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

There were 246 million tax filers in 2007 8 later

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Unformatted text preview: ividends, interest income, rental income, pensions, EI benefits, withdrawals from registered pensions and savings. There were 24.6 million tax filers in 2007. 8 Later charts in this report go back to 1920. These charts plot data from the Saez and Veall paper, running 1920 to 2000, and the Veall updated series, from 1982 to 2007, showing the overlaps and differences between t he two series. Data from 1920 to 2000 were based on histograms, collapsing available tax records into tax brackets. Until the past few decades, tax data did not entirely capture trends at the very bottom of the income spectrum, as many people simply did not earn enough to warrant filing a return. With changes in transfer a nd tax policy, more people now file. Data since 1982 is based on a 20% sample of Canadian tax records. the rise of canada’s richest 1 % 11 The share of all income going to the richest 1% almost doubled between 1982 and 2007, rising from 7.9% to 13.8%. By 2007, the 246,000 Canadians lucky enough to be among the richest 1% claimed a bigger piece of the income pie than at any time since 1941. shares of income for the richest 0.1% The higher up the income scale, the more dramatic the gains. The richest 0.1% of tax filers includes 24,600 Canadians who have a minimum income of $621,300 and an average income of $1.49 million. The share of total income held by the richest 0.1% of tax filers was cut from roughly 6% to less than 2% between the 1940s and the 1970s. Then the trend reversed itself. By 2007, the richest 0.1% of Canadians held 5.5% of total income in Canada, more than double their share in early-1980s. You would have to go back to the Roaring Twenties to see a comparable phenomenon. chart 5 Share of Total Income, Richest 0.1% Canada, 1920–2007 8% Old Series New Series 7% 6% 5% 4% 3% 2% 1% 0% 1920 1925 1930 1935 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 shares of income for the richest 0.01% In 2007, the richest 0.01% of Canadians made a minimum of $1.845 million. The average income of the 2,500 people in this rarified group was $3.833 million. The share of total income held by Canada’s elite (the richest 0.01%) remained remarkably constant throughout the Roaring Twenties and Dirty Thirties, roughly 1.8% of the total. But after the war broke out, their share of total income fell dramatically, dropping to 0.5% or less by the mid-1960s and staying at those levels right until the end of the 1970s. 12 growing gap project What happened next was shocking, by any measure. Between the mid-1970s and 2007 the share of income accruing to the richest 0.01% Canadians more than quintupled. The updated series starts in 1982, when the richest 0.01% of Canadians had incomes of no less than $640,000. The average income of this group was $1.172 million in 1982. As noted, minimum income of the richest 0.01% had risen to $1.85 million by 2007 and the average income had soared to more than $3.8 million. No other category has seen incomes grow at such an explosive pace. By 2007, the richest 0.01% laid claim to 2.6% of total income in Canada, a larger share than at any time on record. chart 6 Share of Total Income, Richest 0.01% Canada, 1920–2007 3.5% Old Series New Series 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0% 1920 1925 1930 1935 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 including capital gains Until now, historic analyses of income trends did not include capital gains because prior to 1972 capital gains were not taxable in Canada, and so were excluded from the tax database used to follow the long-term evolution of incomes. Veall’s recent updates for Canada run from 1982 to 2007, permitting a first-ever look at how the inclusion of capital gains affects long-term changes in incomes. The U-turn patterns are virtually the same as those described earlier, but adding capital gains to the mix slightly increases the shares of total income going to those at the top. By including capital gains we can see that by 2007, the richest 10% of Canadians held 42.5% of all income generated by the market (compared to 41% when capital gains excluded). This is up from 34% in 1982 (33.6% excluding capital gains). the rise of canada’s richest 1 % 13 table 1 Shares of Total Income Going to the Top, With and Without Capital Gains Canada, 1982 and 2007 Top...
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