In his now famous book, Capital in the Twenty-First Century, Thomas Piketty argues that there is a strong tendency for wealth to become concentrated in ever fewer hands unless the economic forces promoting greater inequality are countered by deliberate political choices.
The issue of income-splitting — a tax policy whereby income is reattributed within a household from a higher-earning spouse to a lower-earning spouse — has been front of mind among tax experts, federal Conservative ministers and, most recently, the left-leaning Broadbent Institute. The practice advantages households in which income is predominantly earned by one spouse, since it allows a taxpayer in a high tax bracket to attribute income to a partner who pays at a lower marginal rate (or who earns nothing at all).
The OECD Economic Survey of Canada released today calls for tax reforms which would increase government revenues while also reducing inequality, specifically calling for changes to preferential treatment of stock options.
Noting that income inequality in Canada is above the OECD average and has been rapidly rising in recent years, the organization states that "there is also scope for the federal government to increase efficiency and reduce income inequality by further reducing tax expenditures that benefit relatively higher income households, such as... preferential treatment of stock options” (p. 38).
Posted by NationBuilder Support · June 10, 2014 4:04 AM
Detailed analysis of Conservative proposal reveals deeply unequal scheme
OTTAWA—Two out of three families targeted by the Conservative income splitting plan would receive less than $500 while fewer than 4% of such families – some of the wealthiest in Canada – would be eligible for a benefit in excess of $5,000, a new study by the Broadbent Institute has found.
Employment Minister Jason Kenney says the Harper government has no intention of backing away from its income splitting pledge, despite a new report concluding the plan would exacerbate income inequality and bestow the most benefits to the West.
During the ordinary working of capitalism – absent the extraordinary Great Wars and Great Depression of the first half of the twentieth century – inequality, as manifested in the distribution of wealth, rose over time and promises to continue to do so.