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NDP Leader Andrea Horwath speaks to reporters after the Ontario budget vote at Queen's Park in Toronto on April 24, 2012. (Nathan Denette/Nathan Denette/The Canadian Press)
NDP Leader Andrea Horwath speaks to reporters after the Ontario budget vote at Queen's Park in Toronto on April 24, 2012. (Nathan Denette/Nathan Denette/The Canadian Press)

Gerald Caplan

Taxing Ontario's rich and the menace of creeping Nazism Add to ...

Jim Doak is a man with a mission, a money manager in Toronto anxious to share with the world his strong views on taxing the rich. Last week, on both CTV and in the National Post, he explained that the Ontario NDP’s demand for higher taxes on the rich was “ ethnic cleansing,” since it would “force a defined group, in this case those with annual incomes over $500,000, to emigrate”.

It so happens that in one of my present lives, I both write and teach about genocide. I can report that many scholars see ethnic cleansing – in the Balkans in the 1990s, for example – as barely a step short of genocide itself, which is of course considered the crime of crimes. So this is heavy stuff Mr. Doak is laying on us.

But he had hardly begun.

His target was a new tax the NDP was able to force on Ontario Premier Dalton McGuinty this week. In order to avoid an election, the Liberal Leader agreed to impose a 2 per cent surtax on the 23,000 Ontarians who declare earnings of more than $500,000 a year.

It is satisfying that the world-wide campaign to reduce inequality by increasing taxation on the rich can finally record one success, right here in Ontario; just ask a frustrated President Barack Obama how hard it is. Yet it must be said the Ontario breakthrough is modest indeed. The new hit will cost the newly-taxed all of $3,000 annually; if you’re making enough to pay, you won’t even know it’s missing. Nor does the deal begin to compensate for the $12-billion in tax cuts handed out by the McGuinty government in the past three years, an interesting figure given Ontario’s deficit is $15-billion. Besides, the half a billion or so the new tax might raise will go to reduce the deficit, not to increase social programs, which you might think the rich would applaud.

But it’s the “might raise” in the previous sentence that’s the kicker. Just to put the entire transaction in perspective, several commentators have already pointed out that sharp tax accountants and lawyers will ensure the rich find ways to avoid most of the increase. Writing in Report on Business, Tim Cestnick reported that rich people don’t appreciate in the slightest “paying more tax than they think is fair and reasonable”. Sure enough, though 78 per cent of Ontarians approve the new minor surtax, Mr. Cestnick explained that “the wealthiest individuals and families in Ontario” are indeed likely to see it as unfair and unreasonable. So some will leave the province altogether, while others “will undoubtedly look to their tax advisers to develop strategies to keep taxable income below the new highest marginal tax bracket”.

This observation, and others like it, echoes that made more than once in this newspaper by Neil Reynolds, most recently in an April 17 column with the succinct headline: “Taxing the rich: Not as easy as it sounds.” After all, what’s the point of being very rich if you can’t buy the kind of advice that will keep you very rich. So the new tax seems unlikely to raise more than a few dollars with each person who earns more than $500,000 paying a mere trifle.

Nevertheless, even when these details were publicized this week, the outspoken money manager Jim Doak wasn’t through. This time it was on CBC Radio’s Ontario Report. Maybe this particular tax change wasn’t such a big deal, he allowed, but it’s an “incremental” thing. You know, he explained, incremental like “the Nazis.” Here the usually articulate Mr. Doak stumbled a bit, noting that the Nazis started in 1933, then came 1936, then 1939. His point was that the Nazis began small, like the tax cut, and grew incrementally till they ultimately emerged as the Full Adolf. Obviously startled by the analogy, CBC host Rita Celli observed gently that “some people will say that’s pretty extreme.” Mr. Doak declined the opportunity to modify his remarks.

I know nothing about Mr. Doak’s background, but I assume he alludes to the Holocaust when he talks about Hitler’s “incremental” moves.

Yet in the powerful words of Nobel laureate Elie Wiesel, the world’s best-known Holocaust survivor, “I compare nothing to the Holocaust.” To invoke the Holocaust inappropriately, for Mr. Wiesel and for many of us, is to trivialize it, to banalize it, to insult the memory of the six million. Yet Elie Wiesel made these comments when reprimanding Israeli Prime Minister Benjamin Netanyahu for comparing Nazi Germany to today’s Iran. What might Mr. Wiesel make of the comparison between the Holocaust and a modest increase in the taxes of some of the richest people in the world?

There are many things one could say about the hysteria that people like Messrs. Doak and Schwarzman seem determined to spread. But for me, the most striking one is that their side is actually winning – big time. Despite putting inequality on the political agenda last year, the Occupy movement has all but disappeared and inequality, everywhere from Canada to Britain to South Africa to Mexico, is increasing. There is indeed a bitter class war, as the two money men believe, and the 1 per cent continue to be the victors in this war.

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