Canadians like to think that income inequality is an American problem. But, Linda McQuaig writes, on that meme, Canada is a close second behind the United States:
It’s true that the U.S. has the most extreme inequality, but a recent OECD report noted that Canada has the second-largest share of income growth going to top earners.
However, even that OECD report understates the drift of wealth to the top in Canada — according to dramatic data from a recent academic study which received relatively little attention.
That study presents some pretty stark numbers:
It shows that billions of dollars in income received by the very richest Canadians have not been included in calculations of their income. That’s because the wealthy funneled this money through private corporations in order to legally reduce their taxes — a practice that is more widely used in Canada than the U.S.
Once this income — amounting to an astonishing $48 billion in 2010 — is added to their reported personal incomes, Canada’s rich are considerably richer than we’ve been led to believe.
For example, according to commonly-used data, the average income for Canadians in the top 1 per cent is $359,900. However, this doesn’t include money channeled through their private corporations. Once we include this additional income, the actual average income of these high-rollers rises to a much heftier $500,200.
And, remember, all of this has been happening while 37,000 civil servants have lost their jobs, while medicare funding has been cut and while veterans affairs offices have been closed:
The study also shows that the share of Canada’s national income going to the top 1 per cent — commonly believed to be 10 per cent — is actually 13.3 per cent, once private corporation income is included. This share has been rising, from 12 per cent in 2009 to 13.3 per cent in 2011 (the latest year available).
Meanwhile, the OECD has warned that:
“Recent empirical work finds that high levels of inequality are harmful for the pace and sustainability of growth.”
The rich keep getting richer -- but our politicians want to keep it on the QT