Days before the 2021 NDP convention, the National Post expressed their horror at a proposed resolution calling to abolish billionaires. The Post condemned the resolution as a “modern socialist utopia” and gave a warning against supporting such a radical demand. As Marxists, however, instead of being horrified at the radicalism of the resolution, we would warn that it was not radical enough! While “abolishing billionaires” did not pass at the April 2021 convention, billionaires continue raking in profits while the working class is barely making ends meet. We agree with the sentiment of the resolution, but taxing away billionaires is utopian. We need a real socialist solution to resolve wealth inequality.
The NDP resolution calls for a 100 per cent tax on all gross wealth above $1 billion and correctly condemns the profiteering of billionaires during the pandemic. The top 44 Canadian billionaires accumulated $63.6 billion in the early months of the pandemic. Leading the pack is the Thomson family, who own much of Canadian media and increased their wealth by $8.8 billion. Tobi Lutke, who controls Shopify, gained an additional $6.6 billion.
Coming in at third place was Loblaws CEO Galen Weston, who took home an extra $1.6 billion in 2020. Even though Weston comes in behind other billionaires, when considering total wealth, the Weston family is one of the richest on the planet with an estimated net worth of $8.7 billion. Fearing a staff shortage at the beginning of the pandemic, Galen Weston was generous enough to pay his grocery workers an additional $2/hour “hero pay”. This was quickly scrapped when Weston realized he just could not afford both the hero pay and increasing his personal wealth by $1.6 billion.
Similar money-saving techniques have been used by British Columbian billionaire Jim Pattison, who revoked hazard pay at his grocery stores two months into the pandemic. Since June 2020, hundreds of food-retail and pharmacy employees across the country have contracted the virus with several dying from COVID-19.
As an Oxfam report put it, “the recession is over for the richest”, if there ever was a recession for them to begin with. In fact, not one of the top 20 billionaires in Canada saw their wealth decrease since the pandemic hit. Meanwhile, for Canadians living in poverty, it is estimated that they will take 14 times longer than the rich to return merely to their pre-pandemic wealth levels. The Oxfam report summarized the situation as “the most extreme wealth inequality in Canadian history”. In this context, it is commendable that NDP rank-and-file members put forward a resolution to abolish billionaires. But the question remains: is taxation an effective solution?
Taxation is ineffective
The National Post is deeply concerned about the danger this “reckless” resolution poses to billionaires, but they have nothing to worry about. It is naïve to expect the rich to simply let themselves get taxed and lose their profits.
Their first way out of paying would be capital flight where they withhold investments in Canada and take their money to a tax haven in the Caribbean. The result would be an economic crisis and job losses here in Canada. The reformist left says this wouldn’t happen, but experience shows otherwise. We saw a capital strike and slander campaign in the 1990s, when the Bob Rae NDP government tried to introduce minor social spending in Ontario. If the capitalists could not tolerate such minor reforms, we can imagine how they would react to an “abolish billionaire” tax. These billionaires do not even have to leave if they can get a good accountant who can move around their legal papers to claim residence in a tax haven.
An alternative way out would be to simply dodge the tax. Five years ago, the Panama Papers scandal revealed how more than 200,000 ultrarich individuals have avoided paying any taxes. Just this month, the Canadian Revenue Agency put out an update that they are still working on auditing the Canadians mentioned in the scandal, but estimate that they have dodged $25 billion in taxes every year. One of these individuals is Galen Weston, who has been hoarding an estimated $350 million in Barbados and Bermuda since 2005. If a global pandemic that has left 3 million people dead is not enough to make these billionaires reconsider prioritizing their personal wealth hoards, why would they suddenly change because of a new tax?
The COVID-19 pandemic has been called the inequality virus, as the gap between the rich and the poor has widened to an unprecedented scale. Even before COVID-19, Canadian billionaires were on average 4,500 times richer than the average family. The pandemic did not cause wealth inequality, but simply intensified it.
The question “how do we abolish billionaires?” can only be answered if we understand what creates billionaires in the first place. The NDP resolution claimed that billionaires are a “policy failure”. However, the pandemic has pulled back the curtain on how billionaires really make their profits. The rich have been sitting safely at home and continue to line their pockets while essential, poorly paid grocery clerks, warehouse workers, delivery drivers, manufacturing employees, nurses and teachers risk their lives to keep society running. Billionaires are not making their profits from their own labour. They are living off the labour of workers and collecting profits by paying the working class less than the wealth they create. But how do they get away with this?
These billionaires are capitalists, meaning that they own the means of production including the machinery and warehouses the workers need to produce socially necessary goods and services. The private ownership of production gives the capitalist class power in society to control how wealth is distributed. Wealth inequality is only a symptom of the problem of ownership. A resolution to tax billionaires would have no way to control capitalist wealth accumulation so long as the commanding heights of the economy remain in private hands. Private ownership of the productive forces is why we have vast sums of wealth in the pockets of billionaires alongside crushing poverty.
If the capitalists are unwilling and incapable of using this wealth for the needs of society, they should not be in control of this wealth. We need social ownership of production under control of the workers to decide democratically how best to use the wealth generated by society. Socialists inside and outside the NDP need to reject clever tax schemes that keep the parasitic billionaire class in control of the economy. We need to expropriate the capitalist class and fight for democratic control by the workers who create all the value in society. That is the way to genuinely abolish billionaires and build a new socialist society which meets the needs of all.