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New policy framework is needed to tackle inequality in Canada

February 23, 2016 Print

Montreal – The federal government’s attempts to shift the tax burden from the middle class to the top 1 percent will not be enough to address rising income inequality, says a new book published by the IRPP in collaboration with the Canadian Labour Market and Skills Researcher Network. Based on extensive research on inequality trends and outcomes in Canada over the past three decades, the book sets out an ambitious policy agenda to deal with the problem.

“We have looked at this question from all angles and the bottom line is this: income inequality in Canada has increased substantially over this period, primarily due to the dramatic increases in income among top earners and the general lack of progress for the middle class and those at the bottom of the distribution. These trends are worrisome, especially given signs of decline in both income and intergenerational mobility over time,” says Craig Riddell, co-editor ofIncome Inequality: The Canadian Story.

The book, released in the wake of tax hikes on Canada’s wealthiest 1 percent, concludes that the federal government is on the right track, but a more comprehensive approach is needed. “Tax-and-transfer policies have been quite effective in the past in offsetting rising market income inequality and could be used again to better effect,” says co-editor France St-Hilaire.

In their conclusion, the editors support the proposed Canada Child Benefit, and believe it should be complemented by a substantial expansion of the Working Income Tax Benefit. At the same time, Canada’s social assistance and employment insurance systems need to be substantially revamped to better address the needs of working-age adults who are falling through the gaps in the social safety net.

They also conclude, however, that a more stable and longer-term solution to inequality will depend on policies that affect the distribution of income beforetaxes and transfers, such as education, minimum wages and unionization, although they warn that doing more of the same in these areas is not the answer. Renewed efforts to increase educational attainment will need to focus on removing barriers faced by children of low-income families, through early-childhood education programs, improved high school teaching of math and science, access to tuition-free postsecondary education, and income-contingent student loans.

The editors also point to the need to better balance the relative bargaining power of people across the income distribution. For those at the bottom, they support a gradual move to higher minimum wages. For those in the middle, they suggest workers’ rights need to be enhanced, even beyond the traditional framework provided by unions. And for those at the top, they signal the excessive compensation of chief executives and other corporate governance problems that need to be reviewed and addressed.

Income Inequality: The Canadian Story, edited by David A. Green, W. Craig Riddell and France St-Hilaire, is the fifth volume in The Art of the State series.

Media are welcome to attend the book launch.

When: February 25, 2016, 5:30 p.m. – 7:30 p.m.
Where: The Metropolitain Brasserie, 700 Sussex Dr., Ottawa
Guest of honour: Hon. Jean-Yves Duclos, Minister of Families, Children and Social Development

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The Institute for Research on Public Policy is an independent, national, bilingual, not-for-profit organization based in Montreal. To receive updates from the IRPP, please subscribe to our e-mail list.

Media Contact:    Shirley Cardenas    tel. 514-594-6877    scardenas@nullirpp.org

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