthy have recovered all the ground they lost and more. Since 2012, the increase in the average net worth of the 87 richest families was 37.2%. That’s almost double the increase for the average family.
To put it in perspective, the net worth of the wealthiest 87 families is equivalent to the net worth of Newfoundland and Labrador, PEI and New Brunswick combined.
Wealth inequality product of income inequality
In the 1990s, income inequality increased rapidly. A combination of income tax cuts that primarily benefited the wealthy and cuts to funding for social programs helped the wealthy at the expense of the rest of us.
The increase in wealth inequality since 1999 shows how the damage done by the cuts in the 1990s is still with us and continuing to get worse.
Inequality is what we leave our children
As the report title makes clear, wealth inequality is being passed on from generation to generation. That’s reflected in how the wealthiest 87 families obtained their wealth.
In 1999, only 47% of Canada’s wealthiest families inherited their wealth. In 2016, that was up to 56%. The number of families passing wealth down through multiple generations is also increasing — from 22% to 26%.
For that reason, the report suggested that Canada needs to follow the example of every other G7 country and tax inherited wealth. In most G7 countries inheritance taxes are at least 40% on large estates. In Canada, an inheritance tax of 45% on estates worth more than $5 million would be an important step to reducing wealth inequality and generate roughly $2 billion a year in revenue for the federal government.
Tax reform needed to reduce inequality
The report makes it clear that it is not possible to reduce inequality without requiring that the very wealthy pay their fair share. In addition to an inheritance tax, the report suggests closing some of the loopholes that disproportionately benefit the wealthy. That includes ending the practice of taxing income from things like stock options for CEOs, or dividend income from shares, at half the rate of earned income.
But that’s only half the solution. The reason the wealthy need to pay their fair share is not to penalize them. It’s so the money is there to fund the public services people rely on and that our economy needs to succeed.
The National Union of Public and General Employees (NUPGE) is one of Canada's largest labour organizations with over 390,000 members. Our mission is to improve the lives of working families and to build a stronger Canada by ensuring our common wealth is used for the common good. — NUPGE