Most Canadians Are Not Getting Richer
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An important factor in measuring quality of life is the extent to which the benefits of income growth and employment are shared equally. This, in turn, influences the opportunity for all residents to achieve their goals and aspirations. The tax filer data confirms that only the wealthiest 30 per cent of families and 20 per cent of individuals in the 20 QOLRS municipalities enjoyed any increase in before-tax income between 1990 and 2000. In contrast, the before-tax incomes of low and modest income individuals—the bottom 30 per cent on the income scale of all unattached individuals—decreased by 10 per cent or more (after adjusting for inflation) during this time.
Income percentile
As used in this report Income Percentiles represent the total population ranked from highest to lowest in terms of either individual or family income. For example, if the 25th percentile of family income is shown as $30,000, then 75 per cent of families under review have a total income greater than $30,000 and 25 per cent of families have a total income less than or equal to $30,000. The information in the percentiles table relies on data contained in personal income tax forms.
Growing income divisions between “majority†and “minority†populations
Another measure of income equality relates to the difference in income growth and total income between different demographic and ethnic groups . In general, income growth of “minority†or “vulnerable†groups was substantially lower during the period 1991-2001 than their “majority†counterparts. Female-headed lone-parent families were an exception, with this group experiencing income growth that exceeded the rate for all families.
A growing income gap between the wealthiest and poorest
A simple measure of the distribution resources is the ratio of society’s highest to lowest income earners. The growing size of this ratio is referred to as the Income Gap and corresponds to a growing inequality in the distribution of income and wealth. A report prepared for FCM and released in November 2003 provides additional analysis of the growing income gap in Canadian municipalities. Falling Behind: Our Growing Income Gap builds on one of the key findings of the 2001 Report on Quality of Life in Canadian Municipalities, which stated that “the income gap between Canada’s wealthiest and poorest urban residents is growing.†one of the report’s main findings is that an increase in this gap ultimately diminishes quality of life for all residents at both ends of the income spectrum.
The Income Gap report points to studies in Europe and the United States that suggest that, while levels of income are important determinants of poverty, it is the level of inequality that may be more important to understanding the implications for individuals and the broader community. In particular, the growing gap between high and low incomes is understood to have implications for individual and community health, crime, education, political stability and governance, and social cohesion.
Furthermore, changes to government transfer payments and the erosion of public services during the 1990s have meant that these mechanisms are less able to reduce ine-quality. Instead, strong social infrastructure has taken on an increasingly important role in moderating the effects of growing inequality. […]
In all cases, the income gap grew during the year period and was widest among individuals.
In the case of the QOLRS average for before-year 2000 income, the 90th percentile family income was close to eight times higher than 10th percentile family income ($123,250 versus $16,100). In comparison, the ratio between 90th and 10th percentile individual income more than 13 times higher ($63,200 versus $4,700) in 2000. The income gap was marginally wider in the rest of Canada for both individuals and families.
The federal and provincial income tax system includes a combination of taxes taken from individuals and families and tax credits transferred individuals and families. In a progressive tax system, higher income earners experience relative losses in income, while lower income earners enjoy relative gains. […] The federal and provincial income tax systems reduced the size of the 2000 income gap from close to eight to less than six in the case of QOLRS families, and from more than 13 to less than 11 in the case of individuals.
Centre for Research and Information on Canada
@ April 21, 2004