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.)
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.Â And they underline that the child poverty rate is set to soar again with the onset of recession
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 aÂ 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 â€“ not the poor or middle class â€“ 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. )Â 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.