Richer Than You

Richard (Rick) Mills

Ahead of the Herd

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As a general rule, the most successful man in life is the man who has the best information

 

Income inequality in Canada and the United States is on the rise. Read on to learn the real reason why…

 

The Canadian Centre for Policy Alternatives (CCPA) analysis of income inequality data shows the richest one percent of Canadians make $180,000 more today - adjusted for inflation - than they did in 1982.

 

The bottom 90 percent of Canadians saw income gains of only $1,700 over the same time period. In Vancouver, Toronto, and Montreal - Canada’s three largest cities - the bottom 90 percent actually make less today than they did in 1982.

 

 Most Canadians living in these cities have seen drops in income of:

  • Vancouver = $4,300
  • Toronto = $1,900
  • Montreal = $224

The richest one percent of Canadians in these three cities cities saw pay increases of:

  • Vancouver = $189,000
  • Toronto = $297,000
  • Montreal = $162,000

 

 

There are shocking disparities in income inequality in America…

 

David Cay Johnston, a Pulitzer Prize winner writing for Tax Analysts says that between 1966 and 2011, average inflation-adjusted income of the bottom 90 percent of US workers grew by just $59 while the income of the top 10 percent of workers grew by $116,071 - an astonishing, and frightening, 1,967 times the bottom 90 percent income growth rate.

 

The top one percent have enjoyed 81 percent of all the increased income since 2009.

 

The truly astonishing fact here is that it takes only $110k a year to be a top 10 percent earner in the U.S.! Getting into the top one percent is a stretch being over three times higher at $366k while joining the exclusive top .01 percent takes a whopping $8 million yearly income. In Canada, to join the top one percent club of 255,000 taxpayers, your income would have to have exceeded $200k. The threshold for the 25,475 Canadians that make up the top 0.1 percent was $685,000.00 of income.

Why such growth in income inequality?

Most would tell you, are telling you, it’s because…

 

Stocks and bonds are going up while the housing market remains flat. The top 10 percent have most of their wealth concentrated in stocks etc., less affluent households have their wealth in the value of their home - housing prices remain well below their 2006 peak while U.S. stock indices have all recently hit records.

 

Some will say falling top marginal tax rates in Canada explain part of the wealth disparity and income rise for the richest one per cent in that country.

 

A few will point out that the increase in inequality, in both countries, can also be attributed to institutional forces:

  • Declines in unionization rates
  • Stagnating minimum wage rates
  • Deregulation
  • National policies that favor the wealthy

All the reasons above show why the bottom 90 percent are getting poorer or at best have stagnating incomes but at best they explain only partially why the income gap is widening.

 

Consider what Stephen McNamee and Robert Miller, authors of The Meritocracy Myth have to say:

  • 20% of American households receive 50% of all available income  
  • The lowest 20% of households receive less than 4%
  • The top 5% of households receive 22% of all available income
  • The richest 1% of households account for 30% of all available net worth
  • Economic inequality in the U.S. is the highest among all industrial countries

 


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