Main menu:

History of RPE Thought

Posts by Tag

RSS New from the CCPA

  • Kate McInturff's Prebudget Presentation to FINA, 2017 July 30, 2018
    Canadian Centre for Policy Alternatives
  • In loving memory of Kate McInturff July 30, 2018
    On July 27, 2018, CCPA Senior Researcher Kate McInturff passed away. The CCPA mourns the devastating loss of our colleague and friend. Kate will be remembered as a feminist trailblazer in public policy and gender-based research. Our hearts go out to her family. Kate’s colleagues, collaborators, and countless organizations across Canada are stronger because of her […]
    Canadian Centre for Policy Alternatives
  • Debunking myths about proportional representation July 25, 2018
    This fall, British Columbians will get to vote on whether we want a new electoral system for our province. What an incredible opportunity. Between October 22 and November 30, BC voters will be able to vote in a mail-in referendum. The ballot will look something like this: We at the CCPA-BC are big fans of […]
    Canadian Centre for Policy Alternatives
  • Canada’s fossil-fuelled pensions June 22, 2018
    The British Columbia Investment Management Corporation is the steward of BC’s public pensions, but bankrolls companies whose current business models exceed the climate change targets agreed to in the Paris Agreement to which Canada is a signatory. The pensions of over 500,000 British Columbians and assets worth $135 billion are managed by the Corporation—-one of Canada's largest […]
    Canadian Centre for Policy Alternatives
  • Imagine a Winnipeg...2018 Alternative Municipal Budget June 18, 2018
    Climate change; stagnant global economic growth; political polarization; growing inequality.  Our city finds itself dealing with all these issues, and more at once. The 2018 Alternative Municipal Budget (AMB) is a community response that shows how the city can deal with all these issues and balance the budget.
    Canadian Centre for Policy Alternatives
Progressive Bloggers

Meta

Recent Blog Posts

Posts by Author

Recent Blog Comments

The Progressive Economics Forum

The Benefits of Public Spending

A year and a half ago I published an updated study on tax incidence in Canada. It found that the Canadian tax system is progressive up to the middle of the income distribution, then flattens out before becoming regressive at the very top. (Interestingly, a short piece on the US tax system by Citizens for Tax Justice just came out the other day. They come to a roughly similar conclusion, although the US system is progressive further up the distribution before becoming regressive; ultimately it is hard to compare due to differences in methodology.)

Of course, taxation is only one side of the equation. How progressive is the other side – public spending – in Canada? The CCPA revealed an answer to this question (that has been keeping bureaucrats at the Ministry of Finance awake in the middle of the night) by Hugh Mackenzie and Richard Shillington. Canada’s Quiet Bargain: The Benefits of Public Spending finds that, on average, Canadians benefit by $17,000 per year from public services, with more than half of that coming from health care, education and transfer payments. The benefit is much higher than that for the lowest income groups, then the average benefit (in dollar terms) flattens out through the remainder of the distribution. The authors also break these numbers down by level of government and category of public spending.

My only complaint is that the authors do not present their results by deciles and as a percentage of income, although the latter is easily approximated from the figures. Combined with my study, it shows that taxes, transfers and public spending together are highly progressive through a good chunk (up to the seventh or eighth decile) of the distribution. After that it is harder to tell if the progressive result vis-a-vis income is enough to offset the regressive taxation incidence within the top decile. This next step would enable what is called a “full incidence” framework of the impact of the public sector on distribution in Canada.

Anyway, the authors deserve a big hand, as this exercise is more complicated than one might think at first glance. And this is the first such study of expenditure incidence published in Canada (please tell me if I missed something). Plus, there is a neat calculator on the webpage linked above that allows you to calculate the benefits you receive from public spending.

Here is the CP story on the study via the Globe.

Enjoy and share:

Comments

Comment from Andrew Jackson
Time: April 15, 2009, 10:15 am

I forget the details but I believe the Department of Finance did a similar study many moons ago

Comment from Marc Lee
Time: April 15, 2009, 10:40 am

There was an internal study (I have a hard copy of it) but I do not think it was ever publicly released. If it was, I would like to know.

Write a comment





Related articles