Montreal, Monday, January 4, 2016 – At the start of each year, the Canadian Centre for Policy Alternatives (CCPA) publishes a report on the remuneration of the 100 highest paid CEOs in Canada. Last year, this group pointed out that by January 2 at 11:41 AM, these CEOs had pocketed the equivalent of the average annual salary in Canada.
According to the authors, the gap between the remuneration of these CEOs and the average salary in Canada has reached a point that justifies greater wealth redistribution. By increasing income tax rates and limiting deductions, the CCPA claims that governments could use these additional revenues to finance public services that would benefit the population.
Following the same logic, and using the data from last year’s CCPA report, the MEI’s researchers carried out some calculations to see what effect this proposal would have on the overall budget of Canada’s different levels of government.
If the total remuneration of the 100 highest paid CEOs in Canada, some $921 million, were entirely confiscated, this would represent just 0.13% of the overall revenues of governments in Canada, which total $720 billion. Assuming that these CEOs would continue to perform their duties without getting paid, their salaries would be entirely spent by governments by 10:37 AM on the first day of the year, shortly before lunchtime.
“There is a legitimate debate to be had regarding the remuneration of the CEOs of large corporations. But it has to do with corporate governance and the ability of shareholders to have their point of view on the topic properly reflected in the decisions of boards of directors,” notes Michel Kelly-Gagnon, President and CEO of the MEI.
In addition to being an ineffective means of increasing government revenues, high tax rates hinder wealth creation, and wealth creation is something that actually contributes to everyone’s standard of living.
“Dangling the prospect of being able to pay for a multitude of social programs just by excessively taxing the salaries of the CEOs of large corporations, as some do, is simply mistaken. It serves only to stoke people’s envy, and contributes nothing constructive to serious discussions of public policy,” concludes Mr. Kelly-Gagnon.
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The Montreal Economic Institute is an independent, non-partisan, not-for-profit research and educational organization. Through its studies and its conferences, the MEI stimulates debate on public policies in Quebec and across Canada by proposing wealth-creating reforms based on market mechanisms.
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