On Inequality, Democracy and Taxing the Rich – A Modest Proposal

No doubt many raised in our capitalist society, where inequality rules and excessive incomes and wealth are seen as a right (and where even the NDP only proposes a measly 1% tax on excessive wealth), will consider this proposal to be radical but it is actually quite a modest proposal.

So what is excessive income and wealth. There are many ways to measure that, many statistical, but I propose a simpler definition – the amount of wealth and income where increases have no discernible effect on ones way of life or standard of living, where the increase is simply not noticeable in one's day to day life. Let's be generous to the wealthy in determining such levels. I propose an annual income of $1 million dollars and total assets of $100 million as the level that triggers “excessive income and wealth”. Above that no one notices without reading their financial statements.

The thing about excessive wealth is that it makes minuscule difference to the recipients but could make all the world of difference to the poor and underprivileged and to society as a whole if used for the common good. I will not even attempt to list what all that excessive wealth could do if devoted to the common good of society .

But there is another side to excessive income and wealth – it is highly undemocratic. The rich do not cling to their excessive wealth because it makes a difference to their daily lives. They cling to it because it gives them economic and political power. It is not just a matter of economic inequality, is a matter of political inequality.

Democracy is based on equality, one person one vote. Economic power is political power. Excessive wealth skews political power so that the wealthy have more of it. Excessive wealth is inherently undemocratic.

So what do we do with this excessive wealth so that it benefits society. We tax it away so that it can be used for the common good.

This sounds radical at first. But what do the wealthy lose in this proposal. Their standard of living and quality of life does not change. They only thing they lose is their excessive economic and political power, power that undermines our democracy.

Postscript

In taxing away excessive wealth we cannot just require it's conversion to cash to be paid as taxes. That would obviously be very disruptive to the economic system. Society (through the government) will take ownership of these resources in kind and in many cases maintain them while applying revenues from them to the common good. In some cases they may need to change the policies of entities that are not acting in the public interest or divest ownership of entities where that serves the public interest.

Also this proposal does not address all the problems with our tax system. For it to be truly progressive we need to raise the income level that triggers the payment of taxes and increase the higher marginal tax rates, including adding marginal tax rates at higher income levels (between $200,000 and $1 million).

Zoning: Developers vs the Environment and the Public Interest

I was out on my bike yesterday riding along Huntmar Road and the Carp River, including land on the flood plain that the city has approved for housing development. Along parts of my route you could not even tell where the river is as everything is flooded alongside it.

As I passed the Corel Centre I recalled the Ontario Municipal Board (OMB) rezoning battle for the proposed NHL arena lands.

My wife and I were amongst the official objectors to the proposal to rezone thousands of acres of high quality farmland for commercial development, including the arena. The result was unusual in that we essentially won the battle with the well funded developers. The arena and 100 acres, was allowed to be developed but the remaining thousands of acres were protected and conditions were put on the development to protect the surrounding land from development, including limiting sewage and other services to the size necessary for the arena and requiring the developer to pay for the Highway 417 interchange because it would only be serve the arena project.

The only reason we won this unusual victory was because of timing. The battle was waged during the short period that Ontario actually had a progressive government (Bob Rae’s New Democratic Party government) that cared about protecting the environment and protecting farmland and our food supply. It was the dedicated officials from the Ontario Ministry of Agriculture and Food (OMAF) that carried the major weight of the battle, otherwise the various public interest groups would not have been able to compete with the financial resources of the developer.

Interestingly the quality of the farmland was not an issue at the hearings, although it was an issue in the developers PR campaign. Even as the developer was presenting to the OMB it’s consultants report, that agreed that the land was high quality agricultural land, the developer was waging a public relations campaign of lies to claiming the exact opposite of what they were saying to the OMB, a quasi-judicial board. They knew better that to try to lie to the OMB but lying to the public was no problem for them.

So why was I biking through all sorts of development adjacent to the arena. It is essentially because the rules favour the developers. A victory for the developers is always permanent. A victory for the environment and the public interest is always temporary.

Once developers get land zoned for development it can virtually never be taken away no matter what environmental or public interest arguments and evidence might be presented. To do so would take away their “property rights” and that has financial implications - it would be reducing the monetary value of their land.

However land that is zoned to protect it from development for environmental and public interests reasons has no such long term protection. The developers can keep trying again and again until the defenders of the environment and public interest can no longer afford to keep fighting. It appears that the environment and the public interest has no monetary value.

One of the most troubling cases involved land adjacent to the Trillium Woods in Kanata that was designated as environmentally protected and purchased by a developer (Minto). The City was forced to purchase the lands when the OMB basically ruled that because the land was owned by a developer the developer could do whatever it wanted with it.

This is the type of irrational thinking that leads to the argument that we have to destroy the environment or the economy will collapse. The fact that there would be no economy without the environment is irrelevant because there is no monetary value placed on the environment.

If we are going to have livable communities we have to place a value on the environment that we live in. Once land is designated as protected from development those environmental rights should have the same permanent status as developers rights to destroy the environment (and farmland) have.