The Fair Share Act is the BC Greens’ plan to tax extreme wealth and ensure it benefits all British Columbians.
The Fair Share Act is structured in two parts. First, a one time wealth tax, which we’ll use to establish public programs like affordable housing, universal childcare, and Community Health Centres. Then, a smaller, annual wealth tax, to ensure these services can grow and be maintained.
Here’s how it’ll look:
One-time:
5% on net wealth above $50 million.
10% above $100 million.
20% above $1 billion.
This is estimated to raise approximately $22.2B.
Annual (to start after one-time):
2% on net wealth above $50 million.
3% above $100 million.
5% above $1 billion.
This is estimated to raise approximately $5.4B each year.
Will this tax affect me?
Does your family have more than $50 million dollars in assets? If not—this wealth tax won’t touch you. The Fair Share Act will affect under 2500 households.
If you are one of those few households worth more than $50 million dollars, congratulations, you won capitalism! We know high-net-worth individuals are often able to avoid income taxes, so we’re closing the loophole, and asking you to contribute a small sliver of your wealth, just like everyone else has to. By chipping in, you’re helping to make sure everyone in the province (including you) has access to affordable housing, accessible healthcare, and universal childcare.
What is a wealth tax?
You know how we have a property tax? Where the government assesses the value of your property, then taxes you based on it? A wealth tax is exactly like that, but it measures the value of other assets too, like trust funds, yachts, and valuable art. Wealth (or net worth) is just the market value of everything a family owns minus their debts.
So, at the end of every year, the government will tally up the value of what the extremely wealthy own, then apply a progressive wealth tax based on that valuation.
Won’t the ultra-wealthy just move elsewhere?
It’s possible that some people will move, and we’ve accounted for that in our modelling, but the reality is that “capital flight” is not as prevalent as billionaires would have you believe. The ultra-wealthy don’t live in B.C. because it’s a tax haven, they live here because B.C. is a beautiful province, a hub of trade and innovation, with skilled workers and access to global economies. Just like you, the ultra-wealthy are rooted to their communities by connections to family and friends, businesses and employees, and properties and history.
The stats back us up here, too: Just 0.01% of the richest households relocated after wealth tax reforms targeting the richest households were implemented in Norway, Sweden and Denmark. We also know that millionaires have a lower migration rate (2.4%) than the general population (2.9%). Only 0.3% of all millionaires in the United States move to lower-tax states in a given year.
But like any good policy, we’re thinking about those contingencies. That’s why the one-time wealth tax will apply retroactively to the previous tax year, to ensure every ultra-wealthy household is chipping in. Just like when individuals choose to leave Canada, we’ll charge an exit tax to any household with more than $50 million in wealth leaving the province. This will disincentivize tax-dodging and make sure the ultra-wealthy who have benefited off of B.C., and want to get out of paying their fair share, give a little back before they leave.
Ultimately, capital flight is a mostly-empty threat used by the ultra-wealthy to discourage working people from asking them to pay their fair share.
How will this work?
We’ll establish our own bureau to assess the value of ultra-wealthy households’ net worth, similar to how Quebec employs its own tax authority. B.C. is already really good at tracking and assessing property value, meaning that portion of wealth is already tracked better than other provinces. Building on that infrastructure and expertise will give us a head-start, and will be funded with a direct transfer from the Fair Share Act’s revenue (2% a year).
At the end of every year, that agency will finish up its assessments, and send the Fair Share bill to the households with more than $50 million in assets. This is a marginal, progressive tax, meaning only wealth over a given margin will be taxed at the given percentage for that margin.
Households affected by this tax can pay through general income, liquid assets, borrowing, or liquidation of non-liquid assets. Given the nature of the one-time tax, these households will be able to defer payment for up to five years (with modest interest), to ensure liquidity is not an issue.
We will work closely with the CRA and federal government to ensure tax loopholes are closed, and to monitor any shifting of wealth. Since the creation of the Common Reporting Standard from the OECD, offshore tax evasion has declined by a factor of about three in less than 10 years. With a new tax authority, the assistance of the CRA, and information sharing networks like the Common Reporting Standard, we’ll ensure this tax is applied fairly to all with a net worth of over $50 million.
How is this different from Premier Eby and the BC NDP’s tax?
Premier Eby and the BC NDP are proposing an income tax increase on the top two margins (on individuals making over $190K annually), with an added margin for those with an income of over $1M annually. They claim it will raise $225M in its first year, and $1B annually in years following. While this tax is not objectionable, it’s just not very effective.
Firstly, it is an income tax (not a wealth tax) and it targets high earners, not necessarily the ultra-wealthy. The ultra-wealthy are famously good at hiding their income, and often pay lower effective tax rates than workers. This is a problem, because it increases the distortion between the ultra-wealthy and the rest of us, and allows for more wealth hoarding at the tippy-top. We believe that if we’re going to be introducing new taxes, it should be on extreme wealth, not workers’ wages.
Secondly, raising $225M-1B is just not enough to address chronic underfunding in B.C.’s public services, and the deficit which has ballooned up to $14B under Premier Eby. For example, to make back the revenue we lost from Eby’s floundering on corporate LNG royalties alone, his tax would need to bring in $3B annually just to match those losses.
Premier Eby rejected the idea of any kind of wealth tax when the BC Greens sat across the table and proposed it. It sent a clear message: Eby’s NDP cares more about propping up the ultra-wealthy than supporting working people.
Are there examples of this working elsewhere?
Both Spain and Switzerland have successful wealth taxes that work at the sub-national level, meaning that individual jurisdictions (similar to provinces and territories) have the ability to implement and manage wealth taxes. Norway’s nation-wide wealth tax has brought in steadily increasing revenue since 2008. In 2019, they reported the equivalent of €1.6B in revenue, in a country with a population of only five million. Taxes on the ultra-wealthy in Massachusetts have been more successful than anticipated, because the ultra-wealthy did not flee as some suggested they would.
California is looking to bring in a similar one-time billionaire tax, supported by a coalition of unions, healthcare workers, and progressive leaders like Bernie Sanders, which has been virulently opposed by local billionaires. They’ve spent hundreds of millions trying to stop it, because they know it would be effective at getting them to pay their fair share.
These examples and others provide models which can be replicated, and models to be avoided, when applying our own wealth tax.
What about xyz country where they repealed their wealth tax?
A comprehensive study from the European Commission showed that failed wealth taxes often have two things in common: too many exemptions, and an unfocused base. Tax exemptions and targeted tax relief on wealth taxes creates more opportunities for the ultra-wealthy to take advantage of yacht-sized loopholes, partaking in tax avoidance and shady wealth planning. Relief provisions make administration far more complicated, increasing costs for governments and taxpayers alike. They also reduce the tax base where it needs to be largest, at the top percentiles of wealth. But with too large a base, such as wealth taxes which include middle class families, that administration becomes even more bloated, while burdening those with less wealth and fewer liquid assets. Many of the wealth taxes that failed due to major loopholes were scrapped with a promise to rework them and reintroduce stronger versions.
That’s why the Fair Share Act targets only households with $50 million or more in wealth (under 2500 households), a large enough segment to generate strong revenue, but not too large to affect average families. That way we can ensure working British Columbians aren’t paying extra, while those who have more to chip in do.