End Child Poverty: Tax the Rich

There’s a great op ed in today’s Globe and Mail by Ed Broadbent, marking the twentieth anniversary of the unanimous passage by the House of Commons of his eve of retirement resolution to abolish child poverty by 2000. (Ed did, of ourse, later return to the House.)

http://www.theglobeandmail.com/news/opinions/how-to-end-child-poverty-tax-the-rich/article1374806/

As Ed argues:

“We thought an 11-year agenda to virtually overcome child poverty was quite plausible, and the 1990s did turn out to be one of the very best decades in economic growth. According to the trickle-down soothsayers in politics, the media and the academic world, we all should have benefited. Instead, 20 years after the motion was passed, Canada’s level of poverty is virtually unchanged.

Almost all income growth has gone to the top 10 per cent, and their share of the national income has substantially increased. In contrast, after two decades, the child-poverty rate has dropped a mere two percentage points, to 9.5 per cent.”

Today’s anniversary report card on child poverty from Campaign 2000 details the message of little or no progress even in times of apparent prosperity.  And they underline that the child poverty rate is set to soar again with the onset of recession

http://www.campaign2000.ca/reportCards/national/2009EnglishC2000NationalReportCard.pdf

The report card calls for a full suite of policy measures, including increased child benefits, higher minimum wages, improved access to EI, and investments in affordable housing and child care.

In his op ed and in a brief presentation to a forum on Parliament Hill this morning, Ed called for renewed political will to act on a number of fronts, and specifically proposed a  progressive change in income taxes to fund a non negligible transfer of income from rich to poor.

“On the 20th anniversary of a noble parliamentary resolution, let’s acknowledge our failure. And then reverse course. Instead of an income-tax policy favouring the rich, let’s do the opposite. For a start, let’s get our poor, hard-working families what they need immediately: more money.

For more than a decade, it is upper-income Canadians – not the poor or middle class – who have disproportionately benefited from globalization and deregulation. Therefore, I say that increasing their share of income taxes would be based on neither greed nor class envy. It should be called justice.

In the next budget, let’s impose a six-point increase in income tax on those earning more than $250,000 a year (whose average taxable income is $600,000). While leaving them with very high incomes, this would provide $3.7-billion in additional revenue. All of this should be used to increase the National Child Benefit Supplement and thus help our poorest children. With this single act, we would significantly make up for two decades of neglect and make a major dent in child poverty.”

It is indeed quite stunning just how much income ends up in the hands of those at the very top. 2007 tax data show that the 177,280 persons declaring more than $250,000 in income made up just 0.01% of all tax filers – but had a total income of $105 Billion. (This figure includes the non taxable portion of capital gains income and would be even higher if we adjusted for the special tax treatment of dividends. )  http://www.cra-arc.gc.ca/gncy/stts/gb07/pst/ntrm/pdf/table2a-eng.pdf Increasing the marginal tax rate above a very high income threshold would indeed generate a significant increase in revenues.

At the other end of the spectrum, the National Child Benefit Supplement goes to low income families with children. The current maximum is about $2,000 per child (it varies with the number of children) and is phased out at a bit over $20,000 for families with two kids. Doubling the supplement would bring total child benefits (the base plus the supplement) to close to the $5,000 per child goal of the Caledon Institute which would make a very serious dent in child poverty.

4 comments

  • I am not sure if this is my David Harvey course that I am in the midst of (such a great resource online- wow he is quite a gifted man) or what it is.

    BUt when you think about such things as child poverty it makes us wonder very loudly why it is that such goals cannot be met.

    Simply put- we have so much production capacity that is unused from a economic sense, why is it that such necessities that make up for child poverty can not be addressed.

    Under our current economic system, if you cannot commodify it, you can’t solve it! If you can easily commodify it then you have a good chance of solving you problem with private sector productive capacities.

    So maybe we should privatize child poverty, and let the private sector to make profit off of ensuring kids are feed, clothed and looked after in proper day care.

    Somehow I do believe that is the only way such poverty will be eradicated if we are left onlt with the tools currently available.

    It surely must be a matter of priority for the public sector and the wealth transfer problem. Cause why is it we can afford to fight expensive wars, but cannot fight child poverty. Pure and simple, poverty under any system could be dealt with given the priority. Communism, socialism, capitalism, they all had poverty to one degree or another, but the question is, what level causes the contradictions to be loud enough to make poverty an issue with a whole lot more social priority.

    Even further thinking about the issue, why is it we sit here with all this productive capacity, yet world poverty still exists. We are merely dismantling capacity as we sit here right his minute- because apparently it is not profitable to feed the poor.

    How is it that we allow such ambivalence and small thinking to persist on the world stage.

    Given the cash that was just made available to some of the richest in this world through biggest bailouts in the history of banking, it does make one really scratch the middle of ones back- when trillions can be found to stave off poverty for bankers. All a matter of priority- I do believe under a capitalist or even actually existing socialism, poverty will always be here.

    How is it that we can afford to allow those with so much cash to be bailed out, yet a hungry child still hungers through the night- here in Canada, and around the world. How much stuff does one person need! and that is the question it comes down to- how much, under the current system be lawfully allowed to be taxed away to meet these goals.

    Under another system- it would be a matter of expanding capacity not based upon mere profit motives. Despite all the rhetoric, our system fails badly when profits are not attached to the problem at hand. And even when profits are affixed to the problem, it can barely make head way into solving the complexity.

    paul

  • I’ve been critical of a lot of stuff I’ve read on this blog recently, but I like this proposal. Specifically, there’s a complete cost-benefit analysis. It’s one thing to say how beneficial a particular initiative is (in this case, raising benefits to poor children) but so often there’s not a complete accounting for how we’d pay for it.

    It’s nice to see that accounting done here, and it seems pretty reasonable.

  • It’s definitely important to give back and help those who are less fortunate than ourselves. Far too often the wealth is not distributed to those in need.

    Of course it can be far too easy to say “oh well,” but as a society of individuals we need to come together and breath life into an issue that has been a persistent problem for some time.

    If we were in the same situation we would call for help and we should be lucky that we don’t need the assistance and that we can survive on our own… but not everyone is as lucky.

    For the new year we all need to make the effort and strive for “change,” because that “change” is what will make us better human beings.

    TJ

  • I am afraid any large corporation would squeal at having to pay their fair share of taxes. Because, if that should happen, big business would pay another political party, that would favor big business. Canada, is so corrupt, and that is why this country is failing. What happens, when the cannon fodder, can no longer support the corruption? Unfortunately, corruption pays very well, so there would be a hell of a fight, even to try make the tax system more fair. The first sign of a recession, is, when the government bails out big corporations, and to hell with the every day guy, let them eat cake.

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