Hey there, time traveller!
This article was published 14/12/2010 (4215 days ago), so information in it may no longer be current.
Think you live in a country dedicated to fairness and equity? Think again. Recent data on wealth and poverty in Canada is stark and deeply disturbing.
In 2005, the richest 10 per cent of families held almost 60 per cent of the total wealth in the household sector, leaving the other 90 per cent to divvy up 40 per cent, according to Statistics Canada's 2005 survey.
On average, those in the bottom 20 per cent were standing in a debt hole of $7,800, 14 per cent owed more than they owned, including equity in their homes, and 24 per cent had no financial assets at all.
Statistics Canada has no plans to do any more such surveys. Fortunately, the financial research institute, Investor Economics, stepped up to the plate.
Inequality leaped ahead significantly since then. Investor Economics identified 544,000 "high net-worth" households in Canada as of Dec. 31, 2009. Although a minuscule 3.8 per cent of all families, they controlled $1.78 trillion -- that's right, trillion with a "t" -- of financial wealth. That's 67 per cent -- two-thirds -- of the total financial wealth of all Canadian households.
This data and much more are available in an explosive new report by Canadian Centre for Policy Alternatives economist Armine Yalnizyan. Called The Rise of Canada's Richest One Per Cent, it's part of the CCPA's ongoing Growing Gap project measuring Canada's escalating social and economic inequality.
"This generation of rich Canadians is staking claim to a larger share of economic growth than any generation that has preceded it," says the report's executive summary. "Since the late 1970s, the richest one per cent has almost doubled its share of total income; the richest 0.1 per cent has almost tripled its share of total income; and the richest 0.01 per cent has more than quintupled its share of income."
Canada's richest one per cent -- the 246,000 privileged few whose average annual income is $405,000 -- took almost one-third (32 per cent) of all income growth between 1997 and 2007, the fastest growing decade of this generation.
The last time the economy grew this quickly was in the 1950s and 1960s. But back then, the richest one per cent of Canadians pocketed just eight per cent of all the income increase.
"From the beginning of the Second World War to 1977, the income share of the richest one per cent was cut almost in half, from 14 per cent to 7.7 per cent as the gains from growth led to more people working and better-paid jobs," the report states.
Two factors turned back the clock: globalization and tax cuts. Globalization allowed corporations to move purchasing and production to the lowest-cost jurisdictions around the world, putting enormous downward pressure on unionization, wages and salaries for the vast majority of Canadian workers. It also created a whole new class of super-rich who, unlike the super-rich of the past, base their wealth not on inheritances and property, but on stratospheric salaries, bonuses and rewards as corporate CEOs, investment bankers, inventors, entrepreneurs, athletes and artists. By 2007, the richest 10 per cent of Canadians held 42.5 per cent of all market income, up from 34 per cent in 1982.
Meanwhile, Canada's governments, both federal and provincial, have been on a tax-cutting spree, urged on by the proliferation of right-wing think- tanks. Since 2000, federal personal and corporate taxes have been slashed by $320 billion, an amount Canadians should remember every time they're told we can't afford medicare or improved public services. The provinces have followed suit.
Simultaneously, tax brackets have been telescoped from 19 in the 1950s to three. In 1948, the top federal marginal income tax rate was 80 per cent. Today, it's been almost halved, to 42.92 per cent, the lowest ever.
"Ability to pay" taxation is now a perverse joke. Between 1990 and 2005, the richest one per cent of Canadians experienced twice the reduction in taxes as the average Canadian -- four per cent versus two per cent.
Unbelievably, today, the richest one per cent of taxpayers is paying a slightly lower rate of taxes than the poorest 10 per cent of taxpayers.
Jobless benefits are at a 60-year low. Savings rates are at the same level they were in the Great Depression. Household debt has never been higher, rising from an average $1.40 on every dollar of disposable income at the outset of the 2008 recession to $1.49 today.
Last May, the OECD reported that Canada's infant mortality rate has skyrocketed, plunging this country from sixth to 24th place among the 34 major industrialized countries. Canada is regressing socially, economically -- and morally.
Frances Russell is a Winnipeg
writer and political commentator.