Chapter 9. Social Inequality
9.3 Social Classes in Canada
The concept of social class was discussed earlier in the chapter. Below, the major divisions of Canadian social class and their key subcategories are developed in more detail.
The Owning Class
The owning class is considered Canada’s highest elite. Members of the owning class can afford to live, work, and play in exclusive places designed for luxury and comfort. Only the very powerful get to see the view from there. In Canada, the richest 87 families account for 0.002% of the population, but in 2016 they had accumulated the equivalent wealth of everyone in Newfoundland and Labrador, Prince Edward Island and New Brunswick combined (including all savings, investments, pensions, houses, cottages, cars, etc. minus mortgages and debts). The combined net worth of these 87 families added up to $259 billion in 2016, which equaled the net worth of the lowest 12 million Canadians (Macdonald, 2018).
What is the source of the owning class’s wealth? Among the wealthiest families in Canada are also many of the top paid CEOs in the country. For example, among the top 20 wealthiest families, including the Thomsons, Westons, Saputos, Desmarais and Southerns, are nine of the 100 top paid CEOs in the country (Macdonald, 2018). In 2019, the average income of the top 100 CEOs in Canada was $10.8 million (Mcdonald, 2021). It is significant that a large portion of this income is paid in the form of non-cash bonuses like corporate shares and stock options because these are taxed at half the rate of salaries and cash bonuses. In 2019, only 12% of top-100 CEO pay came in the form of a salary while 82% of it came in some form of a bonus.
But income from work is not the most important source of wealth for the owning class. In Marx’s definition, it is ownership of capital that distinguishes the owning class from the other classes. Ownership of capital increases wealth in three primary ways: (1) capital gains from the buying and selling of assets such as businesses or real estate; (2) dividends from corporate investments and stock shares; (3) interest from investments, such as savings, bonds and GICs (Guaranteed Investment Certificates) (Macdonald, 2018). In Canada, income generated from capital gains and corporate dividends is taxed at about 50% and 75%, respectively, of the tax rate for ordinary wage labour income. In addition, the owning class benefits from numerous “aggressive tax planning approaches” like the use of private corporations, trusts and offshore tax havens to hide income from Canadian taxation (Macdonald, 2018).
Finally, inheritance is also a key source of the owning class’ wealth. In 2016, within the wealthiest 87 families, 39 (45%) were first generation wealth holders, meaning that they did not inherit their wealth, whereas the other 55% did, sometimes through multiple generations (see Figure 9.14). Incidentally, Canada is the only country in the G7 without inheritance taxes.
Canadian society has hist