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Noah Schafer

Election sealed corporate tax cuts; Canada needs more - The Globe and Mail - 0 views

www.theglobeandmail.com/...article2017147

Canada NDP USA Corprate tax

shared by Noah Schafer on 05 Jun 11 - No Cached
  • The election determined only that corporate tax rates won’t go up. It did not determine that they won’t go down – as, almost certainly, they will – through the next four years.
  • The average rate in 28 of the member countries of the OECD is 20 per cent.
  • In the campaign, the government asserted correctly that Canada’s corporate tax rate was the lowest in the G7. This, alas, wasn’t saying much. Four of the G7 countries have the four highest corporate tax rates in the world: U.S. (39.2 per cent); Japan (35.5 per cent); France (34.4 per cent); and Germany (30.2 per cent).
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  • Canada’s rate (at this moment, 27 per cent).
  • As Canada trimmed, the world trimmed, too: 75 countries aggressively cut corporate tax rates in the past decade. China’s corporate tax rate is 20 per cent – discounted to 15 per cent for companies that invest in strategically important industries.
  • combined federal-provincial statutory tax rate of 25 per cent, won’t
  • The “Bowles-Simpson Plan,” proposed by President Barack Obama’s commission on fiscal reform, suggests a federal rate of 28 per cent. The Wyden-Gregg Plan, proposed by Democratic and Republican legislators, suggests 24 per cent. The China-OECD Plan, advanced by the non-partisan U.S. Tax Foundation, suggests 20 per cent
  • These rates are federal rates and don’t include corporate rates levied by the states: nominally, on average, 6.6 per cent; in fact, on average, 4.2 per cent. Thus a U.S. federal rate of 20 per cent (the China-OECD Plan) would produce a comprehensive “America rate” of 24.2 per cent
  • Canada’s goal assumed an “America rate” of 39.3 per cent: a competitive advantage for Canada of 14.3 percentage points.
  • when you add the federal rate and the average provincial rate (19 plus 12.5), you have a “Canada rate” of 31.5 per cent – the fourth-highest rate in the world: and twice as high as China’s most competitive rate.
  • The Conservative government took a lot of heat for incrementally lowering Canada’s corporate tax rate.
Carolyne Wang

Inequality Rising Across the Developed World - NYTimes.com - 0 views

economix.blogs.nytimes.com/...ing-across-the-developed-world

Income Inequality OECD Gini Coefficient Globalization

shared by Carolyne Wang on 02 Jun 11 - No Cached
  • A new report from the Organization for Economic Cooperation and Development finds that most of its member countries have seen their richest citizens get much, much richer in the last few decades, leading to a widening income gap.
    • Carolyne Wang
      Carolyne Wang on 02 Jun 11
       
      This graph shows that the Gini coefficients of most countries have increased, indicating increasing income inequality in the world as the value of the Gini coefficient approaches 1, which represents perfect income inequality.
  • As lower-paid workers have seen their incomes stagnate or even fall, the highest-paid workers have gotten steep raises.
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  • Changes in capital income — which primarily affects wealthier people — have contributed to rising inequality, although the impact has been relatively modest when compared to changes in labor income
    • Carolyne Wang
      Carolyne Wang on 02 Jun 11
       
      In this graph, you can see that there is a greater reduction in the number of hours worked by low income earners compared to the hours worked by high income earners. Fewer work hours combined with low wages leads to lower incomes for the poor and widens the divide between the rich and the poor.
  • Today, across developed countries, the average income of the richest 10 percent of the population is about nine times that of the poorest 10 percent, with much bigger multiples in Israel, Turkey, the United States, Chile and Mexico. In these last two countries, the income ratio is 27 to 1.
  • Besides outright layoffs, there have also been cuts in work hours (sometimes voluntary, sometimes not), disproportionately affecting lower-paid employees:
  • Globalization has had an impact, as rich countries have been sending more of their commodifiable, generally less-skilled jobs offshore, which has displaced many lower-paid workers in rich countries.
  • Technological improvements have also disproportionately benefited the pay of high-skilled workers. Regulatory changes, like loosening protections for temporary (and less-skilled) workers and lower unemployment benefits, may have also had an effect.
  • Over the years people have become more and more likely to marry mates who have similar incomes. “Today, 40 percent of couples in which both partners work belong to the same or neighboring earnings deciles, compared with 33 percent some 20 years ago,” the report says.
  • Surely to some extent this has to do with more women having earnings, period, and therefore having more women’s earning matching what their husbands make. But in any case if poor marry poor and rich marry rich, that magnifies the income gap effect. After all, if poor married rich, the result would be more evenly distributed wealth.
dylan huber

Economic news fl ash: Inequality is complex - 0 views

www.nationalpost.com/...story.html

Inequality Income OECD

shared by dylan huber on 02 Jun 11 - No Cached
  • in most places growth was more rapid at the top than at the bottom of the income distribution.
  • Canada's numbers were 0.9 and 1.6, the United States' 0.5 and 1.9.
  • incomes at the top grew more quickly than incomes at the bottom.
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  • deregulation, free trade, fiscal conservatism (yes, that would be neo-liberal conservatism) -are rewriting the post-war economic and social contract at the expense of the poor and to the benefit of the rich.
  • globalization may be playing a part.
  • Technology also plays a role
  • Changes in household size do seem to be part of the problem. In most countries, there are fewer people per household. Across the OECD, the number of households with only one head has risen from 15% to 20% of the total.
  • If more families are smaller and therefore not enjoying such economies of scale, more are going to be poorer.
Susan Cui

The Progressive Economics Forum » Housing on the knife's edge - 6 views

www.progressive-economics.ca/...ng-on-the-knife%e2%80%99s-edge

Housing Price Unstable Housing Market

shared by Susan Cui on 23 May 11 - No Cached
  • On the heels of multiple warnings from the Bank of Canada that Canadians have taken on too much household debt for comfort (we hold the dubious distinction of having the worst consumer debt to financial assets ratio among 20 OECD nations), the federal government announced
  • On the heels of multiple warnings from the Bank of Canada that Canadians have taken on too much household debt for comfort
  • the federal government announced
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  • these federal changes will have the greatest effect on middle class Canadians
  • With these moves, the federal government is starting to take seriously the risk of record-high housing prices and record-high household debt.
  • It will reduce the maximum insurable amortization period from 35 years to 30 years
  • to get back to basics and start saving again.
  • The optimistic possibility is that reverting to pre-2006 regulations could help put a lid on house prices
  • The pessimistic possibility is that trying to reign in mortgage debt and housing prices could burst the housing bubble that simultaneously exists in six Canadian cities.
  • It could also force Canadians
  • Between 1980 and 2001, housing prices in four of the six major markets in Canada (Edmonton, Calgary, Ottawa and Montreal) remained in a tight band of between $150,000 and $220,000 (in today’s dollars).
  • experienced three housing price declines between them brought on by interest rate hikes.
  • Toronto and Vancouver
  • When the bubbles burst, they wiped out in the worst case more than 35% of an average house’s value
  • Today it isn’t just Toronto and Vancouver; it’s all six major Canadian cities that are outside of the safety zone.
  • Canada’s housing market is still on a knife’s edge and isn’t clear which way we’ll fall.
Alejandro Enamorado

William Watson - Economic news flash: Inequality is complex | FP Comment | Financial Post - 0 views

opinion.financialpost.com/...ws-flash-inequality-is-complex

income inequality complex

shared by Alejandro Enamorado on 04 Jun 11 - No Cached
  • Almost everywhere there was growth at the bottom. But incomes at the top grew more quickly than incomes at the bottom. In effect, the rich were pulling away.
  • People who can handle the new technology on which most production is based are increasingly in demand and in many cases such brain (as opposed to brawn) workers are already well paid, so paying them even more only widens the income gap.
  • Across the OECD, the number of households with only one head has risen from 15% to 20% of the total. In calculating households’ real income, the statisticians try to factor in the economies of scale families enjoy. (Kids are cheaper by the dozen, yes, but also by twos and threes.) If more families are smaller and therefore not enjoying such economies of scale, more are going to be poorer.
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  • “assortative mating” also seems to blame. More than in the past, the same kinds of people — or at least people with similar earning power — are marrying each other. Doctors increasingly marry other doctors, rather than nurses. Today, 40% of couples in which both partners work have similar incomes, compared with only 33% in the 1980s.
Carolyne Wang

How paying people's way out of poverty can help us all - The Globe and Mail - 0 views

www.theglobeandmail.com/...singlepage

Income Inequality Tax Cuts Homelessness Set Annual Income Unemployment

shared by Carolyne Wang on 02 Jun 11 - No Cached
  • there’s an increasing awareness, among even the country’s most wealthy, that poverty reaches beyond the tables of the hungry and digs into their own pocketbooks
  • When people are poor, out of work or homeless, it hurts the bottom line of all Canadians. And as the country struggles to maintain a shaky recovery amid growing global economic uncertainty, that’s not a hit they can afford to take.
  • If Ottawa and the provinces fail to make this a priority, Tory Senator Hugh Segal predicts, “over time, we will begin to run out of the money that we need to deal with the demographic bulge because it will be consumed in the health care requirements of the poor, which will increase. It will be consumed in the costs of the illiteracy and unemployment which relate to poverty. ... And it'll be unsustainable.”
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  • It’s already on the radar of some provinces: One of Christy Clark’s first actions as B.C. Premier was to raise the province’s minimum wage for the first time in a decade and offer a tax cut for low-income families. Ontario has launched a sweeping review of social assistance programs that Community and Social Services Minister Madeleine Meilleur has admitted are failing the province’s neediest.
  • Despite Canada’s reputation for a strong social safety net, the country is becoming economically polarized. And the decades-old dominant economic dogma that growing wealth among society’s highest earners would trickle down to those less fortunate is being challenged by an alternative approach: Eliminate crushing poverty among the lowest earners, and wealth will trickle up.
  • The ranks of the working poor have swelled as minimum wages fail to keep pace with rising costs and social assistance levels drop.
  • The recession widened the chasm, and a subsequent recovery hasn’t closed it.
  • On paper, almost as many jobs have been added as were lost during the financial crisis. But they offer fewer hours and less pay – and some of the hardest-hit sectors aren’t coming back.
  • Food bank use hit a record high in 2010. Tellingly, more of the people using those food banks have jobs – they just don’t make enough to pay the bills or feed their families.
  • As the incomes of the country’s top earners have risen, the incomes of Canada’s lower- and middle-income earners have stagnated.
  • Tony Masciotra is diversifying himself. The Argentine-Canadian father of two went back to school immediately after being laid off from his tool and die job at Ford Motor Co. in Windsor three years ago.
  • “I have records of over 100 jobs I have applied for,” he said. “I have looked really hard. ... But I haven’t been able to get a job yet.
  • Mr. Masciotra is part of a growing group of skilled labourers on the brink. The métiers in which they’ve worked for years are no longer economically viable: Many well-paying blue-collar jobs are being replaced by minimum-wage, service-sector ones. And that’s causing significant shifts on both sides of the border, notes MIT economist David Autor.
  • It gets more complicated, and more economically detrimental, if the people who’ve lost jobs aren’t the ones being hired to new ones.
  • They enter what Robin Somerville of the Centre for Spatial Economics calls “structural unemployment.” And if they leave the workforce entirely, they fall off the radar of unemployment stats: The numbers look better precisely because they’re worse.
  • The drop is even more significant because more Canadians are putting off retirement. That should mean more people in the workforce. But it doesn’t: So many younger workers are dropping out entirely that they outweigh the older ones sticking around longer.
  • “If you’re losing opportunities in some areas, and you’re not replacing them with opportunities of equal or greater value, then the overall level of income in the economy is reduced. And the ability of people to go out and buy goods and services is reduced.”
  • Homelessness costs taxpayers money – in both foregone wealth and social service spending.
  • Some see a solution in a 40-year-old experiment: In the 1970s, Manitoba wanted to see what would happen if it guaranteed poor people in a few communities a set annual income.
  • The philosophy behind this is simple: People are more likely to stay in school, out of emergency rooms and out of jail; they contribute to the economy through their purchases; they’re more likely to move eventually above the poverty line and pay taxes.
  • The irony is that Canada already scores high compared to other OECD countries when it comes to helping the elderly. Where it falls short is where it matters: The working-age poor – the ones who should be contributing to the economy.
  • $134,000 Estimated amount for emergency shelter, emergency hospital care, law enforcement and other social services for one homeless person in Calgary, for one year
  • $34,000 Estimated cost to proide supportive housing for one person in Calgary, for one year
  • $12,555 Average cost of hospital stay for non-homeless patient at St. Michael's Hospital in Toronto
  • $15,114 Average cost of hospital stay for homeless patient at St. Michael's Hospital in Toronto
Alejandro Enamorado

Income Inequality Around the World Is a Failure of Capitalism - Kentaro Toyama - Busine... - 0 views

www.theatlantic.com/...238837

inequality income capitalism

shared by Alejandro Enamorado on 06 Jun 11 - No Cached
  • But inequality is rising in most developed countries, literally upending the Kuznets curve
  • The Kuznets Curve, named after Nobel Laureate Simon Kuznets, predicts that as nations become wealthier, inequality initially rises and then declines, like a single squeeze of an accordion.
  • The OECD considers several reasons why this might be, including: increases in more people working part-time; increases in investment-based income among richer households; and even rich folks marrying each other and doubling up on wealth accumulated at the top.
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  • the dominant reason is that we're experiencing another labor revolution, a transition from low-skill industrial work to high-skill knowledge work. High-skilled workers with jobs that cannot be off-shored or automated are being paid more compared with low-skilled workers.
  • Policies that promote the up-skilling of the workforce are therefore key factors to reverse the trend to further growing inequality." The only way to achieve fairness in a meritocracy is to provide more equal opportunities for everyone to attain merit.
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