Sky is the limit when it comes to being ‘Rich’
Recently, Canadian Centre for Policy Alternatives (CCPA) released a report in which it stated that 70% of Canada’s wealth belongs to Canada’s 20% wealthiest. How did we manage to come to this inequality not only in terms of income but also in wealth? Experts say it is the policy and tax structure where the Canadian who works in job pays double the tax as compared to a business person.
The report by CCPA says that Canada’s richest 20% of families take almost 50% of all income Move higher up the income spectrum and the wealth gap is even greater. The level of wealth inequality in Canada has reached such extremes that in 2012, according to figures derived from Canadian Business magazine, the 86 wealthiest Canadian-resident individuals (and families) held the same amount of wealth as the poorest 11.4 million Canadians combined. To put these findings into historical perspective, in 1999, The Wealthy 86 held the same wealth as the bottom 10.1 million Canadians. In dollar terms, the net worth of The Wealthy 86 has been increasing since 1999 when it sat at just under $120 billion ($2012). It has since increased in 2012 to almost $180 billion ($2012). The Wealthy 86 represent only 0.002% of Canadians, but they hold the same amount of wealth as the bottom 34% of the population.
In our zeal to be a business friendly economy we have ended up with a society where there is huge income disparity.
The data shows that wealthy is concentrated in the hands of few business families who keep on growing the wealth steadily. Middle class is getting marginalized by every passing year. We cannot be a nation of rich and poor, it will lead to dis balance in other aspects of life as well. Society as whole suffers when one family feasts and other has to fight for decent plate of dinner.
For every new dollar of real wealth generated in Canada since 1999, 66 cents of that dollar has gone to the wealthiest 20% of families. For every new dollar in real wealth generated in Canada since 1999, the upper middle class captured 23 cents, while the bottom 60% of families had to settle for the last dime.
The government needs to define a path now to narrow the wealth gap, the need to initialize a tax reform is becoming imminent with every passing year. Tax payers sitting on top of taxpaying spectrum need to contribute more towards the government’s spending than an average job worker.
Capital gains tax is skewed. It has only 50% inclusion which means that an individual who is one of the 20% rich families pays tax only on 50% of the original total income. If higher inclusion rates and higher income taxes are implemented today then we may see lesser wealth difference in time to come.
Data shows that income inequality in Canada has increased over the past 20 years. Canada reduced inequality in the 1980s, with the Gini coefficient reaching a low of 0.281 in 1989. Income inequality rose in the 1990s, but has remained around 0.32 in the 2000s.
Nobody is against an individual or a family that invests intelligently and becomes rich. But when wealth is not evenly distribute and threatens to turn upside down the apple cart of peace and prosperity of a nation then is becomes a debatable issue. The economy and the country has better chance to steady fiscal growth when middle class is also prospering and expanding and maximum wealth is not lying with handful individuals.
Infact wealth disparity has many other ramifications than just effecting morale of people who work, pay their taxes and expect their country to take care of them or even soldiers who are ready to give up life for the countrymen need to know that their country stands with their families if they are gone and their children will not live a life of poverty. Wealth accumulation with handful people means the society and system is creating more and more poor every day. This is a dangerous situation for us and our future, it’s time we really start a conversation about this scenario.
The most commonly used measure of income inequality is the Gini coefficient, which is measured on a scale of 0 to 1. Named after the Italian statistician Corrado Gini, the Gini coefficient calculates the extent to which the distribution of income among individuals within a country deviates from an exactly equal distribution:
- a Gini coefficient of 0 represents exact equality—that is, every person in the society has the same amount of income
- a Gini coefficient of 1 represents total inequality—that is, one person has all the income and the rest of the society has none