Blog – Tax Fairness and Wealth Taxation – Canada and the World – November 2021 The average total income for all tax filers grew 0.7% to $51,000 in 2019. However, total income grew at a faster pace for tax filers at the top of the income distribution compared with those in the middle or at the bottom. Average total income for the top 1 percent of Canadian tax filers grew 1.8% in 2019, compared with a 0.8% increase among the bottom 50 percent. Average income was relatively unchanged for those in the upper middle of the distribution (51st to the 90th percentiles). Moreover, the average total income growth for the top 0.1 percent (+5.5%) and the top 0.01 percent (+13.9%) of tax filers greatly outpaced those in the top 1 percent. The growth in the total income of high-income tax filers was largely driven by dividend income. For example, while average employment income for tax filers in the top 1 percent increased by half a percentage point in 2019, their average dividend income grew by 10.5%. The average dividend incomes grew even faster for tax filers in the top 0.1% (+18.9%) and top 0.01% (+34.8%) in 2019 Canadian tax filers spent, on average, 11.8% of their modified total income on federal, provincial/territorial income taxes and employee contributions to Employment Insurance and the Canada/Quebec Pension Plan (federal payroll taxes) in 2019, unchanged from 2018.

1. WEALTH AND
TAXATION
Paul Young CPA CGA
August 28, 2021

2. PAUL YOUNG - BIO
• CPA, CGA (1996)
• Academia (PF1, FA4, FN2, MU1. and MS2)
• SME – Customer Success Management
• SME – Risk Management
• SME – Close, Consolidate and Reporting
• SME – Public Policy
• SME – Emerging Technology
• SME – Business Process Change
• SME – Financial Solutions
• SME – Macro/Micro Indicators
• SME – Supply Chain Management
• SME – Data, AI, Security, and Platform
• SME – Internal Controls and Auditing
Contact information email: Paul_Young_CGA@hotmail.com
LinkedIn: https://www.linkedin.com/in/paul-young-055632b/
SlideShare - https://www.slideshare.net/paulyoungcga
Twitter: https://twitter.com/paulyoungcpa
YouTube - https://www.youtube.com/user/youngercga1968/videos

3. AGENDA
• Wealth per capita
• Electricity / Wealth
• How is wealth created?
• Top 1% and Canada (Taxes)
• Tax Fairness / Canada
• Highest Tax / Country
• Pensions Funds and Stock Market
• Tax Competitiveness
• AOC / Wealth Tax
• California Wealth Tax
• Underground Economy / Canada
• World / Underground Economy
• Tax Havens
• Business Transfers
• Natural Resources wealth
• What needs to happen

4. WEALTH
Source - http://statisticstimes.com/economy/projected-world-gdp-capita-
ranking.php

5. HIGHEST INCOME PER CAPITA COUNTRIES
https://www.theglobaleconomy.com/rankings/gdp_per_capita_constant_dollars/

6. ELECTRICITY / WEALTH
Source - https://www.nextbigfuture.com/2021/01/per-capita-energy-and-wealth-
levels.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+blogspot%2Fadvancednano+%2
8nextbigfuture%29

7. HOW IS
WEALTH
CREATED
• People invest in companies – share purchases -
https://www.bloomberg.com/news/articles/2020-06-15/asia-
stocks-to-gain-after-fed-ignites-risk-on-mood-markets-wrap
• People buy property / Rental Property -
https://www.slideshare.net/paulyoungcga/canada-housing-
market-latest-analysis-may-2020
• People start businesses -
https://www.slideshare.net/paulyoungcga/canada-whats-next-
for-small-business
• People inherit money - https://taxfoundation.org/estate-and-
inheritance-taxes-around-world/
• Win the lottery - https://www.lottoland.asia/magazine/9-
countries-where-you-do-not-need-to-pay-tax-on-lottery-
winning.html
• Innovation - https://www.slideshare.net/paulyoungcga/2019-
election-innovation-and-rd-canada-2014-to-2017
• Professional Athlete, Actors and Actresses -
https://www.statista.com/statistics/675120/average-sports-
salaries-by-league/ or https://www.cnbc.com/2020/02/07/the-
10-highest-paid-actors-and-actresses-of-2019.html
• Choose a career that has upsell opportunities in terms of salary
and benefits, i.e. engineer, lawyer, doctor -
https://www.foxbusiness.com/lifestyle/the-10-highest-paying-
jobs-in-the-world

8. CANADA
EFFECTIVE
TAX RATE
Income Tax and High
Ibcome.pdf

9. TOP 1% AND
TAXES
Source -
https://www150.statcan.gc.ca/t
1/tbl1/en/tv.action?pid=11100
05501 or
https://www150.statcan.gc.ca/t
1/tbl1/en/tv.action?pid=11100
05501

10. TAX FAIRNESS / CANADA
Taxing high income earners has not work in the past.
There are ways to fix tax fairness by re-working the ITA, closing down tax havens, Technology tax, revisiting eCommerce taxing, etc. -
https://www.slideshare.net/paulyoungcga/2019-election-who-do-your-trust-more-when-it-comes-to-tax-fairness
If Canada also became more competitive it could also bring back FDI and be a world leader in sustainable natural resources -
https://www.slideshare.net/paulyoungcga/have-the-liberal-party-of-canada-supported-the-natural-resources-sector
https://www.slideshare.net/paulyoungcga/world-needs-to-look-at-tax-fairness (October 2019)
We do not need a wealth tax!
We do need the following
1. Refocus on supply chain
2. Transforming of Government
Source - https://www.slideshare.net/paulyoungcga/how-best-to-reshore-supply-chains
Source - https://www.slideshare.net/paulyoungcga/canada-municipal-and-local-government-whats-needs-to-be-done
Source - https://www.slideshare.net/paulyoungcga/world-needs-to-look-at-tax-fairness

11. HIGHEST TAX JURISDICTION / COUNTRY
Source - https://www.weforum.org/agenda/2019/11/income-tax-around-the-
world/
• Scandinavia has some highest cost of living in the world
- https://www.businessinsider.com/most-expensive-
countries-to-live-in-ranked#6-denmark-20
• USA wealth distribution - https://www.urban.org/policy-
centers/cross-center-initiatives/state-and-local-finance-
initiative/state-and-local-backgrounders/public-
welfare-expenditures
• Scandinavia have strong, but expensive government
models - http://statisticstimes.com/ranking/democracy-
index.php
• Consumption Taxes - https://www.retail-insight-
network.com/features/highest-sales-tax/
• Revamping Tax codes -
https://www.fool.com/retirement/2019/07/21/you-
wont-believe-how-complex-our-tax-system-is.aspx or
https://www.slideshare.net/paulyoungcga/designing-
social-programs-and-tax-fairness-policies

12. STOCK MARKET AND
PENSION FUNDS
• Role of the Stock Market – “The stock market refers to the
collection of markets and exchanges where regular
activities of buying, selling, and issuance of shares of
publicly-held companies take place. Such financial activities
are conducted through institutionalized formal exchanges
or over-the-counter (OTC) marketplaces which operate
under a defined set of regulations. There can be multiple
stock trading venues in a country or a region which allow
transactions in stocks and other forms of securities.
”https://www.investopedia.com/terms/s/stockmarket.asp
• Pension funds have issues with solvency -
https://www.slideshare.net/paulyoungcga/pension-plans-
continue-face-solvency-issues
• Pension Funds
• Real State
• Money-market
• Company ownership
• Source -
https://www.investopedia.com/articles/credit-loans-
mortgages/090116/what-do-pension-funds-typically-
invest.asp

13. STOCK MARKET

14. TAX COMPETITIVENESS
Source - https://taxfoundation.org/publications/international-tax-competitiveness-index/

15. FAILURE OF
WEALTH
TAXES
• “Normally progressives like to point to Europe for policy
success. Not this time. The experiment with the wealth tax in
Europe was a failure in many countries. France's wealth tax
contributed to the exodus of an estimated 42,000 millionaires
between 2000 and 2012, among other problems. Only last year,
French president Emmanuel Macron killed it. In 1990, twelve
countries in Europe had a wealth tax. Today, there are only
three: Norway, Spain, and Switzerland. According to reports by
the OECD and others, there were some clear themes with the
policy: it was expensive to administer, it was hard on people
with lots of assets but little cash, it distorted saving and
investment decisions, it pushed the rich and their money out of
the taxing countries—and, perhaps worst of all, it didn't raise
much revenue. ”Source -
https://www.npr.org/sections/money/2019/02/26/698057356/if
-a-wealth-tax-is-such-a-good-idea-why-did-europe-kill-theirs
• Wealth taxes have failed around the world -
https://www.wsj.com/articles/where-wealth-taxes-failed-
11572910833
• You cannot tax someone to prosperity -
https://fee.org/articles/why-a-wealth-tax-can-t-solve-our-
problems/

16. AOC AND WEALTH TAX
• USA GDP is driven by capital investment -
https://www.statista.com/statistics/247991/value-added-to-the-us-gdp-by-
industry/
• USA has one the best innovative economies in the world -
https://www.visualcapitalist.com/world-most-innovative-economies/
• New York has one the highest taxation states -
https://wallethub.com/edu/best-worst-states-to-be-a-taxpayer/2416/
• AOC wealth tax would lead to exodus of businesses -
https://nypost.com/2020/07/17/aocs-billionaires-tax-would-spur-wealthy-
exodus-from-ny-report/
• Qatar has one highest per capita income due to its low population and
dependency on oil and gas -
https://www.indexmundi.com/g/r.aspx?t=50&v=67
• There should be more focus on reforming the tax act including the closing
down of tax havens - https://www.ctj.org/american-corporations-tell-irs-the-
majority-of-their-offshore-profits-are-in-10-tax-havens/
• Tax Policy reforms - https://equitablegrowth.org/a-modest-tax-reform-
proposal-to-roll-back-federal-tax-policy-to-1997/ or

17. CALIFORNIA WEALTH TAX
• Fox Business Network anchor Neil Cavuto questioned California State Assemblyman Rob Bonta on "Cavuto:
Coast to Coast" Friday over his proposal to institute a 0.4% wealth tax on Golden State residents worth
more than $30 million. The Alameda Democrat told Cavuto the proposed tax "affects about 0.15% of the
California population -- not the top 10%, not the top 1%, the top .15%, about 30,000 people" and would
generate $7.5 billion in revenue for the state. - Source - https://www.foxbusiness.com/fbntv/neil-cavuto-
california-rob-bonta-wealth-tax
• California already has one highest personal income tax rates in United States including high rates for high
income earners - https://taxfoundation.org/state-individual-income-tax-rates-brackets-2019/
• California is wrestling with a large deficit - https://www.cnn.com/2020/05/14/politics/california-budget-deficit-
federal-funds/index.html
• 77% of California expenses are related to healthcare and education -
https://www.sco.ca.gov/ard_state_cafr.html
• Exodus of people - https://www.fox6now.com/news/california-exodus-more-people-moving-out-of-state-
than-in-for-1st-time-since-2010
• Businesses continue to assess their California high taxation - https://chiefexecutive.net/business-exodus-
california-troubling-sanctuary-policies/
• Rich are trickling out of California - https://www.latimes.com/business/story/2019-10-24/hiltzik-wall-street-
journal-rich-california
• California Tax proposal - https://www.wsj.com/articles/a-california-plan-to-chase-away-the-rich-then-keep-

18. UNDERGROUND
ECONOMY /
CANADA
Source – Stats Canada

19. UNDERGROUND
ECONOMY /
CANADA
Source – Stats Canada

20. WORLD AND THE UNDERGROUND
ECONOMY
• Paying cash to contractors drives the underground economy -
https://www.investmentexecutive.com/news/research-and-markets/paying-cash-to-contractors-drives-
underground-economy/
• The underground economy can be about 15% to 20% of the total GDP.
• USA underground economy is estimated to be about $2.5 trillion -
https://www.investopedia.com/articles/markets/032916/how-big-underground-economy-america.asp
• What needs to be done
• More auditors and tools like AI - https://www.nextgov.com/ideas/2018/04/using-artificial-intelligence-reduce-tax-
fraud/147807/
• Expansion of audits in areas like hospitality, general trades and retail.
• More focus on reporting of results
• Home-owners could be required to report names of work done on their homes as part of renovations

21. TAX HAVENS
• More focus on tax treaties and working with OECD to shut down tax havens -
http://www.oecd.org/countries/caymanislands/jurisdictions-committed-to-improving-transparency-
and-establishing-effective-exchange-of-information-in-tax-matters.htm or
https://www.taxjustice.net/2020/07/22/tax-justice-networks-offshore-wealth-estimates-have-just-been-
validated-by-the-oecd/
• Tax havens cost government tax dollars -
https://www.imf.org/external/pubs/ft/fandd/2019/09/tackling-global-tax-havens-shaxon.htm

22. BUSINESS TRANSFERS
New Business Transfer rules
For example, assume that Mrs. A is a top-bracket individual living in Ontario. She owns Co. A — a corporation that carries on an active business. While Mrs. A
has no plans to sell the business, her accountant tells her there is a new plan that will allow her to strip cash of $892,000 out of the business at zero tax cost.
Mrs. A forms a new corporation, and her children invest a small amount — say a hundred dollars — for fixed-value preferred shares that give them voting
control of Newco. Mrs. A sells her shares of Co. A to Newco for cash of $892,000 and pays no tax. If Co. A had paid her a dividend of $892,000, her tax would
have been roughly $425,000. Under the bill, she avoids this tax completely, and continues to own and operate the business — all thanks to a hundred dollars of
voting preferred shares held by her children
Source - https://financialpost.com/opinion/allan-lanthier-ottawas-blunder-on-business-transfer-taxes-could-cost-
billions?utm_term=Autofeed&utm_medium=Social&utm_source=Twitter#Echobox=1627470001
Dunn said she anticipates that the department of finance will want to amend the bill’s language to limit transactions that may not be “bonafide intergenerational
transfers.” Any business owner currently in the process of selling their business, she said, should be cautious and reach out to their professional advisor.
“Because it’s welcome news, perhaps transactions will be undertaken quickly after it receives royal assent but just be careful that it is a bonafide
intergenerational transfer,” she said. • https://atlanticbusinessmagazine.ca/web-exclusives/bill-c-208-welcome-news-for-family-businesses-expert-says/
CPA view - http://www.canadian-accountant.com/content/practice/new-opportunities-for-intergenerational-transfers-of-businesses
Flawed bill - http://www.canadian-accountant.com/content/thought-leaders/tax-relief-for-family-business-transfers-a-legislative-fiasco-part-i
Cash stripping - https://invested.mdm.ca/md-articles/capital-gains-surplus-stripping-incorporated-physicians

23. TAX ISSUES WITH REIT
Taxation and REIT
Real Estate Income Trusts, or REITs for short, are companies that own or finance income-producing real estate. They receive special tax considerations and tend to have a higher distribution yield than
corporations.
Real estate assets can range from shopping malls, to apartment buildings, to office properties, or a mixed of the different assets. Due to the REIT structure and tax code, REIT taxation for investors in Canada
differs from dividends and warrant a good understanding by individual investors. See below for the Canadian break down by sub-industries.
Source - https://dividendearner.com/reit-taxation/
Benefits:
Over the last few years, a number of Canadian companies have created a REIT as part of a larger business strategy, including Dilawri Group, which established Automotive Properties REIT in 2015; Canadian
Tire Corporation, which established CT REIT in 2013; and Loblaw Companies Limited, which established Choice Properties REIT in 2012.
Setting up a REIT offers a number of potential advantages for business owners, including the following https://www.bdo.ca/en-ca/insights/industries/real-estate-construction/starting-reit-unlock-value-your-
business/
Loopholes
C4TF collaborated with ACORN to calculate the unfair tax advantages that REITs enjoy in Canada. Our research focused on seven REITs that own residential rental properties.[1] We found that if these REITs
had been taxed at the same rate as other Canadian corporations, they would have paid $1.2 billion more in taxes since 2010. Closing this tax loophole would raise revenues to help pay for affordable housing,
while ensuring REIT investors do not profit from the housing challenges in Canadian cities.
ACORN’s report notes that in 1996, REITs owned zero purpose-built multi-family rentals. By 2017, they owned 10% of this rental stock. Alongside the rise of REITs has been an overall concentration among
landlords that control the rental supply. The 20 biggest landlords went from owning 16% of units in 2011 to 20% in 2017. On the other side of this process, renters saw the number of affordable units decline by
830,000. With rising rents and stagnant incomes, about 800,000 Canadians pay more than 50 percent of their income on rent.
REITs have been exploiting people’s housing needs to reap billions in profits, in addition to receiving preferential tax treatment.
Source - https://www.taxfairness.ca/en/news/federal-government-must-end-preferential-tax-treatment-reits

24. NATURAL RESOURCES WEALTH
Natural Resources
Wealth.pdf

25. WHAT’S NEEDS TO
BE DONE
• Revamping the tax code including shutting down tax havens -
https://www.slideshare.net/paulyoungcga/does-taxing-the-top-1-
generate-the-tax-dollars
• Digital Tax - https://www.politico.com/news/2020/07/27/europe-
digital-tax-382309
• Reforming government as part of making government more
efficient and effective -
https://www.slideshare.net/paulyoungcga/transforming-the-public-
sector-canada
• Focusing policies that support economic growth -
https://www.slideshare.net/paulyoungcga/how-best-to-reshore-
supply-chains or https://www.slideshare.net/paulyoungcga/whats-
next-for-canada-post-covid19
• Fixing issues with protectionism including revamping the WTO -
https://www.slideshare.net/paulyoungcga/canada-merchandise-
trade-april-2020
• More emphasis on education and training -
https://www.slideshare.net/paulyoungcga/human-capital-skills-
trades-and-skills-development
• Reforming United Nations and its various agencies -
https://www.slideshare.net/paulyoungcga/reforming-both-the-
united-nations-and-who
• Focusing on improving areas like infrastructure, farming, urban
planning, water and forestry management -
https://www.slideshare.net/paulyoungcga/the-real-truth-about-
emissions-and-carbon-taxation or
https://www.slideshare.net/paulyoungcga/canada-how-are-farmers-
doing-in-financial-in-canada
• FDI - https://www.slideshare.net/paulyoungcga/what-is-next-for-
foreign-direct-investment

26. OTHER
SOURCES
• If you like to learn more
about trade and/or other
subjects as part of your
professional learning and
development then feel
free to review my material
on
https://www.udemy.com/
(search Paul Young CPA
CGA