Inequality by Design

Two facets of economic inequality stand out in Canadian data today: the chasm of inequality between the superrich and everyone else — the 99 percent versus the 1 percent — and the divide between the haves and have-nots of the housing crisis that has left homes scarce and expensive across the country.

One recent set of inequality data comes from Statistics Canada’s Distributions of Household Economic Accounts. The latest numbers show a near-record gap in the share of disposable income — 46.9 percentage points — held by Canadian households in the top 40 percent of the income distribution compared to the bottom 40 percent.

The wealth gap is even larger than the income gap.

The same report found that the top 20 percent of Canadian households controls 64.7 percent of wealth, with an average CAD $3.3 million per household, while the bottom 40 percent holds only 3.3 percent of the total wealth with an average $83,189 per household.

But this significantly understates wealth inequality in Canada, largely missing the extreme wealth of billionaires and the richest 1 percent. Indeed, Statistics Canada surveys are not well suited to capturing the wealth of the richest of the rich, which is often missed by its samples. This is a critical data gap.

Analysis from the Parliamentary Budget Office (PBO) sheds more light on the wealth of the superrich.

The PBO’s wealth distribution modeling finds the richest 1 percent controls nearly a quarter of Canada’s wealth (24.3 percent), amounting to $3.5 trillion. Academic research using a similar modeling approach finds that the wealth share of the top 1 percent may be even higher at 29 percent of net wealth. “Real-time billionaires” data from Forbes find that sixty-five Canadian billionaires now control approximately $410 billion of wealth. The Canadian Business rich list found the richest ten billionaires alone controlled $261 billion.

Outside the realm of the top 1 percent and billionaires, another fresh batch of Statistics Canada data highlight the growing role of land and housing in driving wealth inequality among a wider swath of Canadians.

The scale of housing-driven inequality is no less daunting.

Even if the owners of multimillion-dollar detached houses in cities like Vancouver are not all billionaires or necessarily in the top 1 percent, the land wealth they hold collectively is enormous. The net wealth (property value minus any outstanding mortgage debt) held by homeowners in principal residences across Canada was $5.8 trillion in 2023. Households held another $1.3 trillion in real estate net worth outside of principal residences.

This real estate wealth is especially concentrated in the most expensive cities like Vancouver and Toronto, driven by chronic housing shortages. In the greater Vancouver area, the value of detached houses’ land alone was $744 billion in 2024 — more than the total wealth of Canadian billionaires — according to BC Assessment data. Land and housing wealth is enormous and cannot be ignored.

At a household level, the wealth gap between renters and homeowners is vast, with homeowners holding ten to thirty times more wealth than renters depending on the age group. For example, in the fifty-five to sixty-four age range, homeowners had a median net wealth of $1.2 million in 2023 compared to just $43,000 for renters. The median homeowner under thirty-five had a net wealth of $457,100 compared to $44,000 among renters.

Distorting Democracy and Fraying the Social Fabric

Each of these dimensions of wealth concentration has corrosive effects on our democracy and society.

Looking across the border to the United States, we are witnessing how billionaires like Elon Musk can not only use their wealth to shape politics and policy but also directly wield power. Musk’s Orwellian Department of Government Efficiency (DOGE) is now trying to dismantle much of the United States’ federal public service. A growing body of research shows that income and wealth concentration has a distorting influence on politics and policy, and it’s increasingly plausible to describe US politics as an oligarchy.

It’s not difficult to see indications of distorted democracy in Canada, too. Consider that despite huge backing with 80 to 90 percent support across party lines in opinion polling, implementing a wealth tax on the superrich is nowhere to be found on the federal policy agenda. Even a considerably more modest capital gains tax reform announced last year has now been scrapped after vociferous opposition by lobby groups for corporations and the wealthy. Bay Street and the superrich have long been adept at ensuring their narrow interests are protected in Canadian politics.

Meanwhile, tech CEOs in Canada are becoming more open in their attempts to set the policy agenda. Some are even flirting with the creation of a Canadian version of DOGE to gut public spending. This dovetails with proposals to defund the CBC at a time when strengthening national institutions is more important than ever.

In turn, the inequalities generated by the housing crisis are also deeply corrosive, though this facet of wealth inequality has its own distinct dynamics. In our most expensive cities, owners of detached houses have collectively become the holders of hundreds of billions of dollars in real estate wealth. Meanwhile, millions of Canadians struggle to make rent or find a suitable home at all.

With so much household income diverted to paying rent and mortgages rather than purchasing other goods and services, the housing shortage is a drag on both household finances and the economy writ large. Many workers are excluded from high-wage cities by apartment bans and businesses struggle to recruit workers who can find available and affordable housing in these high-productivity centers.

A recent Statistics Canada analysis notes that “among young Canadians experiencing financial difficulty,” a majority of renters were “unable to move” due to rising home prices and rents, representing a major barrier to mobility. There has also been a sharp increase in the role of inherited wealth enabling homeownership. In British Columbia, more than a third of homebuyers relied on a “gift” (average size, $204,000) to purchase their first homes. The analysis notes that “increasingly tying the likelihood of homeownership to intrafamily transfers may have adverse implications for socioeconomic mobility.”

The role of inheritance in concentrating wealth is rising around the world. Some property owners and their heirs no doubt benefit from this wealth, but this zero-sum game threatens social cohesion and economic vitality. More broadly, a wide range of research shows that high levels of inequality tend to hurt economic growth, worsen health and social outcomes, and skew public policy priorities.

Democracy or Plutocracy

We need a more just and equal Canada if we’re going to tackle the big challenges we face as a society and to strengthen our position to stand up to aggressive foreign powers like the United States. Fortunately, there is no shortage of policy levers available to address growing inequalities.

Fairer tax policies are one set of tools that can be deployed to address wealth inequality at the very top, while raising revenue to help build housing, repair infrastructure, and strengthen public services.

For example, a federal tax on the net wealth of the superrich could raise more than $32 billion in its first year (rising each year) with rates of 1 percent on net wealth above $10 million, 2 percent above $50 million, and 3 percent above $100 million. A narrow wealth tax of this kind would capture only the richest 0.5 percent of Canadians, or about 87,000 families, and is backed by a growing body of economic research. Additional brackets with higher rates on billionaires should also be considered to erode their enormous fortunes and power, rather than to simply slow the rate of their growth (as the above rate structure would do).

Canada should also move to end the preferential tax treatment of capital gains income, which is currently taxed at half the rate of income from work — a deeply unfair giveaway to the rich. As noted above, the federal government recently took a step in this direction but then reversed course.

The government must also press ahead on working with other countries to advance global agreements on corporate taxation, from which Donald Trump’s administration recently withdrew. The recent creation of a global minimum tax on corporate profits reduces the ability of corporations to shift profits between jurisdictions to avoid tax and should be strengthened by a coalition of the willing without the United States.

Tax policy can’t do all the heavy lifting, however. Blunting the power of the superrich and tackling inequality also require policies that help build working-class power, including making it easier to unionize and fight for higher wages, to increase working-class representation in government, and to enable workers to take charge in the workplace through democratic employee ownership of firms.

Fixing the Housing Crisis Means Taking on the Rich

Policy action specific to housing is imperative to address growing inequality driven by the housing crisis. First and foremost, housing must be made affordable, abundant, and available to all. This means significantly increasing public investment in dedicated nonmarket housing, along with robust efforts to increase the overall supply of homes and end the shortage that has taken hold after decades of underbuilding. This must include ending the exclusionary zoning that effectively bans apartments on the vast majority of residential land in our cities and confines most new apartments to noisy, polluted roads (often at the urging of a relatively small number of vocal and influential homeowners).

Canada should also end or reform billions of dollars in harmful subsidies directed toward promoting homeownership each year. These include policies like exempting principal residences from the capital gains tax (costing upward of $6 billion per year in lost revenue) and giveaways like British Columbia’s Home Owner Grant, which could be reformed into a fairer income-tested benefit for renters and owners. As they exist today, these subsidies deepen the divide between homeowners and renters and — in the context of the housing shortage — further inflate housing prices as more money chases too few homes.

Given the $1.7 trillion increase in property wealth in British Columbia in the past two decades, the province should also consider policy options to tax the wealthiest segment of landowners to fund housing.

Under threat from the United States, Canadians appear to be ready to fight for a better country. But if the wealth and power of the superrich is left unchecked, this won’t be possible. If the housing crisis — and the inequality it has wrought — aren’t solved, we won’t be able to build a stronger, more self-reliant, more just society and economy. We need to rein in billionaire power and build homes for all.

Well-researched policy solutions exist, but they have struggled to gain traction in the face of opposition from powerful interests. As a federal election approaches, these issues should be front and center.