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The Progressive Economics Forum

Poverty – The 1% Solution

Statistics Canada provides free of charge a very rich set of data on income issues, including low income (aka poverty) in 20/20 format.

Here you can find data on the incidence of low income by four different measures; by family type; and by quite detailed geography. (You have to play around with the active dimension to get at all of the data. Clicking “show all” will indicate the total menu under a dimension.)

The data include statistics on the depth of low income ie the degree to which the incomes of a particular group in low income fall short of the relevant poverty line.

One measure provided is the shortfall of incomes of those in low income compared to the total income of the whole group.

One rather striking triple factoid is this.

In 2008, the incidence of low income for all persons in Canada measured by the LICO After Tax measure was 9.4%, and the average gap or income shortfall relative to the LICO AT line was 33%. That gap in turn is equivalent to 1% of the after tax income of all Canadians.

In short, we could eliminate poverty by shifting just 1% of our collective income to the almost one in ten Canadians living in low income.

Now just why is that so difficult to do?

(By the way, the 1% figure is the same if you prefer the Market Basket Measure of low income to the LICO line.)

Enjoy and share:

Comments

Comment from Travis Fast
Time: January 11, 2011, 4:29 pm

Andrew,

One little quibble with this statement:

“In short, we could eliminate poverty by shifting just 1% of our collective income to the almost one in ten Canadians living in low income.”

We could eliminate income poverty but not the poverty gap in the equality of opportunity from education on out. I agree though that it would not take much fiscal effort to eliminate income poverty. It would seem the main stumbling block is rather ideological.

That said Hugh Segal, was sounding very reasonable on welfare reform a couple of weeks back on the CBC. Although he was perhaps just working on his desire to cleanse the state of unionised public sector workers. But if meaningful welfare reform along with the elimination of income poverty could be managed in one shot the resources could be freed-up to enhance existing or fund new public services that are directed at alleviating other aspects of poverty. Most welfare case workers I know would like to get out the income monitoring check writing business and do real social work.

Comment from duncan cameron
Time: January 11, 2011, 7:22 pm

Finding ways to illustrate the minimal cost of reducing income poverty is super important, and this is as good a metric as I have seen. I hope the AFB will make something out of it. We are still a long way from getting agreement around an acceptable minimum.
The larger question is the link between income and work. Overall we have to widen the situations in which generous income support is considered appropriate.

Comment from Purple Library Guy
Time: January 12, 2011, 4:54 pm

I assume that was a rhetorical question, but I’ll answer it anyway. It’s difficult to do because in our society poverty (like much of the unemployment) is not an unfortunate accident but a deliberate policy. The poor and unemployed constitute an example with which to threaten the middle class, to scare them out of resisting when their wages are squeezed and their working conditions worsened. They are a tool of “labour force discipline” that shift the relative bargaining power of capital and labour, allowing capital to impose “flexibility”.

Mind you, the rich still wouldn’t be about to let go of that 1% even if it weren’t for that. Every 1% counts when your goal is everything. But the real point is the other 1%s that it helps them pick from the pockets of the middle percentiles, and the increased social control poverty allows them.

Comment from Tom Simunovic
Time: January 26, 2011, 5:10 pm

Guaranteed income for everyone is the only cost effective solution of poverty and bureaucratic abuses.
All cocial programs can be eliminated by taxing national product 10% and then redistributing the proceeds equally to everyone, without any questions.

Comment from pjmora
Time: February 1, 2011, 5:15 pm

According to Jack E. Biddell, povery could be abolished and all social services could be paid by a 1% tax on “all” transactions. This tax could be easily collected by all banks at the time of the transaction.

Comment from Bob Eaton
Time: October 26, 2011, 9:09 pm

To answer Andrew’s quiestion directly, I think it would be dead easy and very economical because we already have the infrastructure in place to do that:
o We have an income tax system.
o We already pay (mostly to the poor) GST refunds.

Not only that but every bit of the money would be spent thereby stimulating the economy…

Wonder why that isn’t a political party’s policy…

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