About five years ago, I became acquainted with a retired fellow by the name of Jim Tocher. Then in his eighties, B.C.-born Tocher was a classic Canadian success story.
After university in Vancouver, he worked for several energy firms in the 1950s and 1960s before going it alone and starting his own Calgary-based companies in the 1970s. He founded several energy and resource companies over the decades. He created his last one, Petrobank Energy and Resources Ltd., at age 66.
During one of the last times we chatted, Tocher relayed his proudest career moment. At a company Christmas party some years earlier, he gazed around the room and realized everyone present, about 100 employees, had been able to carve out a career, buy homes and pay the associated bills of life because of the company he created from scratch.
Tocher died in 2009, but I relay his history because of recent headlines that some Canadian executives earn in a few days or weeks what the rest of us might earn in a year or longer. In assessing those stories, it is critical to remember one fact: risk-taking entrepreneurs are not a burden but a key part of a civilized, opportunity-based and prosperous country.
This doesn't mean every CEO is worth his or her salary, but it is impossible to definitively peg the "correct" salary from the outside.
Some may balk at the $3-million pay package (and potentially tens of millions more in share compensation) for new Blackberry CEO John Chen. However, if Chen turns Blackberry around and its shares appreciate to $20 from $9, that's an extra $5.8 billion in shareholder value. At that point, shareholders, and the company's remaining employees who avoided a Nortel-like fate, may think such executive pay worthwhile.
Shareholders should indeed demand accountability from boards and performance from executives. But in a free society where governments don't set wages, such actions are properly left up to those shareholders and boards.
There is also another point to consider: the amount of tax paid by the now-clichÃ©d top one per cent of income earners.
The Canada Revenue Agency recently released statistics from the 2011 tax year and here are some results from my number-crunching.
Of the 25.1 million tax filers, 8.4 million people paid no income tax at all as their incomes (after deductions) fell below the taxable threshold. It doesn't make sense to tax the poor in that cohort, of course. That means all income tax was paid by the other 16.7 million.
Now let's break that down. Anyone who reported income of more than $250,000 in 2011 belonged to the top one per cent of all income earners (actually, the top 0.8 per cent, but for the sake of simplicity let's round up). That group garnered 10 per cent of all declared income.
That sounds awfully "greedy" to some - until you see how much of the overall tax burden they shoulder. The top one per cent (203,010 people) paid 20 per cent of federal and provincial incomes taxes, or $32.6 billion in taxes.
Expanding the analysis, the top 6.6 per cent of income earners in 2011 (those with incomes of $100,000 or above) garnered 29 per cent of the income but paid 47 per cent of all federal and provincial income taxes, or $77 billion of the $161.4 billion collected in total.
Those who love class warfare and complain about high-income earners should be reminded of two critical facts.
First, tax proceeds from that latter cohort help finance almost half the bills for everything from schools to health care to public transit and national defence. It is thus unwise to dampen such beneficial wealth creation as it even creates a gusher of tax revenues.
Second, as my late friend Jim Tocher reminisced, the successful entrepreneurs among that group also help create opportunities for others. In life, that's what's called a "win-win."
Mark Milke is a senior fellow with the Fraser Institute.
- Troy Media