The Big Story Can the government fix wealth inequality simply by taxing the rich?
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Dec 15, 2025 Mike Moffatt, a Canadian economist and director of the University of Ottawa's Missing Middle Initiative, discusses the implications of potential tax increases aimed at the wealthy. He addresses whether higher property taxes could lead to an exodus of affluent residents and emphasizes the complexity of relying on luxury taxes due to enforcement issues. Moffatt advocates for a balanced approach, suggesting that taxing the rich must be paired with simplifying tax codes. He emphasizes the need to tackle structural issues behind wealth inequality beyond just taxation.
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Property Taxes Are Less Mobile Than Income
- Property taxes or land transfer taxes are harder for wealthy people to escape because property is less mobile than income or corporate activity.
- Mike Moffatt warns that heavy hikes could still deter some wealthy entrants and reduce expected revenue gains.
Don't Overestimate Revenue From Few Rich People
- Temper expectations: taxing the 0.1% yields limited dollars because they are few and politically connected.
- Cities should not rely on small wealthy cohorts as a major revenue source without realistic forecasts.
Luxury Taxes Can Backfire Economically
- Luxury taxes face enforcement costs and wealthy taxpayers use sophisticated tax planning to avoid them.
- Such taxes can also harm related industries and reduce taxable transactions, lowering net revenue.