Inequality: read this now

It’s rare that I recommend a Vancouver Sun story.  I’m sweating here but I have to urge you to check out Pete McMartin’s column on inequality in today’s paper.

McMartin goes well beyond the usual shrug of the shoulders – see Jeffery Simpson – found on the opinion pages of Canada’s mainstream media to review solutions favoured by a group of UBC economists.

And it’s good.  The solutions he finds are by and large the right ones.

They fall into three areas; taxation, redistribution, and bargaining power.   All should be on the menu of any politician trying to change the trend of growing income inequality.

Taxation and redistribution are obvious.  The UBC group calls for a more progressive income tax – to get at some of the growing share of economic growth almost entirely scooped by Canada’s upper crust over the last two decades.

In turn they suggest that more be invested in those who have suffered most from growing inequality – younger workers, young families, single parents and low income earners.  That’s the redistribution part.

More provocative are the labour market reforms they advocate, including an end to the foreign worker program – which artificially lowers wages – and an end to anti-union programs and policies.

It’s risky business proposing those reforms.  But a key part of the enormous growth of inequality in Canada are anti-union laws that reduce the bargaining power of average workers.

The mix proposed by these four economists is pretty good.  There’s only one thing missing – a shift back to income tax and away from consumption taxes as a way of raising revenue, because when it comes to inequality not all taxes are equal.

BC leads the country in growing inequality.  It also leads in the shift away from a progressive income tax and towards regressive consumer taxes – like the gas tax -according to figures reported by the Independent Panel on the HST.

Back in 2001 the BC Liberals told us they’d lower income taxes and they did, mostly for the rich.  What they didn’t tell us is they’d raise fees and consumption taxes to compensate.

The result of this policy shift – income tax cuts concentrated at the top end combined with consumption tax increases is that middle and low income earners pay a more of their incomes in taxes than higher income earners.  Or to put it simply, the result is more inequality.

Inequality sounds obscure.  But its affect is real.   Just about every choice made by somebody is at least partly determined by the amount of money they have in the bank or in their back pocket.

Just yesterday, BC’s education minister announced a new direction which included encouraging students to bring their smartphones and ipads into the classroom.

But what if parents can’t afford a smartphone or an ipad for their kids?  What kind of education is open to their children?  What kind of jobs will that lead to?

Pete McMartin deserves a shout out for raising these issues in a newspaper known for championing unconstrained income inequality.

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