1. Lars Osberg Economics Department Dalhousie University ACEA – October 24, 2008

3.  “growth is largely limited to the top 5% which in turn has been driven largely by increases to the incomes of the top 1%”  “marginal increase in the stability of the high income population”  No Evidence for: “Greater Returns for Greater Risk” H o

4. Source: Statistics Canada, Special Tabulations from the LAD.

11. Total Tax Rate in Canada – “Flat” & declining Lee, Marc (2007) E roding Tax Fairness: Tax Incidence in Canada, 1990 to 2005 Canadian Centre for Policy Alternatives, Toronto November 2007

12. Tax cuts greatest at top Income tax crucial to progressivity of system

13.  Fundamental change in tax structure ◦ Would remove sole progressive element in tax system ◦ Total tax burden then becomes regressive ◦ “Middle 90%” – no increase in income for 30 years  Recessionary losses loom in 2008-2011  Dramatic income rise of top percentile imply major personal gains from “flat tax” ◦ Corresponding losses imposed on poorer neighbours  Politics in the coming recession – rhetoric of “flat tax” rings hollow

15.  Brian Murphy, Paul Roberts and Michael Wolfson (2007) “High-income Canadians” Perspectives on Labour and Income – September 2007 Pages 5 to 17 Statistics Canada Cat No. 75-001-XIE  Statistics Canada (1998) Income Distribution by Size in Canada Catalogue No. 13-207.  CANSIM Table 202-0701V1546461 to V1546465  J.R. Podoluk (1968)Incomes of Canadians, Dominion Bureau of Statistics.

17.  Canada, UK, US, France – top income shares fell sharply during WWII & stayed down for 30 years  1980-2000: sharp increase in top end shares ◦ Concentrated in top 1% & even larger for top 0.1%  Not driven by tax law changes - no coincidence in trends  But big decline in top marginal rates  Similar trends for individual & family income  Not result of greater spousal income correlation  Income mobility – same or decrease since 1980  Same concentration trend in 3 & 5 year average income  Probability still in top 0.1% approx same 1982-2000  Labour income increase greatest in top 1% -  Less among Francophone Quebecers  Lags US increase in top CEO compensation ◦ WHY?  Skill biased tech change cannot explain concentration of income gains  Emigration option to USA & ‘Brain Drain’ – the ‘threat effect’ & keeping up with US CEO salaries