Policy Framework Needed To Tackle Inequality

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    The federal government’s attempts to shift the tax burden from the middle class to the top one per cent will not be enough to address rising income inequality, says a book by the Institute for Research on Public Policy (IRPP) in collaboration with the Canadian Labour Market and Skills Researcher Network. The book, released in the wake of tax hikes on Canada’s wealthiest one per cent, concludes that the federal government is on the right track, but a more comprehensive approach is needed. Co-editor Craig Riddell says, “We have looked at this question from all angles and the bottom line is this: income inequality in Canada has increased substantially over this period, primarily due to the dramatic increases in income among top earners and the general lack of progress for the middle class and those at the bottom of the distribution. These trends are worrisome, especially given signs of decline in both income and intergenerational mobility over time.” For their conclusion, the editors of ‘Income Inequality: The Canadian Story’ support the proposed Canada Child Benefit and believe it should be complemented by a substantial expansion of the Working Income Tax Benefit. At the same time, Canada’s social assistance and employment insurance systems need to be substantially revamped to better address the needs of working-age adults who are falling through the gaps in the social safety net. They also conclude, however, that a more stable and longer-term solution to inequality will depend on policies that affect the distribution of income before taxes and transfers, such as education, minimum wages, and unionization, although they warn that doing more of the same in these areas is not the answer.