Taxes

The Fraser Institute has jumped into the plutonium-powered DeLorean and has gone Back to the Future with their latest report on Canadian taxes.

The Fraser Institute claims that the average Canadian family’s tax bill has soared by 1,787% since 1961.

While that’s a clear exaggeration that ignores inflation, what is astounding is that their numbers don’t even remotely hold up.

Congratulations to Statistics Canada for providing an update on top incomes in Canada, and for launching two new CANSIM tables allowing researchers to dig into the details.

While the income share of the top 1 per cent has slipped slightly since the Great Recession – likely due in large part to the reduced value of exercised stock options – their share of all income (10.6 per cent in 2010) still stands well above the low of about 7 per cent that was reached in the early 1980s.

I don’t know whether it’s smugness or indifference, but we Canadians can be a self-deluding lot. Growing inequality, portrayed recently in The Economist as a global scourge, when viewed from Canada, seems to be a problem only for others.

After all, it was other countries’ banks that crashed in 2008. It’s in southern Europe that tens of thousands are taking to the streets. And it was in France and the United States that recent elections were fought over the fact that those who created the mess, the top 1 per cent, are still getting big bonuses and low tax rates.

It is uncertain which is more puzzling: the sudden surge in inequality in developed countries in recent times, or the failure of this to generate a sufficient response in the form of a countervailing politics.  

In 2008, the collapse of financial markets around the world tipped country after country into recession. Canada was no exception. In a short eight month period, hundreds of thousands of Canadians lost their jobs and the Employment Insurance and Social Assistance rolls started to climb. The proportion of part-time and temporary jobs increased as full-time employment disappeared. Canadians had to stretch their dollars further to pay for rising food costs and shelter, many turning to food banks – and credit cards – to make ends meet.

Canadians can sometimes be smug. We pride ourselves on our supposed modesty, but we never miss a chance to stress all the ways in which we are better than our American neighbour. We have a universal public health care system. They don't.  Our public school system performs much better than theirs. And, on a number of indicators, from child mortality to the rate of poverty of the elderly, we appear to be a more just society.

When it comes to income inequality in Canada though, there is nothing to be proud of. Over the last fifteen years, Canada has had one of the greatest increases in inequality amongst OECD countries. Inequality is not just an American problem.