A new report on personal incomes upends almost everything we thought we knew about taxation, incomes and wealth. The report, by Statistics Canada, is a 30-year look-back on how well, or poorly, we all made out.
Here are the findings. First, median incomes have remained virtually flat from 1982 to the present (median being the point where there are equal numbers of people above and beneath).
In 1982, the median income for all tax filers was $28,400. In 2010, it was $28,800 — a mere $400 increase. (All of the figures here and below are in current dollars).
That’s a little misleading. People in the higher income brackets did better.
Nonetheless, the real wage for a good part of the population has remained almost unchanged for an entire generation. So much for economic growth and prosperity.
Second, contrary to the view that we’re being taxed to death, most of us actually pay less income tax today. In 1982, the median tax filer paid the equivalent of $3,000 in federal and provincial income taxes. In 2010, that figure had dropped to $1,900.
How did this happen? The answer is that our income-tax system has radically changed.
Thirty years ago, the main weight fell on the poor and middle class. In 1982, this group paid more than half the income tax collected.
Today, the balance is reversed. The top 10 per cent of earners now pay 54 per cent of the total. In effect, the burden has shifted over time from a broader base of the population toward a narrower, moneyed group.
Third, there has been a striking re-orientation of income among the regions of our country. In the early 1980s, the Maritimes were a ghetto of poverty and underemployment. Along with Alberta, B.C. was the nation’s powerhouse.
Today, the Atlantic provinces have almost caught up and B.C. has fallen behind. The decline in our province’s fortunes is quite noticeable. In the space of three decades, we’ve gone from second top of the income table to almost the bottom.
The numbers tell the story. In 1982, the median income in B.C. was $31,600, far above the nationwide median. Today, it stands at $27,500, a drop of 13 per cent and well below the national median.
The only other province to record any fall in income was Ontario, and the decline there was marginal. If present trends continue (and they might not), we could replace the Maritimes in a few years at the low end of the scale.
Again, these figures must be taken for what they are — a measure of how tax filers at the bottom half of the income scale have fared. Lots of British Columbians have made out very well.
And there are factors such as age and immigration to consider. Young people and newcomers to the country often start out at the bottom. With time and experience, they usually climb the chart.
But this does not alter the basic truth here: Real wage rates for low-income earners in B.C. have stagnated and now lag the rest of the country. That’s one reason we have the second-worst child-poverty rate in Canada. That is both a shame and a failure.
So what is to be done?
There are warnings here for whichever party wins the provincial election in May.
Policies that divide us, whether by favouring one group or hammering another, have not worked. Raising or lowering the profile of government hasn’t had much impact, either.
The challenge facing B.C. is more basic. We’ve lost our competitive position and we are too reliant on fading industries like lumber and the fishery.
If there is a dominant message in those income numbers, it is this: Canada needs a new approach to economic strategy, and B.C. more than anywhere.
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