How high-tax Canada is driving away billionaire entrepreneurs like Murray Edwards

Posted on March 29, 2016 in Debates – FP/FP Comment
March 28, 2016.   Kevin Libin

The recent wave of populist politics aimed at making the moneyed class pay more in higher taxes has now evidently left us with one fewer member of the moneyed class

All over the globe, the great migration of people running for better lives is upsetting the world order. More than a million migrants to Europe have set in motion a long-term shift in the continent’s demographics, while shaking the entire EU project. Millions pouring over the southern U.S. border have irreversibly tilted America’s culture towards Hispanic Catholicism and lately prompted a leading presidential contender to promise barricades against more. This may be just the beginning. Once global warming really kicks in, say the experts, the world will be awash with a new class of migrant: The climate change refugee.

Canada may be just now be witnessing a new migratory phenomenon, too: The tax-climate refugee. Billionaire Murray Edwards has, after creating an empire from Calgary, evidently relocated his residence to London, England. Separate sources in the know have told Postmedia the move had much to do with the better environment for taxes there. You might think it sounds outlandish, all that effort just to save some taxes. But would you be willing move to one of the world’s great cultural and commercial capitals if someone offered you several million dollars a year for the trouble? The question obviously answers itself.

The left insists this sort of thing only happens in theory — that highly skilled, high-net-worth individuals aren’t really an astonishingly mobile tax base that can and would uproot to London or Monaco or the Caribbean to preserve their wealth, and we can tax them all we want. This despite the fact that studies consistently indicate this mobility does happen, and reality indicates that there are already plenty of high-net-worth Canadians living in London, Monaco and the Caribbean.

These are choices the ultra-wealthy face that make them different from the rest of us. On paper, the recent cranking up of top marginal tax rates looks mild enough. A federal increase of just a few percentage points, from 29 to 33 per cent on each dollar earned above $200,000 this year. In NDP Alberta, it was a five per cent hop from the flat 10 per cent tax to 15 per cent on income over $300,000 (still not even the highest among provinces). Not many of us have incomes that big, and even most who do earn the bulk of it at lower marginal rates.

But then there are super-earners like Edwards. They literally earn that first $200,000 or $300,000 in just the first few days of the year. The other 51 weeks of their income is taxed at top rates. The combined nine per cent tax hike that the Trudeau Liberals and Rachel Notley’s NDP together slapped on Albertans, all in one year, easily adds up to millions of dollars more in taxes for a heavy-hitter like Edwards.

The $13 million a year he makes in cash and stock as chairman of his company, Canadian Natural Resources Ltd., is a mere portion of his paycheque. Reports have him earning millions more as chairman of Ensign Energy Services Inc. and Magellan Aerospace Inc. As a significant shareholder in CNRL, there’s the quarterly dividend cheques. He’s a partner in the Calgary Flames, a hockey team that brings in more than US$25 million in net profits for its five owners, according to Forbes. And then there’s Edwards’s own Resorts of the Canadian Rockies, the largest private ski resort operator in North America, which kicks in who knows how much more.

The recent upward whipsaw in income taxes in this country, and particularly Alberta, are great for the soak-the-rich politics peddled by the prime minister and the Alberta premier, but the ultra-rich do not often get that way by allowing themselves to be easily soaked. Were he to stay in Alberta, Edwards would face not only a more than 20 per cent increase in his income tax bill, he’d be looking at paying between up to 50 per cent more in taxes on his dividends (the rate went from 19.29 in 2014 to 31.71 this year), and a 23 per cent increase in the tax bill on his capital gains (up from 19.5 to 24 per cent).

So Murray Edwards is now a Laffer Curve come to life. The recent wave of populist politics aimed at making the moneyed class pay more in higher taxes has now evidently left us with one fewer member of the moneyed class. Given the generous “non-domiciled” tax breaks in Britain that allow wealthy foreigners to live there but pay almost no income taxes — successfully luring to the U.K. waves of migratory billionaires, celebrities and Russian oligarchs — Edwards stands to save a fortune. That’s millions in taxes lost to Alberta and Ottawa, not to mention the money he’ll personally spend and donate abroad rather than here. And he may not be the last tax refugee: Canada’s average combined top marginal tax rate, at 53 per cent, is now one of the highest in the Western world; only Sweden, Denmark and France’s are steeper. There are dozens of billionaires in this country. There are hundreds more with wealth in the high nine-figure range.

For these people, a five-million pound flat in London has its allures not just for the tax shelter. The high-end property market is looking far less overheated lately. And of course the restaurants, shopping and theatre are incomparably better, too. London can only look to Canada’s wealthy like an increasingly comfortable haven to take cover until governments here remember again that even one brilliant, job-creating, philanthropic entrepreneur refugee leaving Canada is one too many.

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