OTTAWA – The recession and subsequent weak recovery appears to have taken a bite out of Canada’s top income earners — but they are still doing better than the rest and many suspect the setback is temporary.
OTTAWA – The recession and subsequent weak recovery appears to have taken a bite out of Canada’s top income earners — but they are still doing better than the rest and many suspect the setback is temporary.
Statistics Canada reported Monday that the top one per cent of the country’s 25.5 million tax filers earned at least $201,400 in 2010, accounting for 10.6 per cent of the nation’s total income — down from 12.1 per cent peak in 2006.
The latest data finds the biggest narrowing in the gap between to top one per cent and the rest occurred in 2008 and 2009, when the Canadian economy was in the midst of a deep recession and the stock market lost about half its value.
By 2010, however, the recession-effect on income disparity appeared to be diminishing. There was only a slight drop-off for the top earners — from 10.7 per cent to 10.6 per cent of the national income — between 2009 and 2010.
Andrew Sharpe, executive director of Centre for the Study of Living Standards, says he doubts the new data indicate a trend to greater income equality because top earnings are more dependent on investments and capital gains.
“It’s likely a cyclical phenomenon,” Sharpe said. “There’s a lot of forces in society that leads to the concentration of income. It’s hard to say what’s going to happen, but I wouldn’t say it will continue to fall for the top one per cent.”
Taken over a longer time frame, the latest research suggests that inequality between income earners has increased, in some cases dramatically, over the past three decades.
In 2010, the richest one per cent reported a median income of $283,400, or about 10 times greater than the $28,400 median for the other 99 per cent. By comparison, in 1982, the median income for the top one per cent was $191,600, or only seven times the $28,000 median for the rest.
The report also found:
— More women among the rich. There were 53,200 Canadian women in the one per cent club, or 21 per cent of the total, compared to only 11 per cent in 1982.
— The median age of the top one per cent of tax filers was 51 in 2010, a number that has changed little over the past 30 years. The median age for all tax filers increased to 47 from 36.
— The top one per cent paid 21.2 per cent of federal, provincial or territorial income taxes collected, up form 13.4 per cent in 1982. The share paid by the rest fell to 78.8 per cent in 2010 from 86.6 per cent in 1982.
Economist Erin Weir of the Progressive Economics Forum said the one per cent club appears to include more repeat members, suggesting less income mobility in Canada.
In 2010, 72 per cent of the top one per cent were club members the previous year, and 53 per cent had been there five years earlier. The comparable numbers for the 1980s are 67 per cent and 44 per cent respectively.
“One of the problems with a permanent upper class is that it doesn’t have much stake in the public school system or public health care,” he said.
“There’s also quite a bit of empirical evidence to suggest that societies with more inequality have worse health, shorter life spans and more criminal activity, even among rich people.”
Statistics Canada research shows that the vast majority of top earners come from Canada’s most populous provinces — Quebec, Ontario, Alberta and British Columbia — and most live in the biggest cities — Montreal, Toronto, Calgary, Edmonton and Vancouver.
And that is also where income inequality tends to be greatest, according to the Canadian Centre for Policy Alternative.
In its analysis of the data, the group says Calgary is by far Canada’s most unequal city with the top one per cent earning 26 times as much as the bottom 10 per cent.