May 27, 2022

The Queens County Citizen

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A single tax on “extraordinary” wealth can reach up to $ 60 billion

A single tax on "extraordinary" wealth can reach up to $ 60 billion

According to two scenarios by the Parliamentary Budget Officer (PBO), a single tax on “enormous” wealth would bring Canada from $ 44 billion to $ 60.7 billion over a five-year period.

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The idea, put forward by Liberal MP Nathaniel Erskine-Smith in a motion in February, was to “help the federal government pay for the pandemic response.”

A single tax works as follows: Families with assets over 10 million have to pay 3% on assets in excess of that limit. Then the tax rate increases to 5% for assets worth more than Rs 20 million.

The analysis is based on two hypotheses called “behavioral responses” based on the desire of families to hide their wealth through tax evasion and evasion schemes.

First, families try to reduce the total value of their taxable income by 35%.

By doing so, the number of households taxed would reach 46,805, bringing the taxable tax base to $ 1,008 billion and the taxable tax to $ 44 billion.

Second, these families use the same schemes, but to reduce their taxable wealth by 15%. This tax increases the number of taxable households from 46,805 to 68,686 and the total amount withdrawn. 60.7 billion.

Since taxes are a substantial amount for families, MP Erskine-Smith suggested that even if the amount due to the government was applied only once, it should be broken down over a five-year period so as not to harm the cash flow of the families. Its business activities come as a sudden shock.

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In the report, the amount to be paid will remain the same over a five-year period, although the provisions of the bill that would make this effect possible are beyond the scope of the study.

The authors of the report emphasize the difficulty of ascertaining the value of private property. The actual number of households with assets in excess of 10 million can be underestimated.