– Think tank calls on feds to alleviate income inequality, not make it worse
Submitted by the Ottawa-based Canadian Centre for Policy Altneratives
OTTAWA, February 5th, 2014 — The Canadian Centre for Policy Alternatives (CCPA) warns a so-called “do-nothing” federal budget is anything but, and is likely to worsen Canada’s slowing economy.
Canadian Centre for Policy Alternatives’ senior economist David Macdonald
The CCPA’s 2014 Alternative Federal Budget (AFB) shows what the federal government could do if it decided to seriously address Canadians’ largest social, economic, and environmental concerns. It delivers a plan that would lift 855,000 Canadians out of poverty, reduce income inequality, boost the economy, lower unemployment to 5.4%—and still balance the budget one year later than the federal government plan.
“The labour market is much weaker than the federal government would like us to believe. In fact, only one in five of those who came off unemployment rolls since September 2009 found a job, and four of five gave up looking,” says David Macdonald, CCPA Senior Economist. “It is time for the federal government to act to drive down income inequality and create the new jobs Canadians need.”
This year’s AFB raises the bar on transparency by providing an analysis of the distributional and poverty impacts of its tax measures—a first for any budget. Under the AFB:
- The poverty rate for seniors would drop by 46% and child poverty by 26%.
- The bottom 60% of Canadian families will see improved incomes from the AFB’s tax measures.
- Upper-middle class families would see tax increases of under 2% of their family income.
- The top 5% of families would see the largest tax increases (6% of their family income) as tax loopholes used by the rich are closed.
“Reducing inequality is not only possible, doing so would boost the economy from the bottom up,” says CCPA Senior Economist Armine Yalnizyan. “Instead, the federal government is pledging to increase inequality by continued cuts to services in 2014, paving the way for tax cuts, such as income splitting, that will provide the greatest benefit to those who need it least.”
Concerns about low inflation and a slowing economy need more than a status quo response. The Alternative Federal Budget shows how the federal government can strike a better balance and deliver substantially improved services for all Canadians through affordable child care, expanded health care, and improved infrastructure while still fighting the deficit.
Alternative Federal Budget 2014: Striking a Better Balance is available on the CCPA website: http://policyalternatives.ca
The CCPA’s National Office was established in 1980 when the Centre was founded. Located in Ottawa, it coordinates the CCPA’s national research agenda and publishes reports, studies, books and commentary on a wide range of public policy issues.
The office also publishes The Monitor, a monthly magazine sent free to all members, and Our Schools/Our Selves, a quarterly education journal. The National Office houses several ongoing projects: the Alternative Federal Budget, the Education Project, the Growing Gap, Making Women Count, and the Trade and Investment Research Project.
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Niagara At Large 
To add to the accuracy of this finding as well as the article, the New York Times business section recommends higher wages for workers. Apparently the retail outlets that are doing fine are the ones that cater to the wealthy while the middle income outlets are suffering due to lack of sales. The result is stagnation and an inability for the economy to grow. Even the retail organizations are saying the same thing. All the more reason why the feds have to fess up and the Hudaks of the world need to understand economics. The only way to grow the economy is to have people spending and they can’t spend if they don’t have the money.
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A lot of lower-middle income people can benefit from income-splitting also. It is certain measures like that which prevent the disappearance of the so-called middle class. It seems more and more that you’re going to be either rich or poor. In a true free-enterprise system however, everyone can’t be rich. Paying everyone the same so they have more to spend is preposterous and is tantamount to a liberal-democrat hand-out system. But, then they can always “print more money”, can’t they?? “They shall fling their silver into the streets; their gold shall be treated as unclean. Their silver and gold cannot save them on the day of the wrath of the Lord. They shall not satisfy their hunger or fill their stomachs with it. For it was the stumbling block of their iniquity.” Ezekiel 7:19 (NRS)
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The only way for the economy to grow is for people to spend… That is the truth, but artificially raising wages and raising taxes is not the way to go.
I am getting ticked off…… Why aren’t any of you people taking the time to understand that our politicians, ALL OF THEM, have created a public sector, tax and spend environment that inhibits business growth and with it the creation of jobs. What about the freakin waste in ALL levels of government that totals in the BILLIONS! What part of paying $3000 a year to live in a modest home, get double taxed on transportation fuels, taxed on heating fuels, taxed on electricity to cook our food, taxed on WATER for Christ’s sake. AM I THE ONLY ONE THAT SEES A PROBLEM WITH THIS? What part of all the BILLIONS spent on projects that have no merit, overpaid public staff (at all levels), vote buying policies…. do I need to go on do you all NOT understand?
To all of you who buy into the crap that artificially raising wages is the answer… you will be sorely disappointed as inflation creeps up and everything you overpay for already continues to increase in cost. These wage increases have to come from somewhere! Add to that all the incremental taxes the government reaps will just get wasted in some way or another.
The middle class has been beaten up and 2% is a non-starter. As for increasing taxes on the top 5%, they already pay more tax in a year than most people will pay in a lifetime. How long do you think it will for them wise up, take their money and spending power elsewhere. Add to that the potential taxes from these sources are a drop in the bucket compared to the REAL issues and challenges I have presented here and in my previous comments.
AGAIN FOR ALL OF YOU THAT ARE HARD OF HEARING (READING), GOVERNMENT WASTE, PARTISANSHIP, OVERSPENDING ON HUMAN RESOURCES AND INFRASTRUCTURE AND BAD PLANNING IS THE PROBLEM THAT NEEDS TO BE SOLVED. NOT THE TAX OR WAGE RATES!
Just sayin…… wishin you all would just listen…..
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Oh and did I forget to mention……. the CCPA receives much of its funding from trade unions……. Surprise ….. Surprise this kind of recommendation was presented from this organization!
Perhaps this organization would better spends its time attacking the core problems with our government as mentioned previously rather than suggesting tax and spend policies are the way to go.
Talk about being part of the problem.
But then again…. do we ever hear anything but “give me more” from unions of all types? NOPE! ZERO creativity there! Anyone can tax and spend! I guess the real question is just how long are people going to put up with it?Just sayin……
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Gerry
I agree with you completely and your article defines the thinking of an Economist who won the Nobel Prize, a gentleman who uses intellect and common sense and it is a real treat to hear him relate the how, whats and whys improving the lot of the common folk will increase productivity through good paying employment while eliminating poverty.
I have always admired CCPA Senior Economist Armine Yalnizyan for the role has taken in making this a reality.
Thank You Sir
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BY the way to those who are unaware that economist is Joseph Eugene Stiglitz
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Greg: I read both your comments. Here’s the thing. In the 60’s and 70’s federal corporate tax was at 37%. These years were our most productive both from manufacturing and labour. In 2012 it went to a low of 15%. A huge drop in tax revenues was lost. In 1994 came NAFTA. The result was a huge loss of jobs. So the loss of of tax revenues both from the reduction in corporate tax and fewer workers earning good wages meant that whoever was left paid the piper. Government waste has been paired down to the bone. As a result of a reduction in corporate tax and a reduction on the number of people earning a good living, fewer taxes are taken in but the needs have gotten greater due to unemployment, poverty, etc. Added to this is that that are more of us then there were in the 60’s. Again, in Ontario, NAFTA did a real number on us. Jobs went to foreign lands with much cheaper labour and no regulations or benefits for employees. What were left with were low paying service jobs that could not be outsourced. Believe me if corporations could, they would.
The increase of the minimum wage provides a leverage for government to recoup tax by increasing wages. Higher wages pays more tax. I agree with you that things are out of balance. But I would not blame provincial governments since most of our economic ills comes from the feds. who make the rules across Canada. Further, this is occurring across the world and not just here.
My prediction? A lot of citizens are becoming angry. Most don’t trust corporations or unions or governments. They need to blame someone. Provincial government will take the blame because they are the closest to us (as well as city governments). The real culprit is the federal government who make the rules which impinges on the provinces and regions. Until governments in the west figure out that you can’t allow money leaving a country without counter balancing it with rules that affect labour, provinces, regions, etc., we will continue to bleed.
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With all due respect Gerry and I do appreciate your response and agree that the feds are responsible for much of what is wrong…..
But my opinion is that:
1) ALL levels of government have failed miserably in managing the resources they have had made available to them.
2) The province has played a huge role in making this province unattractive to new business because of the liabilities that are attached to moving to this province. While some businesses may grown, its new business that we need to create the jobs we need. You have to admit, the climate is not ideal considering that a major part of operating costs are electricity (especially in manufacturing), fuels and real-estate. In those areas the province in addition to the feds have failed miserably.
3) Yes NAFTA illustrated that we could not adjust to a new competitive playing field. Something both the provincial and federal governments are responsible for. The fact that corporate taxes have fallen so far since and we are still not competitive leads me to believe that it is other operating costs that are holding us back.
Unfortunately this article recommended raising taxes which is something I am dead set against under any circumstances until ALL levels of government from the town to the feds get their shit together and do a better job managing the tax resources they already have available to them.
The waste is in the ten of BILLIONS Gerry …… TENS OF BILLIONS and those resources can go a long way to make things better for all the sectors (corporate and personal) of our population.
Thanks for the feedback….
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Greg
New Businesses??? Do you realize that the ownership of 40 Businesses a month are transferred to foreign interests and that Canada’s resources are not being value added here in Canada but are sold off to foreign interests to be returned as finished products where as after the second world war Canada was a thriving hub of industry with innovation and need being the key to a growing economy. Then regulation fell to the axe as our independent media became almost totally Incorporated. Diefenbaker sold Avro down the drain and with it went the motivator, the employer of over 20,000 good paying jobs…Since then Corporate controlled Governments sold Canada to the highest bidder and where are we now? Free Trade agreements have cost too many jobs and this new TPP could be the ball breaker as our very sovereignty is being eroded by corporate Greed.We once had a Liberal acting Prime Minister who is now the chair of the CEO Association and a prime mover of merging Canada with the US. The SPP using secrecy is move Canada in that Direction very quickly. When the CEO Association was asked what they think is sorely needed in Canada their answer elimination of Social Program, Small Government and less Regulation.
These so called heavy weights want another Depression????
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