【NON-p】econ219--THE RISE OF CANADA’S..r

20 growing gap project conclusion in the 1 920s

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Unformatted text preview: anada’s Recession, Ottawa: Canadian Centre for Policy Alternatives, April 2009. 20 growing gap project Conclusion in the 1 920s , incomes of the richest Canadians were based mostly on capital gains and returns on investment — tantamount to winning the lottery. By 2007, the incomes of the richest Canadians were mostly based on employment income, just like everyone else. But that doesn’t mean getting to the top of the income ladder is simply a matter of merit or effort any more than it was in the past. It’s got more to do with how one’s work is valued and, as this report has shown, the work done by the people at the top is valued much more handsomely today than in the past. Given there were always talented people in society who advanced innovation, entertainment and production, it’s hard to argue that today’s leaders are worth many multiples of their counterparts from the previous generation while the average worker is worth, essentially, nothing more. This review of the data shows that shares of market income held by Canada’s richest 1% have soared dramatically over the past 30 years, making Canada’s distribution of income look more like it did in the 1920s than it has at any time since. But this is not just a return to the past. No previous generation of rich Canadians has taken such a large share of the gains of economic growth in recorded history. If the story ended simply with some people winning the employment lottery, there might not be cause for concern. But the growing concentration of income and wealth has also led to a new thrust in public policy, which affects the fortunes of us all. Canada’s elite has managed to convince decision-makers that if they kept more of their income, they could create more wealth for everyone. After thirty years, the evidence shows that trickle-down economics was a hollow promise and a costly social experiment. the rise of canada’s richest 1 % 21 After the mid-1990s, Canada’s economy grew at the strongest, most sustained pace seen since the 1960s, but the lion’s share of income gains was concentrated in the hands of the richest 1%, who also enjoyed massive tax cuts. Reductions in personal income taxes, tax exemptions for savings, and cuts to consumption taxes disproportionately helped the most affluent and actually made life harder for most Canadians, particularly those with the lowest incomes. Tax cuts do little to put more money in the pockets of those at the bottom of the income distribution, who pay little or no income tax. But tax cuts have stripped hundreds of billions from the public purse since the mid-1990s, squeezing the public programs on which all Canadians depend. The cost of necessities like post-secondary education, health care, housing, childcare and transportation continue to rise. Meanwhile middle class incomes stagnate and the poor are kept on the sidelines or pushed out of the game. The majority of Canadians are running harder to stay in place and many are losing ground, even as the economy grows. This has occurred not out of necessity but by design. Like the Gilded Age of 100 years ago, Canada is awash in money. But instead of using our resources to create greater prosperity for all — as our parents’ and grandparents’ generations did — this generation of Canadians has watched both markets and public policy concentrate resources in the hands of the elite few. The excesses of the Gilded Age induced its own collapse and triggered, in response, a wave of public policy that helped redistribute prosperity through fair taxation and fair wages in order to grow the middle class, reduce poverty and keep a lid on income inequality in Canada. As the story unfolds anew, the response to Canada’s neo-gilded age may very well be the same. 22 growing gap project...
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