Toronto Star December 12, 2004

http://www.thestar.com/NASApp/cs/ContentServer?pagename=thestar/Layout/Article_Type1&c=Article&cid=1102719010440&call_pageid=968256290204&col=968350116795

Dec. 12, 2004. 01:00 AM

Rich walk ever taller in Canada

LINDA MCQUAIG

The C. D. Howe Institute recently set up a "Tax Competitiveness Centre" to
recommend far-reaching tax reforms. That spells trouble for most Canadians.

Unless you're a rich investor, hold onto your wallet. Whenever the
business-funded institute starts poking around in the tax system, it finds
lots of things to change — mostly for the benefit of the rich.

That means the rest of us end up paying more taxes, or face cuts to social
programs or benefits.

With the federal government trying to decide what to do with a surplus of
$9 billion, the institute has been full of ideas.

Its latest — advocated by Jack Mintz, head of its new Tax Competitiveness
Centre — is strikingly similar to one favoured by the Bush administration:

Lift the tax burden entirely off income from investments and place the full
tax burden on income from labour.

Not surprisingly, this idea is wildly popular among investors, who make up
the bulk of C.D. Howe members.

Of course, these investors represent only a tiny proportion of Canada's
taxpayers. But they tend to be highly effective at getting their way.

They've been particularly effective in the last few decades, as the power
of labour has declined and the power of corporations and investors has
risen sharply.

Rich Canadians have benefited enormously.

According to calculations by McMaster University economist Michael Veall,
the top-earning 1 per cent of Canadians have almost doubled their share of
the national income — from 7.6 per cent in 1980 to 13.6 per cent in 2000.

Osgoode Hall law professor Neil Brooks says the top-earning Canadians
haven't enjoyed such a large share of Canada's national income since the
1920s and 1930s, a time when Canada was often regarded as a plutocracy
(that is, a society ruled by the wealthy).

"Canada is once again at risk of becoming a plutocracy," says Brooks.

But mere statistics about inequality can suck the real-life drama out of
the story.

So Dutch statistician Jan Pen came up with a more vivid way to illustrate
inequality, by presenting the national distribution of income as a one-hour
parade in which everyone in the country marches and everyone's size is
determined by his or her income. The bigger the income, the taller the
marcher.

Here's what Canada's parade looks like:

For the first six minutes, the marchers are so small, it's hard to see
them. With average family incomes of about $10,000, they stand only about
one foot tall. The marchers get gradually taller.

When we reach the midpoint of the parade, they measure about 5 foot, 6
inches, with an income of $55,000 — the median Canadian family income.

After that, the marchers continue to increase gradually in height until the
last few minutes, when they shoot up dramatically to heights of 16, 17, 18
feet and more.

By the last few seconds, we see some extraordinary giants, such as John
Hunkin, chairman of CIBC, with an income of $13.8 million, measuring almost
1,380 feet high, and auto parts magnate Frank Stronach, father of Belinda,
with an income of $53.5 million, measuring just over a mile high!

But this parade only measures inequality of income. The more meaningful
measure is inequality of wealth — that is, financial assets.

So here's the same parade of Canadians, but this time with their height
measured in wealth, not income.

This time, the parade has been going for about 10 minutes before we even
realize it's begun — because those at the front aren't just tiny, they're
actually underground. (They own nothing of value and are net debtors).

At about 20 minutes, we see people the size of dwarfs, until the midpoint
of the parade, where marchers stand 5 foot 6 inches, with net wealth of
$81,000.

The rest of this parade progresses much like the income parade, until the
end, when we encounter even more colossal giants.

With less than one-tenth of a second to go, some of Canada's wealthiest men
stride past.

There's Ted Rogers, with assets of $1.7 billion, standing 21 miles high,
and Galen Weston, with assets of $9.7 billion, stretching up a full 121
miles. Finally, bringing up the rear, is Canada's richest man, Ken Thomson,
with $21.6 billion — towering a breathtaking 272 miles above us.

Ironically, one of the positions at the Tax Competitiveness Centre is named
after major donor George Weston Ltd., the company headed by Galen Weston,
Canada's second richest man.

If the centre gets its way, the tax burden will get a little lighter on
Galen Weston and on others with their heads above the clouds, even as it
falls a little heavier on those down here at ground level.

Linda McQuaig is a Toronto-based author and commentator.
[log in to unmask]