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

Mass migration from country to city saw more

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Unformatted text preview: eople started making big gains in their incomes. Industrialization took hold and the population of waged labourers grew. Mass migration from country to city saw more Canadians earning more than they had when their livelihood depended upon agriculture. By 1925, these trends reversed. The share of income held by the top 1% rose, first because Prairie droughts triggered an economic slowdown, then because of the stock market crash in 1929. That trend continued through the Great Depression, as unemployment soared. World War II and Post-War Growth: The Great Equalization The richest Canadians saw a dramatic drop in their income (both before- and aftertax) during the Second World War (1939 to 1945). From 1946 to the end of the 1970s, as mass consumption of private and public goods expanded and more women joined the workforce, Canadians experienced growth both in the share of the population the rise of canada’s richest 1 % 9 that was employed and in unionization. The migration from country to city continued, and the majority of Canadians saw a rapid rise in income during this period. The clear and consistent trend over these decades was towards greater equality. Post-1980: The Neo-Gilded Age Two profound recessions in as many decades displaced millions of workers and put huge downward pressure on the wages of the majority. By the mid-1990s, Canada’s place in the global supply chain had grown more important and the economy entered a decade of unbroken growth, even as the strength of the manufacturing sector faltered. This sustained expansion was unlike anything Canada had experienced since the 1960s. However, in comparison to the 1960s, the benefits of growth were not as broadly shared. The share of income accrued by the richest Canadians grew at a faster rate than any recorded period in our history. The following charts reveal the shares of income enjoyed by Canada’s richest 10%, richest 1%, richest 0.1% and richest 0.01% since 1920. The higher up the income spectrum, the more striking the U pattern. The shares of income going to the richest Canadians now resembles patterns last seen at the end of the Second World War, and even earlier for those at the very top of the income ladder. In fact, the richest 0.01% is taking home a bigger piece of the economic pie than at any time in the past century. shares of income for the richest 10% of canadians Who falls into the richest 10%? If you made more than $63,350 in 2007, you made more than 90% of Canadian taxfilers. Nearly 2.5 million Canadians fell into this category. The richest 10% of Canadian tax-filers accounted for 41% of the nation’s chart 3 Share of Total Income, Richest 10% Canada, 1941–2007 48% 46% Old Series New Series 44% 42% 40% 38% 36% 34% 32% 30% 10 1941 1946 1951 1956 1961 growing gap project 1966 1971 1976 1981 1986 1991 1996 2001 2006 $970 billion in total pre-tax income.7 The richest 10% hasn’t held such a large share of total income at any time since the Second World War, which is as far back as the historical tax data go for this group.8 share of income for the richest 1% In 2007, a Canadian in the richest 1% of tax filers made a minimum of $169,300. The average income of this class was $404,500. Tax records for Canada’s richest 1% go back to 1920. They show that the top 1% of tax filers increased their share of total income from the mid-1920s to the mid-1930s. It only declined after Canada went to war. From the beginning of the Second World War to 1977, the income share of t he richest 1% was almost cut in half, falling from 14% in 1941 to 7.7% in 1977. T hen that trend, which had been going on for decades, stopped and reversed d irection. chart 4 Share of Total Income, Richest 1% Canada, 1920–2007 20% Old Series New Series 17% 14% 11% 8% 5% 1920 1925 1930 1935 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 7 Total income is sourced from Revenue Canada’s Income Statistics for 2007. Most of this income is employment related (almost $660 billion). The figure provided does not include $24.8 billion in taxable capital gains in 2007. Capital gains were not taxed before 1972. Therefore this long-trend historical analysis of income, based on tax data going back to 1920, excludes capital gains. Market income includes wages, salaries, commissions, earnings from self-employment, d...
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This note was uploaded on 09/17/2012 for the course ECON 219 taught by Professor Ragan during the Fall '08 term at McGill.

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