Income inequality is in the minds of 91原创s these days, particularly those minds who think they should have more income and others less.
The House of Commons finance committee is seized of the issue and presumably will issue a report in due course.
On Thursday, the question of taxing the rich more was the topic of the Munk Debate in Toronto. One of the debaters in favour was George Papandreou who, as socialist prime minister, presided over the excesses that left Greece an economic basket case.
One of the debaters against was Newt Gingrich, the sometime Republican candidate for the presidency, who wants his party to 鈥渆nter the age of the lightbulb鈥� and gets a lot of laughs.
Inviting the participation of these guys as authorities on good governance is like asking Mike Duffy to give a talk on household management.
The belief that in Canada, as in other parts of the world, the 99 per cent of us are being put upon by the one per cent, was a theme of the Occupy movement, which looks to manifest itself in various ways in various places again this summer. The Pew Research Centre鈥檚 most recent poll on income inequality suggested that 76 per cent of 91原创s think it has increased over the past five years.
The Organization for Economic Co-operation and Development says that the gap, before taxes and income transfers, increased more between 2007 and 2012 than in the previous 12 years in member countries. Even after taxes and transfers, the gap has widened in the U.S.
Yet it鈥檚 said that 91原创s, who benefit from diverse ways of easing economic and regional disparity, are better able to cope with the income gap: The poorest 91原创s reportedly are better off than the richest Portuguese and about as well off a the richest French, Greeks and Italians.
On the day of the Munk debate, Philip Cross, a former chief economic analyst at Statistics Canada, wrote in the Globe and Mail that despite what most 91原创s seem to think, the income gap isn鈥檛 widening at all.
The rise in pre-tax income for the top 20 per cent of families between 1976 and 1998, he said, reflected an income drop in lower and middle income families and a 17 per cent increase in earnings of the top income group.
Cross reported that income inequality has levelled off since 1998 because lower and middle incomes have grown. Canada鈥檚 progressive tax system means that the top one per cent of income earners pay 21.7 per cent of all income taxes. The lowest 40 per cent pay only 6.8 per cent, almost half what they paid in 1976. More than a third of tax filers pay no tax at all.
Still, the debate sputters with the usual arguments. Those in favour of taxing the rich more talk about social justice and the political danger in allowing extreme inequality. They confuse equality with fairness.
Those against warn of lost jobs, discouragement of risk-taking and innovation and punishing success.
The Gingriches also boast that the rich are able to lobby dependent governments for favourable treatment and stash their money out of reach of those same governments 鈥� an argument, surely, for cracking down on these pirates.
I found Cross鈥檚 column enlightening until I got to the end. He warned against making the rich pay more simply to cover the 鈥渋maginary losses鈥� of the poor or to lower government deficits caused by overspending what the better off largely provide through taxes. His disappointing conclusion was that governments should get out of debt by spending less rather than taxing more. This may be a natural viewpoint for a statistician, but it seems to discount a lot of what governments are for and why they need to impose taxes in the first place.
Good governments provide the services that their people 鈥� all of them 鈥� need to thrive. And they have to follow the money and take it where it lies.
