The COVID-19 pandemic has highlighted economic inequities. Chris Lowry, a professor at the University of Waterloo who researches social and political philosophy, bioethics and applied ethics, discusses our relationship with wealth, our understanding of fairness–and how taxes can be used to create a more just society.
Has the pandemic demonstrated the need for a wealth tax in Canada?
The main reasons being offered for a wealth tax are to help pay for the pandemic recovery efforts and to reduce wealth inequality. The pandemic-recovery reason is likely based on an “ability-to-pay” argument: if there is something expensive that must be done, then those who have the most ability to, should pay for it—or at least pay more than the rest of us. The idea here is that asking or requiring payment from those who have the most ability to pay will not have a significant negative impact on their quality of life. When we think like this, we might like the idea of a wealth tax that is applied only to the super-rich and involves a small enough percentage that they will likely not even notice it in their daily life and will nonetheless generate significant tax revenue for pandemic recovery spending.
Is there fairness in Canada around who has more and who has less?
If you think that Canada’s current economic rules regarding taxes, inheritance and subsidies are significantly far away from being fully fair, and you think that some or all of Canada’s rich or super-rich have more than they ought to have, then you might support a wealth tax as a very modest way to help correct that.
But what is fair? There are, of course, plenty of views about this in philosophy, politics, and daily life. I find we can tell if an economic system is fair if it’s designed so that wealth inequality serves a public purpose—meaning that there is a level of wealth inequality that is good for everyone, including low-income Canadians. This view is plausible only to the extent that we have reason to believe a well-designed system can make it in the self-interest of the super-rich or rich to put their wealth to use in ways that are also good for others.
What are the political effects of wealth inequality in Canada?
At the low end of the economic spectrum, healthy democratic processes don’t want people to be disengaged and apathetic about politics because of poverty or income insecurity. Implementing a basic income can help.
At the high end of the economic spectrum, healthy democratic processes don’t want an extreme concentration of wealth and private power in a small number of people or families, because it can then become practically very important for politicians to please these people. That results over time in a system that focuses too much on serving the interests of the super-rich, rather than the needs of the majority or the marginalized.
It is worth noting that to prevent concentrations of wealth and private power that are so excessive they are harmful to a healthy democratic process, we might well need a wealth tax that would be noticeable by the super-rich. Of course, if we are serious about acknowledging harmful levels of wealth inequality and not merely finding agreeable ways to increase tax revenue, then a noticeable wealth tax is worth considering.
