Thursday, May 31, 2012

Income Inequality In Canada Today And Tommorrow

This report on income inequality in Canada shows how pre-tax income inequality has grown in recent years.  It also shows how progressive taxation, especially at the province level, has mitigated the effects of pre-tax inequality.  Public support for progressive taxation in Canada has been falling.  That raises a question about the potential effect of growing pre-tax inequality in Canada.

The distribution of occupations in Canada among the top 1% is different from the distribution in the US.  It is more concentrated among top executives and financial professionals in the US.  It is less concentrated in Canada.  Consequently, progressive taxes in Canada affect a more diverse group of occupations.  The politics and economic outcomes from progressive taxation in both countries are very different.

Social mobility in Canada is higher than it is in the US. That is largely due to policies that were put in place many years ago under political conditions that favored social mobility.  If the conditions that favor social mobility in Canada are eroding, we can expect growing income inequality in Canada's future.

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