Canadian income disparity among worst in OECD

Canada is among the worst countries in the developed world in terms of the widening income gap between top earners and others in society, according to the Organization for Economic Co-operation and Development.

By THE CANADIAN PRESS

Canada is among the worst countries in the developed world in terms of the widening income gap between top earners and others in society, according to the Organization for Economic Co-operation and Development.

The analysis shows income inequality is on the rise in most developed economies, but the trend has particularly taken hold in the United States and Canada.

The OECD report shows the top one per cent of Canadian pre-tax income earners captured 37 per cent of the overall income growth between 1981 and 2012, and now swallow up 12.2 per cent of the country’s income pie.

In the U.S., the top one percenters captured 47 per cent of income growth in the country during the period — and now take in one-fifth of the country’s pre-tax annual income.

Meanwhile, incomes among the poorest households have not kept pace with overall income growth, the OECD says. In fact, stripping away the top one percenters would leave overall income growth considerably lower in many countries. This is why the majority of the population can’t reconcile their countries’ economic growth rate with improvements in their incomes, the report speculates

The growing income gap has become a major political issue in Canada, with both the Liberals and NDP likely to focus on the topic in next year’s federal election. But the Harper government has downplayed the problem, pointing to other studies that show the Canadian middle class has done relatively well in the past decade.

The OECD report shows Canada is near the top of the heap in terms of both growth in income disparity over the past three decades and in absolute terms.

The apparent disconnect is that most of the growing disparity in Canada occurred mostly in the 1980s and 1990s, whereas the last decade or so has seen the gap narrow or remain static.

McMaster University economics professor Michael Veall, who has done extensive work on the so-called top one per cent, attributes the recent stall in the growth of disparity to the dotcom bust in the early 2000s and the 2008-09 economic crash — two crises that sharply impacted investment incomes.

The OECD also acknowledges the effect on top earners from the recent economic crisis, but says by 2010 real incomes among the top group had increased by four per cent while for the lower 90 per cent incomes were stagnant.

The OECD, whose 34 member countries are among the world’s wealthiest, warns the problem will worse unless steps are taken to ensure top earners pay their fair share of taxes.

“Without concerted policy action, the gap between the rich and poor is likely to grow even wider in the years ahead,” predicted OECD Secretary-General Angel Gurria. He notes that in almost all OECD countries, governments have substantially cut top personal tax rates in the past three decades.

As a result, the OECD is calling for a rollback in those tax rate cuts, as well as abolishing or scaling back on a wide range of tax regulations that disproportionately go to top earners, including on stock options, fringe benefits and income from capital and investment.

With the one percenters capturing 12.2 per cent of the income pie in 2012, Canada ranks only behind the United States (20 per cent), Great Britain (12.9 per cent), and Germany (12.7 per cent) in terms of income disparity among the 18 relatively rich countries compared.

The biggest growth in disparity over the past three decades occurred in Norway, Sweden and Finland, where the percentage increase in income captured by the top group rose by about 70 per cent. Still, the three countries continue to rank among the most egalitarian — by 2012, the top one percenters constituted only seven or eight per cent of total national income.

The data also suggests there is little correlation between income disparity and economic performance.

Countries with high levels of inequality, such as the U.S., Germany and Canada, have been among the strongest performers over the past 30 years. But so have low-disparity economies, such as the Scandinavian countries.

Meanwhile, several struggling economies — such as Spain, France and Italy — boast relatively low levels of income growth disparity between the top one per cent and the rest.

Just Posted

Gesundheit! Stifling a sneeze can cause injuries in rare cases, experts say

TORONTO — With cases of flu continuing to rise in Canada, there’s… Continue reading

‘Reprehensible’: Trudeau abortion policy raises ire of U.S. right

WASHINGTON — In what’s almost certainly a first in the lengthy history… Continue reading

Japan public TV sends mistaken North Korean missile alert

TOKYO — Japan’s public broadcaster mistakenly sent an alert warning citizens of… Continue reading

‘I shouldn’t have to have a husband:’ Winnipeg woman criticizes men-only club

WINNIPEG — A former chair of the Winnipeg Chamber of Commerce says… Continue reading

Replay Red Deer Jan. 14: Watch news highlights in pictures

Stories mentioned: Red Deer RCMP seize large quantity of cocaine: Read more… Continue reading

Advocate poll takers oppose plastic bag ban

Red Deer Advocate readers like their plastic bags. In an Advocate poll,… Continue reading

Photo: Chilly work in Veterans’ Park

What a chilly job but somebody has to do it.… Continue reading

Boy, 15, one of three hit in Vancouver shooting

Police believe a man in his 20s was the target of the shooting

UBCO psychology professor placed under supervision with focus on “boundary issues”

Dr. Stephen Porter has stepped aside from his teaching duties

Alberta elementary school teacher arrested on child porn charges

Investigators charged a 44-year-old Pincher Creek man with possessing, accessing, and distributing child pornography

Report: Health problems could arise as Alaska warms

Climate change in Alaska has the potential to create serious physical and… Continue reading

U.S. cold snap was a freak of nature, quick analysis finds

Consider this cold comfort: A quick study of the brutal American cold… Continue reading

Canadian Kennel Club seeking to add 12 more dogs to its pack

2018’s incoming class could include the Portuguese sheepdog, Tibetan mastiff, rat terrier and Spanish water dog

Most Read


Five-day delivery plus unlimited digital access for $185 for 260 issues (must live in delivery area to qualify) Unlimited Digital Access 99 cents for the first four weeks and then only $15 per month Five-day delivery plus unlimited digital access for $15 a month