From: AlanBaggett@volcanomail.com   
      
   Roar of objections to imposing death duties on Canadians :CRA SOTW   
      
   An attempt to understand Canada's inheritance tax backlash: Don Pittis   
      
   Don Pittis • CBC News •   
      
   Anyone who thinks the CBC does not serve conservative-leaning Canadians should   
   look at the comments for a recent online story about inheritance taxes.   
      
   The article was based on a report about the wide gulf between rich and poor   
   issued by the left-leaning Canadian Centre for Policy Alternatives think-tank.   
   The report suggested the lack of an inheritance tax in this country makes   
   inequality worse.   
      
   Other countries, including Britain and the United States, have 40 per cent   
   inheritance taxes that kick in if people are rich enough. In the U.S., you   
   have to have about $11 million when you die for your estate to pay death   
   duties.   
      
   Death and no taxes   
   Canada used to have an inheritance tax, but as of 1972 the Canadian death duty   
   rate dropped to zero.   
      
   Of course, that's not the whole story (more on that in a bit). But the really   
   interesting thing was the reaction to the think-tank's proposal that estates   
   worth more than $5 million be subject to a 45 per cent tax.   
      
   Of the roughly 3,000 people who commented, a large number — and generally   
   the most strident voices — condemned the idea. Many Twitter responses did so   
   as well.   
      
   Mark Scott, for example, tweeted that he would leave Canada if such a tax were   
   ever applied.   
       
   Depending on your religious views, you really do have to depart — if just to   
   the Great Beyond — in order to pay death duties.   
      
   But if you do decide to leave Canada before you die, choose your country   
   wisely. The U.S. isn't the only place to have an inheritance tax. Most rich   
   countries have one, or like Canada, something roughly equivalent. Japan takes   
   half. Tax havens such as    
   the Channel Islands and the Caymans are among the few safe spots.   
      
   Unlike in so many other cases, the usual warning that if Canada doesn't do the   
   same as the U.S., rich Canadians will take their money bags and head south,   
   does not apply.   
      
   Lucky to pay high taxes   
   Perhaps more interesting was the angry reaction from people who probably have   
   little prospect of being affected by the hypothetical tax anyway. It's hard to   
   imagine all the comments at the bottom of the inheritance story were from the   
   richest group of    
   Canadians known as the "one per cent," or even from the "10 per cent."   
      
   Instead, the tone is very much Joe and Josephine Canadian. And as that   
   inheritance report points out, the vast majority of Canadians can never aspire   
   to pay death duties. They should be so lucky!   
      
   As the article reminds us, half of all Canadian families have net assets worth   
   less than $300,000. Even the relatively well-off, with say, a paid-off home in   
   Vancouver and a million dollar retirement nest egg, won't pass the $5-million   
   threshold.   
      
   So why the backlash? According to research in the U.S. by scholar Dianna   
   Muntz, the main cause of conservative anger that fired up working-class   
   supporters of Donald Trump during the 2016 presidential election was status   
   threat.   
      
   It wasn't so much that people were poorer, although they may have been, but   
   that they were afraid that they were losing what they had, "a sense that white   
   Americans are under siege by these engines of change," wrote Muntz.   
      
   Man on horse wanted   
   And according to Canadian data from Ekos Research released earlier this year,   
   a similar kind of populist backlash seems to be brewing here in Canada. Last   
   Friday's report on growing anger over illegal border crossings seems to   
   support the theory.   
      
   Ekos founder and president Frank Graves says the rejection of inheritance tax   
   is just one part of a wider phenomenon demonstrated in his polling. He pointed   
   to the election of Doug Ford as premier in Ontario as an example of its   
   impact. Most of Ford's    
   supporters declared themselves to be working class.   
      
   When people feel threatened by change, he says, they don't necessarily look   
   for logical solutions such as income redistribution from the very rich to   
   people like them. Instead, the part of the collective personality that seeks   
   strong leadership and order    
   comes out.   
      
   "It looks for the man on the horse, the strong man," Graves says. "It also   
   looks for decisive government action."   
      
   Research by Graves and others shows that under what some call "ordered   
   populism," people turn against progressive action that they would have   
   supported when they felt secure. That includes sharing wealth through   
   government transfers — even if they    
   would benefit. He says research shows that explaining the advantages of tax   
   transfers to poorer people can make them change their position on such   
   transfers.   
      
   As to solving inequality with inheritance taxes, the U.S and Britain, two of   
   the most unequal of the rich countries, are hardly proof it works. Good public   
   education for everyone has been shown to work better. And it makes a county   
   richer in the long    
   term.   
      
   And as for leaving Canada if it were to introduce death duties, it may not be   
   worth your while. Under the tax provisions introduced in 1972, inheritance tax   
   was cut to zero, but a provision on capital gains was added. Bringing back   
   death duties would    
   likely mean the two would be switched again to avoid double taxation.   
      
   Right now, if you die at 85 and bequeath a cottage lot you bought for a few   
   thousand bucks to the grandkids, you (or, rather, having passed on, your   
   estate) must pretend you sold it at the $500,000 it is worth today, treat that   
   notional increase as    
   capital gains and pay the appropriate tax. Same applies to other assets. And,   
   sorry, no $5-million minimum.   
      
   So no, even in wonderful Canada, you can't escape death or taxes.   
      
   Follow Don on Twitter @don_pittis   
      
      
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