A left-wing think-tank led by former NDP leader Ed Broadbent says greater "wealth redistribution" is needed to battle income inequality in Canada.
The Broadbent Institute says the growing gap between the rich and the poor became the "defining political issue of our time" after the Occupy movement swept across North America last fall.
In response, the think-tank proposes raising corporate taxes, the creation of "good jobs" - employment with high labour standards and environmental protections - and expanding public services.
"Higher tax rates for very high-income earners are likely the most effective way to deal with the fact that the incomes of the top 1% are rising at the expense of everybody else," the report says. "Top tax rates today are certainly much lower than they were 20 years ago."
Broadbent's institute also argues Canada is currently moving backwards because for "every $1 increase in national earnings over the past 20 years, more than 30 cents have gone to the top 1%, while 70 cents have had to be shared among the bottom 99%."
Broadbent, who has also narrated a YouTube video on the topic, says societies with greater income inequality are generally more violent, less healthy and less prosperous.
The NDP built its election platform on the assumption that a higher corporate tax rate would bring in billions in additional revenue. Conservatives argue lower corporate rates attract foreign investors and create jobs.
Toronto - One year since Occupy Wall Street became one of the leading political movements, the left-leaning Broadbent Institute published a report that highlights income inequality as one of the most important issues facing Canada.
The Broadbent Institute, founded by former New Democratic Party leader Ed Broadbent, released the findings of its latest "Equality Project" on Tuesday. The results suggested that more than three-quarters (77 percent) of Canadians believe income inequality is a serious issue and say they are willing to do more to tackle the problem.
If left unresolved and government doesn’t provide necessary solutions, participants said then the long-term negative impact could eventually be seen in the standard of living (79 percent), community safety (75 percent), quality of healthcare and public services (72 percent), employment opportunity for youth (71 percent) and democratic principles (67 percent).
Participants (71 percent) in the research study concurred that the widening gap between the rich and poor is something that “undermines Canadian values.”
What are some of the solutions? The group said that an overwhelming number of Canadians, both high- and middle-income, support the introduction of new taxes and tax increases as some of the answers to the problem.
Although the federal government faces a near $600 billion national debt and a $31 billion budget deficit, most Canadians want the government to do more. If Ottawa cannot then a majority of Liberal, NDP and Conservative respondents said they’d be willing to pay more to protect public services and reduce income disparity.
Furthermore, 83 percent of Canadians in the survey said that they support higher income taxes for the affluent in society and nearly three-quarters said they want corporations to pay higher tax rates (2008 levels)
More than two-thirds (69 percent) support introducing a new 35 percent inheritance tax on any estate that is estimated to be valued at $5 million or more – Canada used to maintain such a tax but it was scrapped in the 1980s.
“The current rise of extreme income inequality must now be reversed. Canadians need to take action, and demand that their governments take action on income inequality,” said Broadbent in a statement. “Drafted in consultation with some of Canada’s leading thinkers and policy experts, I hope that this paper will stimulate a serious national discussion on extreme income inequality, and what to do about it. We are facing a serious and growing inequality problem, and the time is now to re-balance our priorities.”
Broadbent also published a cartoon video along with the report that shows the former NDP leader writing on a white board with a black marker.
The institute noted that in the coming weeks it will release responses to the study from across the political spectrum.
Earlier this year, the organization published a similar study that suggested Canadians are willing to pay “slightly” more in taxes to protect the nation’s social services, such as education and health care. The survey also suggested the same taxes: 35 percent inheritance tax, corporate tax increase and higher income taxes for those earning between $250,000 and $500,000.
Ed Broadbent has a novel idea for convincing Prime Minister Stephen Harper and other Conservative politicians to care about income inequality.
“I would like to take them all and give them a good shake, and take them back to talk to their parents or grandparents,” he said.
As he envisions it, these heart-to-hearts would remind them of the fact that politicians of all stripes — including Conservatives — had a hand in helping to create Canada’s social welfare state.
“My lifetime was mostly spent with governments of all persuasions that at least claimed that they were trying to reduce inequality. Now we have governments that proudly are indifferent to it,” he said.
Raising the profile of Canada’s growing rich-poor divide is top of mind for the former NDP leader and founder of the left-leaning Broadbent Institute, which is dedicated in large part to tackling rising income inequality.
Speaking to The Huffington Post Canada in advance of the release of the think-tank’s latest report on the growing gap, Towards A More Equal Canada, Broadbent explained why income inequality “affects us all.”
The elder statesman also weighed in on the performance of new NDP leader Thomas Mulcair (a candidate he did not endorse in the recent leadership race), and what Trudeaumania 2.0 could mean for the NDP.
What do you hope to achieve with this report?
The major goal is to help stimulate debate right across the political spectrum in terms of [getting all of the] parties to pay attention to the problem, and across the communities, in towns and villages to get engagement in what is a very serious social issue for the country.
We’re getting worse more quickly than other rich countries when it comes to inequality. If you look at incomes, from 1982 to 2004, the bottom 60 per cent of Canadians working, when you allow for inflation, had no increase. And the precise middle, the median income, had [an increase of] $1,000, from $42,000 to $43,000. The rest [of the income gains] went to the top 20 per cent, and the top one per cent almost had their income doubled from $380,000 to $684,000.
So there’s a growing change in what Canada is all about. It’s totally different from the Canada I grew up in. Sure, we had inequality, and no one ever expects perfect equality, but my lifetime was mostly spent with governments of all persuasions that at least claimed that they were trying to reduce inequality. Now we have governments that proudly are indifferent to it.
With that in mind, what are the major obstacles to raising the profile of income inequality issues?
One is that the average Canadian has to understand that inequality affects us all, and not just the poor. Most ordinary people are feeling the pinch because they’ve had no real income increase in 20 years, but they often think of inequality in terms of poverty. But the key thing, the major democratic significance of inequality, is that we’re all affected, even middle-income Canadians, even upper-income Canadians.
The data is overwhelmingly clear that the more equal the society, the lower the level of teenage pregnancy, the lower the level of crime overall. There’s more political participation and civil participation by citizens. Kids are more and more likely to become what they want to be than they are in unequal societies.
Another, to put it candidly, is the ideology of politicians. We have had in the Western world a kind of market-driven ideology. If you let the markets go, [and that] was overwhelmingly reinforced by tax changes that benefit the rich, we [would] all benefit. Many of our politicians, particularly Mr. Harper and the Conservatives, remain locked in that mentality. It hasn’t worked. It brought on a global crisis. It’s led us to the worst inequality since the 1920s. So they have to be persuaded. We have to have a serious debate about re-balancing markets and governmental forces on the other side.
Persuading the Conservatives seems like it will be a pretty big challenge. How will you overcome it?
Well, I’d like to take them all and give them a good shake, and take them back to talk to their parents or grandparents. I’m half-serious about this. Because it was [during] my parents’ generation and that of the grandparents of Mr. Harper — he’s a little younger than I am — that we had the creation of our more socially balanced state. Mr. Diefenbaker brought in hospitalization [insurance] for example, he was a Conservative. Mr. Pearson brought in the broader foundation of the welfare state in the 1960s, with universal health care with the Canada pension.
Of course, my party, the CCF [Co-operative Commonwealth Federation] and the NDP played a leading role in all that, but previous politicians did see the need for this balance. They didn’t want the markets to totally dominate our lives.
I wish I had the answer to how I could persuade other politicians. The Occupy movement ... has called attention to the problem. A lot of it will come from activist organizations, trying to mobilize around the issue. I think more of that needs to be done.
What are the specific Tory policies working against what you’re trying to achieve?
The reductions of income tax. Not only reductions of income tax, but disproportionate benefits to upper-income [individuals] that take away the money that’s needed for post-secondary education, for health care, for Canada pensions. Two of the economists that we [include] in our report show that these kinds of programs that go to everyone that need more expansion right now are, from a cost-benefit analysis, the best thing that middle-class Canadians will ever get.
The other thing that’s happened here, and you see it almost every day from Mr. Harper and in Ontario now, is attacks on unions. Again, the data is very clear, the OECD reports the higher level of unions that you have in a society, the higher level of equality that you have overall. Companies that want to keep unionized employees out frequently raise the wages and salaries of their own employees.
Increasing government support for social programs means convincing Canadians that taxes isn’t a dirty word. How do you plan to accomplish that?
We did a poll a few months ago, and we found that Canadians are upset with the degree of inequality. They believe it should be dealt with. But we asked a hard question, not just “Are you in favour of increasing taxes on the rich.” [It] was “Would you be willing to pay somewhat more in taxes yourself if this led to the improvement of social programs and reducing the degree of inequality.” And the answer, overwhelmingly, is yes.
If we compare ourselves to the U.S., which is a very anti-tax country, the majority of Canadians still see [the benefits], because we have universal health care. We have Canada pension. We have an employment insurance program.
[But] I don’t underestimate it. It’s still a challenge for politicians to go out there and say, “We need to increase taxes.”
You didn’t endorse Thomas Mulcair as the new leader of the NDP. How do you think he’s doing so far?
I think he’s just doing splendidly. He’s been fighting on the very issue we’re talking about, particularly in the case of jobs. Our report [puts] a lot of emphasis on creating jobs that are higher paying paying jobs, not just minimum wage jobs. [Mulcair has] done that.
I strongly endorse Tom. Yes, I supported another candidate [NDP president Brian Topp], but that’s part of the democratic process, and once you have a leader in place, whether or not you supported a leader, we’re in the same party, we share the same broad values. There have been past cases going back many years when I haven’t always been on the side of the newly elected leader, but I have rapidly joined the rest of the team and supported him or her.
What’s your take on Justin Trudeau’s decision to run for the Liberal Party leadership? How concerned are you about him splitting the centrist left vote, and reducing some of the gains the NDP made in the last election?
I suspect [I’m] right there with the majority of Canadians. Mr. Trudeau seems like a personable young man, but he hasn’t demonstrated yet, in the number of years he’s been in politics, a degree of expertise in any particular field.
This is not to say he won’t do that, that he won’t have policies that will be attractive to the people of Canada. All I would say right now [is that] we have a young man with a famous name. [His father was] a man who did some exceptionally good things for Canada, but I would also say some exceptional things that weren’t so good for Canada. [Justin] has won a couple of elections like most MPs have in their own area. But he has not as yet established solid credentials for why he should be prime minister. It’s early yet, so we’ll just have to see.
A year after the Occupy movement set up camps in cities around the world to protest economic disparities, the institute founded by former NDP leader Ed Broadbent has conducted a study that says income inequality is the defining issue of our time.
“Reasonable people can differ over what income and wealth differences are needed to provide incentives and appropriate motivation in a market economy,” said the report released Tuesday. “But extreme economic inequality clearly undermines equal developmental opportunities and individual freedom since unequal economic resources give rise to significant imbalances of power.”
The policy report is the first to be released by the Broadbent Institute which was founded last year to promote social democratic issues across Canada. It is accompanied by a video that features an animated version of Mr. Broadbent, complete with his trademark bushy eyebrows, explaining the problem of income inequality using a black marker on a white board. This study follows on a poll conducted for the institute earlier this year which suggested a majority of Canadians would be willing to pay higher taxes to preserve social programs.
In the new report, Mr. Broadbent calls for economic policies that promote an increase in middle-income jobs, enhanced public support to those with low incomes, expanded public services, and changes to the tax system that would do more to redistribute wealth.
It is a view that is more easily espoused by a left-wing think tank than a party vying for political power. Even New Democrats would have trouble campaigning on a platform of higher taxes.
But, with the resentments that led to Occupy continuing to simmer and with the U.S. presidential election focused so heavily on the merits and moral legitimacy of wealth redistribution, the institute lays out the argument for a more socialist construction of Canadian society.
Pointing to data obtained from Statistics Canada, the study asserts that, between 1982 and 2004, there was no increase in the incomes of the bottom 60 per cent of families, when adjusted for inflation. But, over the same period, the share of taxable income going to the top one per cent of families rose from 7.4 per cent to 11.2 per cent, it says. And the top 1 per cent of all tax filers receive 14 per cent of all income – up from 8 per cent in the early 1980s.
Since the mid-1990s, the study says, the increase in income inequality in Canada has been greater than the average of most advanced industrial countries.
The Broadbent report argues that, when left to their own devices, “markets generate large inequalities of income and wealth which pose a threat to the moral goal of equal life chances.” It says a society based on merit is undercut when extremes of wealth allow the very rich to buy advantage for their children.
And it says that, in situations of extreme inequality, less wealthy consumers try to copy the spending patterns of the affluent, creating unaffordable debt and economic bubbles which burst causing recessions like the one that began in 2008.