Reality Check： The rich aren’t Canada’s problem
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Summary
In this episode, Jasmine Moulton tackles one of the left's biggest obsessions: the rich. She explains why the rich don't pay their fair share, and why they should pay a fair share. Plus, why the top 1% of income earners in Canada should be required to earn at least $250,000 a year.
Transcript
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I'm Jasmine Moulton and it's time for a reality check.
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Reality check is a new show that we'll be dropping every Wednesday that will use facts
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and logic to debunk the favorite arguments of the left. So don't miss out. Tune in every week,
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every Wednesday on YouTube or subscribe wherever you get your podcasts. Don't miss a show. For our
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topic this week, we're going to be tackling one of the left's biggest obsessions and that is the
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rich. Take a listen. The cost of everything is going up. Some say it's because of supply chain issues.
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Some say it's because the government spent money on programs to help people in need.
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Here's the truth. Why is the cost of everything going up? Simple answer, greed. When the cost of
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things go up, it hurts some people, but it benefits those at the very top. And it's not the grocery
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store workers, those that stock the shelves, farmers that grow your food or small businesses
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and grocery stores like this. Large corporations, big box stores and big retail are making record
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profits in this time. Why should you pay more and more just so that large corporations can make more
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and more profit? It's a rigged system. So here's the most important economic fact of our time.
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We are living in an age of surging income inequality, particularly between those at the very top
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and everyone else. This shift is the most striking in the U.S. and in the U.K., but it's a global
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phenomenon. It's happening in communist China, in formerly communist Russia. It's happening in India,
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in my own native Canada. We're even seeing it in cozy social democracies like Sweden, Finland,
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and Germany. From what we heard from those two clips, we can basically boil the left's arguments
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about the rich down to two main arguments. One, that the rich don't pay their fair share,
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and two, that the rich are getting richer and the poor are getting poorer. Now, the first thing to do
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when you hear these arguments is to ask for a definition. There's no single definition of what
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the rich means, and it really is this nebulous term, but it's worth nailing down what their definition
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is of the rich, because that could really impact what they think should be done about this problem.
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Now, usually what the left means when they're referring to the rich is the top 1%, but still,
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that definition doesn't suffice because there are two different categories that mean two very
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different things. On the one hand, you could have the top 1% of income earners in Canada,
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and on the other, you have the top 1% of wealth in Canada. What you might be surprised to learn is
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that in order to qualify as the top 1% of income earners in Canada, you just need to earn over $250,000
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a year. Now, this is according to Statistics Canada. Now, on the other hand, if they're not
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talking about income earning, if they're talking about top 1% of wealth, well, that's a different
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story. So according to a report from the parliamentary budget officer, in order to be in the top 1% of
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wealth in Canada, and this is family wealth, the threshold to be in the top 1% is just over $6
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million. I believe it's something like 6.1 million. So just to recap, first step, anytime you hear those
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arguments, always ask them to define what they mean by the rich, because their definition will have big
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impacts on what they think should be done about the problem. So as I said, the left have two main
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arguments when it comes to the rich. A, that the rich don't pay their fair share, and B, that the rich are
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getting richer, and the poor are getting poorer. Let's debunk argument number one, that the rich
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don't pay their fair share. The Fraser Institute released a report that said that the top 20%
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of income earners in Canada paid about two-thirds of all income taxes in Canada. It was about 64%.
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That's a big chunk. The top 1% of income earners in Canada pay for 18% of all income taxes in Canada.
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So the very first question that you should ask a leftist if they say that the rich should pay their
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fair share is, what would be fair if 1% of Canadians pays 18% of income taxes, how much more should
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they pay? If 20% of the top income earners in Canada cover 64% of income taxes, how much more
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should they pay to make that fair? In fact, Dr. Mark Milkey published a report with the Canadian
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Taxpayers Federation that found that one-third of tax filers in Canada, which is about 9 million
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people at the time of the report, they don't pay any income tax at all. So the entire income tax burden
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is borne by two-thirds of tax filers in Canada. His report goes on to show that in jurisdictions in
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Canada where there are a number of high-income individuals, they actually serve to alleviate the
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tax burden on middle-income and lower-income Canadians as well. So if anything, it really helps
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to have high-income earning people in paying tax in the same jurisdiction as you because you'll end
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up paying less taxes. Your tax burden is relieved. It actually helps middle-income and lower-income
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Canadians when we have higher-income Canadians who can help to shoulder the burden. So it really isn't
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true. If the left is pretending to care about lower-income Canadians, they wouldn't really want to get rid
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of the higher-income ones either. Now, that's for the top 1% of income earners. But if we shift over
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to the top 1% of wealth, family wealth in Canada, well, their solution is a bit different. Instead of
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increasing, as we know, with income tax, it's a graduated tax system, people who earn more pay more.
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Now, whether that's a good idea might be a topic for another podcast. But when it comes to wealth,
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the left shifts their argument and they say that instead of a graduated system like we have on
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income, we should have a wealth tax that slaps in, comes into effect at a certain level of wealth. Now,
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a wealth tax is a terrible idea, which again, probably deserves its own entire show. It's that bad. But
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I think that we need to touch on it because it always comes up in this debate about the rich. The left
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is always saying that there should be a wealth tax. The evidence should speak for itself. There's been a ton
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of European countries that tried wealth taxes and abandoned them because they don't work and
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there are a lot of money to implement. But in Canada, the parliamentary budget officer actually
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released a report saying that if we had a wealth tax, they're not really sure, but it might bring
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in $5.6 billion. I did a quick calculation and $5.6 billion, the revenue that a wealth tax would bring
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in, wouldn't even cover four days of Justin Trudeau spending. So you'd get to partway through
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Thursday before that revenue would run out. So just to recap, the rich do pay their fair share.
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They pay the vast majority of income taxes in Canada. They actually help to alleviate the tax
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burden on lower income Canadians and middle income Canadians. And a wealth tax is very poorly understood
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by the left, but it wouldn't do anything to alleviate the financial mess that Canada's in,
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but it would wreak havoc on industry and a variety of industries. It would just wreak havoc generally
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in Canada. All right. And now to debunk the left's second typical argument when it comes to the rich,
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which is the rich are getting richer and the poor are getting poorer. I am so excited to debunk this
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because it's such a ridiculous statement that can be proven wrong so easily, which I can't wait to do.
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Let me give you a few numbers to place what's happening. In the 1970s, the 1% accounted for about
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10% of the national income in the United States. Today, their share has more than doubled to above
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20%. You may recognize for our podcast listeners that voice. It was our, it is our finance minister
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and deputy prime minister, Christia Freeland. Now this is from a Ted talk that she had years ago,
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but why I wanted to include this clip is because it really underpins the philosophy of the current
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government in Canada of prime minister, Justin Trudeau and the way that he's this government is
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really revolves around this idea that the rich are getting richer, the poor are getting poorer.
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This philosophy played a big role in why Christia Freeland holds the position that she has today.
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The book that she wrote Plutocrats outlines this philosophy and her Ted talk does as well,
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which we just listened to. And the very first way to counter this argument that the rich are
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getting richer and the poor are getting poorer is very simple. It's that it's not an empirical
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argument. It's an emotional one. Empirical being something you can measure. We can clearly measure
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that the poor are not getting poorer globally and here at home in Canada. In fact, Dr. Steven Pinker is
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someone whose work on this I really admire. So he's a Harvard professor. He's out of Montreal,
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actually a proud Canadian. And he said this, he dismisses the rich getting richer, poor getting
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poorer argument as a relativistic one, meaning you're just comparing things relatively. Is the gap
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widening? Well, is that really the relevant question? Because it would be far more relevant
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to focus on measures such as absolute prosperity. It doesn't matter necessarily where the poor are in
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relation to the rich, but more so how are the poor doing generally? Are they moving up the ladder?
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Are they getting a better quality of life, et cetera? Just because there's inequality that doesn't
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equal poverty. He calls that a logical fallacy. As I said, what we actually see around the globe and
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here at home in Canada is that the poor are getting richer. Let me read a quote to you from
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humanprogress.org. Globally in the past 25 years, more than 1.25 billion people escaped extreme
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poverty. That equates to over 138,000 people being lifted out of poverty every single day. Now this
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stat should make people happy. And if it doesn't, if it angers them because it debunks their argument
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that the poor are getting poorer, then that should tell you a lot about who you're talking to. But
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fortunately, I mean, that's something really incredible that people are being lifted out of poverty
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every single day at alarming rates and not just around the world, but also here in Canada. So
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according to the government's own data, which is published on its website, poverty in Canada is at
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one of the lowest rates it's been in recent history. And it's a pretty sharp decline as well. Now the
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left also, when they talk about the rich, like to talk about them, like they're this exclusive
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impenetrable group that there's, you know, a group of maybe Toronto elitists or something like that,
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that we just, we can never aspire to join. It's impermeable. We just will never gain entry into
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that exclusive group. But Statistics Canada actually shows another story. So I took a look
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at some recent census data. And if you look at the top income earners in Canada, five years ago,
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only 50% of the current top income earners in Canada were in that group. So it really is quite
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fluid. I mean, there is room for social mobility in Canada. The Canadian dream is alive and well.
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It's just simply not true that there's this group of rich people in Canada that stay rich and the rest
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of us can't ever gain entry. But here's one of the biggest mistakes and flaws that the left has in
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their logic when it comes to the rich. The left talks about the pie as if when the rich gain their
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portion of the pie or economic growth, as the rich get richer, they think that necessarily it's a
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zero sum game, which means that the poor have to get poorer. But what they don't understand is that
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in any sort of growing economy, while your portion might get smaller, your total wealth might actually
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be bigger. So you'd have a smaller piece of the pie, but you'd actually have more in your pocket at
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the end of the day. So your retort in this case really should be that the focus should be on growing
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the pie, not on redistributing it. Now, this actually brings me to one of my favorite examples.
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It's a video clip that we'll play in just a moment that explains why the wealthy get a bad rap, but
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really they do play an important function in our society in upward mobility within our society.
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Why is it we have this lack of money where people who can't support themselves decently and get a
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decent job where all these big men are up on top making oodles and oodles of money? They don't
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need it. They can only eat that much, eat in a sleep in a bed. And what do you suppose they do?
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If they don't eat it and don't use it, what do you suppose they do? They hoard it.
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And what do you mean they hoard it? Do you mean they put it under their pillows? That's right. No.
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They keep investing it. Investing it in what? That's right.
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What are they invested in? Well, in oil and everything where, I mean, all these other people.
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What are they invested in? Don't get off the subject. No. What are they invested in?
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Well, they invested in a lot of different things that the little people need.
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Do those factories and machines provide ordinary working people with jobs or not?
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What do you suppose the productivity of this country would be and of the wage rate would be
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if the total amount of capital in this country today was what it was 100 years ago?
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Where do you suppose the improvements in productivity come from except from the investment by people of their savings?
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Of course, we've got a lot of people who are poorly off.
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But if you look at it over time, if you get a sense of proportion, the well-being of ordinary people has been the main thing that has been improved by economic progress and economic growth and development.
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That was famous economist Milton Friedman explaining the value of investments that help spur innovation and entrepreneurialism within our society.
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To conclude, when politicians in Canada, leftist politicians like to focus on and target the rich,
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it really is a distraction from their own atrocious financial track record.
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As I've already pointed out, revenue from a wealth tax would last the Trudeau government three and a half days.
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So that is not a serious solution to fix this country's financial problems.
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For those of you who are unaware, Justin Trudeau has doubled this country's debt since he came into office.
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Now, while finance minister Chrystia Freeland likes to blame COVID as an excuse, let's not forget, and we really should hold them to account here,
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that government added $100 billion to the country's debt before COVID-19.
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So recall, they were in office five years before COVID-19 was even a word anyone had heard,
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If you're $100 billion off the mark, you shouldn't be giving anybody financial advice.
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You should really be doing some introspective thinking about maybe how you could do better managing the economy.
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Quite frankly, this government shouldn't be looking at the rich to solve its financial problems.
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The most obvious retort when governments like, or politicians like Jagmeet Singh, Justin Trudeau,
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is that they're conveniently ignoring how their government enriches the already quite wealthy families in this country.
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My favorite example of this was when the Trudeau government gave $12 million to Loblaws
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to put in some sort of environmentally friendly freezer.
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So $12 million of tax taken from taxpayers' pockets,
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given to a large company owned by one of the wealthiest families in Canada.
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I think that, so it's owned by the Wesson family.
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I think that their total net worth is somewhere around the $10 billion mark.
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I think they're something like the fourth richest family in the country.
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It's insane to think that a government who pretends to defend the interests of the lower income and middle class
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would take money out of their pockets and hand it over to one of the wealthiest family companies in the country.
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If the left was really serious about helping lower income Canadians or even the middle class,
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they would acknowledge the fact that the best poverty reduction tool we've ever known in the history of mankind
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So to recap, here's a reality check for leftists complaining about the rich.
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As the rich get richer, investment and absolute prosperity increases across the board.
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Getting rid of the rich in Canada would hurt entrepreneurialism and innovation,
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which are two things that this country desperately need right now.
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Lastly, the real solution here is smarter, smaller, and more accountable government.
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Thank you for tuning in to Reality Check with Jasmine Moulton.
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Don't forget to follow us wherever you get your podcasts.
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And remember that we're releasing a new show every Wednesday.