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Top Income Shares in Canada: Recent Trends and Policy Implications

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  • Veall, Michael R.

Abstract

According to Canadian taxfiler data, over the last thirty years there has been a surge in the income shares of the top 1%, top 0.1% and top 0.01% of income recipients, even with longitudinal smoothing by individual using three- or five-year moving averages. Top shares fell in 2008 and 2009, but only by a fraction of the overall surge. Alberta, British Columbia and Ontario have much more pronounced surges than other provinces. Part of the Canadian surge is likely attributable to U.S. factors but a comprehensive explanation remains elusive. Even so, I draw implications for policies which might achieve some support from across the political spectrum, including the elimination of tax preferences that favour those with high incomes, the promotion of shareholder democracy and, to maintain Canada’s relatively high intergenerational mobility, continued wide accessibility to healthcare and education.

Suggested Citation

  • Veall, Michael R., 2012. "Top Income Shares in Canada: Recent Trends and Policy Implications," CLSSRN working papers clsrn_admin-2012-25, Vancouver School of Economics, revised 29 Oct 2012.
  • Handle: RePEc:ubc:clssrn:clsrn_admin-2012-25
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    2. Nicole M. Fortin & Thomas Lemieux, 2015. "Changes in wage inequality in Canada: An interprovincial perspective," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 48(2), pages 682-713, May.
    3. Bev Dahlby & Kevin Milligan, 2017. "From theory to practice: Canadian economists’ contributions to public finance," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 50(5), pages 1324-1347, December.
    4. Sébastien Breau & Michael Shin & Nick Burkhart, 2018. "Pulling apart: new perspectives on the spatial dimensions of neighbourhood income disparities in Canadian cities," Journal of Geographical Systems, Springer, vol. 20(1), pages 1-25, January.
    5. Beach, Charles M., 2014. "What Has Happened to Middle-Class Earnings? Distributional Shifts in Earnings in Canada, 1970-2005," CLSSRN working papers clsrn_admin-2014-13, Vancouver School of Economics, revised 26 Mar 2014.
    6. Osberg, Lars, 2013. "Instability implications of increasing inequality: Evidence from North America," Economic Modelling, Elsevier, vol. 35(C), pages 918-930.
    7. James B. Davies & Nicole M. Fortin & Thomas Lemieux, 2017. "Wealth inequality: Theory, measurement and decomposition," Canadian Journal of Economics, Canadian Economics Association, vol. 50(5), pages 1224-1261, December.
    8. Audra Bowlus & Émilien Gouin-Bonenfant & Huju Liu & Lance Lochner & Youngmin Park, 2021. "Four Decades of Canadian Earnings Inequality and Dynamics Across Workers and Firms," Staff Working Papers 21-20, Bank of Canada.
    9. Hou, Feng & Picot , Garnett, 2015. "Immigration, Low Income and Income Inequality in Canada: What’s New in the 2000s?," CLSSRN working papers clsrn_admin-2015-2, Vancouver School of Economics, revised 25 Jan 2015.
    10. Peter Burton & Shelley Phipps, 2017. "Economic Well-Being of Canadian Children," Canadian Public Policy, University of Toronto Press, vol. 43(4), pages 299-330, December.
    11. Kevin Milligan & Michael Smart, 2015. "Taxation and top incomes in Canada," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 48(2), pages 655-681, May.
    12. Andrew Sharpe & Evan Capeluck, 2012. "The Impact of Redistribution on Income Inequality in Canada and the Provinces, 1981-2010," CSLS Research Reports 2012-08, Centre for the Study of Living Standards.
    13. Christoph Schinke, 2014. "Government Ideology, Globalization, and Top Income Shares in OECD Countries," ifo Working Paper Series 181, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    14. Jean-Yves Duclos & Mathieu Pellerin, 2015. "The Evolution of Hourly Compensation in Canada between 1980 and 2010," CIRANO Working Papers 2015s-15, CIRANO.
    15. Duclos, Jean-Yves & Pellerin, Mathieu, 2015. "The Evolution of Hourly Compensation in Canada between 1980 and 2010," IZA Discussion Papers 8917, Institute of Labor Economics (IZA).
    16. Salvatore Morelli & Timothy Smeeding & Jeffrey Thompson, 2014. "Post-1970 Trends in Within-Country Inequality and Poverty: Rich and Middle Income Countries," CSEF Working Papers 356, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    17. Shyon Baumann & Hamnah Majeed, 2020. "Framing economic inequality in the news in Canada and the United States," Palgrave Communications, Palgrave Macmillan, vol. 6(1), pages 1-11, December.
    18. Charles M. Beach, 2016. "Changing income inequality: A distributional paradigm for Canada," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 49(4), pages 1229-1292, November.
    19. Kao-Lee Liaw & Lei Xu, 2013. "Changes in Wage Distributions of Wage Earners in Canada: 2000-2005," Quantitative Studies in Economics and Population Research Reports 451, McMaster University.
    20. Jean-Yves Duclos & Mathieu Pellerin, 2015. "The Evolution of Hourly Compensation in Canada between 1980 and 2010," Cahiers de recherche 1506, Chaire de recherche Industrielle Alliance sur les enjeux économiques des changements démographiques.
    21. Jacob Schwartz, 2018. "Schooling Choice, Labour Market Matching, and Wages," Papers 1803.09020, arXiv.org, revised Aug 2019.
    22. Jeff Larrimore & Richard V. Burkhauser & Gerald Auten & Philip Armour, 2016. "Recent Trends in U.S. Top Income Shares in Tax Record Data Using More Comprehensive Measures of Income Including Accrued Capital Gains," NBER Working Papers 23007, National Bureau of Economic Research, Inc.

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    More about this item

    Keywords

    income concentration; income polarization; Canadian personal income tax system; intergenerational mobility; corporate governance;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies

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