Proponents of an annual wealth tax in Canada and abroad are giving a flawed idea new life, according to a report from the C.D. Howe Institute. In “Over the Top: Why an Annual Wealth Tax for Canada is Unnecessary,” authors Robin Boadway and Pierre Pestieau note the rising calls for a national wealth tax – from economist Thomas Piketty, to US Senator Elizabeth Warren, to Canada’s federal NDP – and assess whether it is a good idea for Canada – or not.

A wealth tax typically applies to net wealth; that is, assets less liabilities. It can be levied annually or as a one-off capital levy and typically varies with the level of personal wealth, note the authors.

The idea of a wealth tax has taken on new prominence since French economist Thomas Piketty famously proposed a global wealth tax in 2013; Senator Elizabeth Warren has even made a national wealth tax a plank in her campaign to become the Democratic presidential candidate in 2020. As well, Canada’s NDP recently made a wealth tax part of its platform for the upcoming federal election.

“The current interest in wealth taxation is a response to the increase in wealth concentration and income inequality that has occurred in most OECD countries,” said Boadway. “It has been well documented that both income and wealth inequality have risen significantly in recent decades.”

In their Commentary, the authors do not address the issue of how responsive tax policy needs to be to deal with the evolving inequality of income and wealth. Their focus, instead, is on the mix of policy instruments that are most effective for whatever degree of responsiveness policymakers choose.

They find that wealth taxes add relatively little to what taxes on capital income can achieve, and that concerns about the social consequences of wealth concentration are better addressed by reform of existing capital income taxes and by considering wealth transfer (inheritance) taxation.

“Our argument against wealth taxation is over and above the substantial administrative challenges in measurement, collection and coverage for annual wealth taxes,” said Pestieau.  “These alone are enough to raise red flags about wealth taxation.”

There are also cautionary lessons from International experience.  Several countries have abolished or decreased annual wealth taxes and inheritance taxes. Only four of the 35 OECD countries still tax wealth. Two decades ago, one-half of OECD member countries had some type of annual wealth tax, but many have discontinued it, for example, Austria and Denmark in 1995, Germany in 1997, Finland and Luxembourg in 2006, Sweden in 2007 and France in 2017. In those few nations that continue to have a wealth tax, its proceeds have decreased over time. The wealth-tax share of total tax revenues in 2015 was 3.6 percent in Switzerland, 2 percent in Luxembourg, 1 percent in Norway and 0.3 percent in Spain, or from 0.2 percent to 1 percent of GDP.

Read the Full Report

For more information contact: Robin Boadway OC, FRSC,  Emeritus Professor of Economics, Queen’s University; Pierre Pestieau, Professor Emeritus, Université de Liège; David Blackwood, Communications Officer, C.D. Howe Institute, phone 416-865-1904 ext. 9997, email:

The C.D. Howe Institute is an independent not-for-profit research institute whose mission is to raise living standards by fostering economically sound public policies. Widely considered to be Canada’s most influential think tank, the Institute is a trusted source of essential policy intelligence, distinguished by research that is nonpartisan, evidence-based and subject to definitive expert review