Hyer on the Hill – “The Rich Get Richer …and Richer”

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Bruce Hyer MPOTTAWA – Are you a member of the middle class? Do you feel that you are working harder and harder just to keep afloat financially… but that your ship is still taking on water? If that is how you feel… you are probably right.

Do you feel that the richest Canadians are getting richer …and by comparison you are getting poorer? If so… you are right again! This month, economist Armine Yalnizyan of the Canadian Centre for Policy Alternatives reported on “The Rise of Canada’s Richest 1%”, with worrisome facts. There were 24.6 million Canadian tax-filers in 2007. Canada’s richest 1% (the 246,000 privileged few whose average income is $405,000) hoarded a third of all the income growth from 1997 to 2007.

Canada’s richest 1% is now taking a larger share of our economic growth than any period in recorded history; their income is the highest ever. The richest 0.01% had it even better, with an average annual income of over $3.83 million. But the take-home income of the average Canadian hasn’t fared nearly as well: it passed its peak way back in 1980, and now is back to where it was in the early 1960’s!

The richest 1% of Canadian tax-filers received 13.8% of total national income (double their share in 1977).  And the highest 0.1% of tax-filers made out like bandits; their income almost triple over that 20 year period, and … hold onto your bank card… the highest 0.01% have seen their income go up by more than five-fold! The statistics show that the richer you are, the faster your income is growing, while the middle class is sailing backwards.

But if Canada’s economic ship has been steered towards growth in the last few decades …and if a rising tide really DOES lift all boats …how did this happen? It’s not rocket science. The governments of Mulroney, Chretien, Martin, and now Harper have looked out for that 1% with massive tax cuts, and shifted the tax burden onto the beleaguered middle class, through payroll taxes and commodity taxes like the HST. For example, the marginal income tax rate for the richest Canadians in 1948 was 80% …today that rate is only 42.9%.  

From 1990 to 2005, the total tax burden on the lowest 10% of wage earners has gone UP by 6%; the tax load on the richest Canadians has gone DOWN by 4%.

Last week in Ottawa, I met with Richard Wilkinson, the British co-author of “The Spirit Level.” It’s an important book with a poor title; the real title could have been “Scientific Proof that Trickle-Down Economics is Baloney”.  This book is a “must read” for anyone interested in the well being of people and nations. Medical epidemiologist Wilkinson and co-author Pickett used 30 years of United Nations and other data on health, education, crime, obesity, suicide, mental illness, and more to rank the 23 richest countries in the world for well being. They then looked for a scientific correlation between those findings and disparities in income.

They found a whopper. The five happiest and healthiest countries in the world are the four Scandinavian countries, plus Japan. The gap in income (from lowest 20% to highest 20% of wage earners) in those countries was less than four-fold. By far the unhappiest, unhealthiest developed country is… you guessed it …the USA. As the September Maclean’s editorial declared: “America is headed back to the stone age.” The income gap there is almost tenfold – and is expanding rapidly, like in Canada.

The book shows that quality of life is directly related to a country’s income gap between rich and poor. Their study offers hard scientific proof. But when it comes to epidemiology, or the results of Statistics Canada’s long form census, or the advice of 99% of climate scientists worldwide, the Harper government does not want to be confused by any science which runs contrary to their ideologies… or the interests of their political masters.

Bruce Hyer, MP

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