Mind the gap

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In a memorable moment during her last appearance in parliament as British prime minister, Margaret Thatcher held up her forefingers to indicate points on an imaginary scale.

Her message: socialist policies lower everyone’s income. Her policies may boost higher incomes more, but also nudge up those on the lower end of the scale.

“So long as the gap is smaller, they’d rather have the poor poorer,” she said, taunting the members opposite.

It’s a facile concept — at what point does this theoretical equation become unfair or undemocratic? — but the mindset still seems to persist among governments today.

On Wednesday, the Organization for Economic Co-operation and Development (OECD) released a report comparing changes in the income gap around the world.

Perhaps not surprisingly, Canada’s income gap has widened faster than that of almost every other developed nation.

According to the Canadian Press, the analysis found income inequality has grown over the past three decades in most advanced economies represented by the OECD, but the United States and Canada are near the top in terms of growth and in absolute terms.

The top one per cent of Canadian income earners enjoyed 37 per cent of the overall pre-tax income growth between 1981 and 2012. They earn 12.2 per cent of the country’s total income.

Only the U.S. measured higher in both categories.

Since the study spans three decades, it doesn’t compare the contribution to this phenomenon of specific administrations. But it should be noted that under Prime Minister Stephen Harper, corporate tax rates have dropped to their lowest level ever.

During the 2011 federal election campaign, the Conservatives flogged the notion that the opposing parties would “raise your taxes” if elected. What they meant, in fact, was that the Liberals and NDP wanted to reverse deep corporate tax cuts that have since put Canada at or near the bottom of the list compared to other countries — even lower than those of the United States.

So much for the desperate need to compete — at an average of 15 per cent, Canada is basically a world champion of bargain-basement tax rates for big business.

There are caveats. As corporate advocates like to point out, Canadian businesses have to contend  with other taxes as well. But that doesn’t change the equation much. The same is the case for other countries, particularly in Europe.

Perhaps the most disturbing aspect of this trend is the increasing difficulty to track it. For that, you can also blame Stephen Harper.

When the Conservatives replaced the mandatory long-form census with the voluntary National Household Survey in 2010, they set the table for unreliable demographic data.

Participation of in the most recent voluntary survey was about 68 per cent, compared to 94 per cent for the mandatory census. Worse, experts discovered the data was skewed because richer and poorer citizens were less likely to comply.

In short, we can no longer calculate with good accuracy what the income gap is in Canada, but the trend would suggest it’s even higher than estimated.

Maggie Thatcher would be proud.

Organizations: OECD, Organization for Economic Co, Conservatives Canadian Press

Geographic location: Canada, United States, Europe.Perhaps

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