I’m a Millionaire. Tax Me More, Please.

Earlier this year, I was in the plush boardroom of the wealth-management division of a major Canadian bank, on a floor high above the branch where everyday transactions take place. The investment manager handling my account wasn’t happy. The strategy I’d recommended, she explained, could result in me paying quite a bit more money to the CRA. “That’s okay,” I responded. “I’m comfortable paying more in taxes.” She laughed nervously. “Well, that is the first time I have ever heard that.”

I’m rich. At 30, I sold my small Canadian technology company Dabble DB—an early online-database tool—to Twitter, and my family moved to San Francisco. For the next decade, I worked in senior technical roles at Silicon Valley startups, sometimes in person but mostly remotely from Galiano Island in B.C. I retired at 40 with enough wealth to do pretty much anything I wanted for the rest of my life. When I confided my financial status to a good friend from high school, she looked puzzled. “I’m sure you’re good at what you do,” she said, “but why would they pay you that much? It’s not like you’re a basketball star.” The truth is, I got lucky. After leaving Twitter, I was an early hire at Stripe—at that time, a small, unknown payment processing company. Tech startups pay their employees partly in stock options, so when Stripe unexpectedly grew to hundreds of times its initial size, my equity grew in value along with it.

I’d lucked out from the start, though: I was born in Canada. People in my situation often talk about being self-made, but I don’t see it that way. I think about my parents, who moved here from the U.S. in the 1970s and lived in a Vancouver housing co-op built by the city and the federal government. I think about their stable jobs at the University of British Columbia, and the education I got in Vancouver’s public schools—and later, at UBC myself, with a scholarship from public money. I also think about starting Dabble DB with investment capital from a public pension plan, along with Canadian R&D tax credits that reimbursed large parts of our payroll. In Canada, I could take entrepreneurial risks fearlessly, knowing that, whatever happened, I had universal health care and a social safety net to fall back on. Given all that it’s invested in me, I wonder: is Canada getting what it deserves in return? 

As a tech entrepreneur, I’m intimately familiar with the venture-capital model. The vast majority of companies that a VC firm invests in will lose every cent of the investors’ money. But every once in a while there’s a big hit, like Stripe, that returns so much money to the fund that it pays for all of its other investments—and more. The same should be true for Canada: we invest in all of our people, but the vast majority of tax revenues should come from those fortunate enough to accumulate great wealth. I’m not alone in this opinion: my wife and I are members of the newly formed Canadian chapter of Patriotic Millionaires, an organization whose members have more than $5 million in assets and advocate for higher taxes to lower inequality.

The problem is that, after supporting us on the way up, Canada coddles us once we’ve become rich. Progressive taxation should mean that those who make more money pay a higher tax rate than those with more modest incomes. The reality is that the effective tax rate of Canada’s highest earners is generally lower than that of its middle class, because those with capital to spare earn some (or all) of their income from investments in the stock market, real estate or in startups—avenues that get breaks under the tax code. Much of the money I made from Dabble, Twitter and Stripe came from cashing in my shares and stock options, so it was taxed at roughly half the rate it would’ve been if I’d earned that money as income. That doesn’t feel fair.

The Trudeau government came close to increasing the capital gains inclusion rate, a move I supported and still do. I’d go even further to close loopholes abused by the wealthy—for example, borrowing against company shares instead of selling them to avoid paying taxes indefinitely. I’d like to see a cap on the exemption of primary residences from capital gains taxes. It’s intended to protect middle and working-class homeowners, but also allows holders of luxury real estate to make tens of millions of dollars without paying a cent. Those same luxury-property owners should be paying land value taxes even if their homes never sell; that would help to bring real-estate prices back down from the stratosphere. Finally, we should be heavily taxing the fuel used by private jets and yachts in order to offset their negative effects on the environment. I’m not saying that wealthy Canadians shouldn’t be able to own these things, but we should be reimbursing society for their impact. 

I’ll admit these are difficult positions to take publicly: I’m outing myself as different from my friends and neighbours in normal income brackets. I’m also not making myself popular among my peers in the tech world, some of whom have been the loudest opponents of changes to Canada’s capital gains policies. They’ll tell you we need these tax breaks to attract investment and keep entrepreneurs from going abroad to start their companies. They use this threat because it works. At Twitter, I saw this first-hand, when the company threatened to move outside of San Francisco if it didn’t get a break on payroll taxes. The city caved and cut them a deal. Canada shouldn’t fall for this. Why do so many tech employees live in California, the state with the highest taxes in the U.S.? Because entrepreneurs start businesses in places people want to live: where schools are good, infrastructure is reliable, health care is accessible and where their employees will be happy, secure and productive. Wealthy Canadians who would rather see this country make cuts to vital services than pay more in taxes are just not thinking about the long-term.

One country that is considering the big picture is Denmark. There, top income tax rates are 52 per cent, and capital gains are taxed only slightly less at 42 per cent. Their overall taxes are higher than Canada’s, with a tax-to-GDP ratio of roughly 47 per cent compared to our 35. As a result, Denmark has an unmatched social-welfare system and lower income inequality than almost anywhere. They are consistently ranked among the happiest two or three countries in the world. Depending on the poll, Canada hovers around 15th place or lower. Some people maintain that we should just do a better job of allocating the tax revenues we already collect, but boosting Canada’s productivity and happiness up to Denmark levels will require more money in our coffers. 

With those extra resources, I’d like to see Canada go back to creating non-profit housing, the way we did in the 1970s. We could be investing much more in scientific research, particularly given the huge recent drop in government funding from the U.S., which affects our researchers as much as it does theirs. In the face of a major trade war, we could support our workers the same way we did during COVID, with a permanent CERB-like basic income, along with more federal capital investment in Canadian industry (prioritizing climate, not pipelines). I’d also like to see us put more money into child care and education at every level.

A lot of wealthy families believe philanthropy should fill these gaps, but that’s not going to cut it. Charity has its place. Private philanthropic initiatives can take risks and innovate in ways that the government’s financial controls and political concerns don’t allow. For example, I’m putting money into marine electrification—funding research, engineering and infrastructure to shift boats and ships away from fossil fuels. This is a new and niche part of the climate fight, where private efforts can actually move the needle. But, at the end of the day, only the Canadian government has the scale and breadth to lift all Canadians up to a better standard of living. Just as importantly, the Canadian government is accountable for its spending to all Canadians. A democratically elected government that demands the wealthy reinvest in this country—instead of waiting for them to pick and choose their own spending priorities—is the only solution to our biggest economic issues. Rich Canadians don’t have to choose between charity and paying our fair share of taxes. Trust me, a member of the 0.1 per cent: we can afford to do both.