OTTAWA — Income inequality was alternately described Tuesday as “a dangerous and socially harmful thing” and an overblown fear as parliamentarians began their study of the issue.
“Excessive inequality is socially corrosive,” said Finn Poschmann, vice-president of the C.D. Howe Institute in Toronto.
“It makes us unhappy, it undermines institutions, it makes it difficult to govern.”
Poschmann was one of several experts who testified before Parliament’s finance committee on the first of three days of studying income inequality.
The study, first proposed by Kings-Hants MP Scott Brison, was almost shot down in the House of Commons last year by the Conservative government. But it was saved when a number of Conservative MPs voted with the opposition in favour of discussing the issue.
The conflicted origins of the study were echoed in the first day of hearings, when two separate groups of experts largely argued opposing points.
The first group included Diana Carney, vice-president of research for progressive think-tank Canada 2020. She has become an icon of the movement against income inequality, partly because she is married to former Bank of Canada governor Mark Carney.
“It’s our view at Canada 2020 that it matters a lot, that our attitudes towards inequality go to the very heart of the type of society that we wish to build,” she said.
Carney argued that income inequality, taken too far, leads to the deeper issue of inequality of opportunity — essentially that poor people are unable to escape poverty.
She was backed up by Craig Alexander, chief economist and senior vice-president of the TD Bank Financial Group.
“Moderate income inequality can actually be healthy,” he said. “Excessive income inequality can actually create enormous social, health and economic strains.”
Alexander pointed to barriers in the system, such as the employment insurance clawback, that act as a disincentive for people moving out of poverty.
But there was considerable debate on the question of whether people are facing inequality of opportunity in Canada.
Charles Lammam of the Fraser Institute’s Vancouver office argued that fears about income inequality are overblown because people become wealthier over time and most studies ignore that.
Instead of looking at the overall numbers of how many rich and poor people there are, you have to look at specific people, he said.
Lammam authored a study that argued most people in the lowest 20 per cent of wealth actually move to higher income brackets over time.
“If we don’t understand that people’s income are changing over time, I think that we can get misled by looking at snapshots of the income distribution, which is what most people do,” he said.
Lammam argued against higher taxes on the rich, saying it would only discourage people from moving out of lower income brackets.
Representatives from the Canadian Taxpayers Federation and the Montreal Economic Institute also argued that fears of income inequality are overblown.
At times, the questions from MPs verged on overt partisanship. Toronto Conservative MP Mark Adler at one point tried to goad Poschmann into denouncing former Liberal prime minister Pierre Elliott Trudeau’s Just Society plan to lessen income inequality.
“Has the Just Society experiment of the 1970s been a dismal failure, and did the ’90s governing party bring us back to the Just Society?” Adler said.
While Poschmann’s answer dodged around politics — “Mr. Chairman, some of us know a loaded question when we see one” — he highlighted one area in which Trudeau and every prime minister since has failed: First Nations education.
While young people across Canada have seen a large jump in opportunities in recent decades, a huge portion of First Nations youth do not finish high school and show “absolutely appalling” test scores that suggest a failure of the system, Poschmann said.
Manny Jules, chief commissioner of the First Nations Tax Commission, proposed a solution. He said the government should create a voluntary system for reserves to opt out of the Indian Act and own reserve properties in their own name.
“We need to relearn how to build and run a tax system, build infrastructure, facilitate investment and to be an entrepreneurial people,” Jules said.
Original Article
Source: thechronicleherald.ca
Author: PAUL McLEOD
“Excessive inequality is socially corrosive,” said Finn Poschmann, vice-president of the C.D. Howe Institute in Toronto.
“It makes us unhappy, it undermines institutions, it makes it difficult to govern.”
Poschmann was one of several experts who testified before Parliament’s finance committee on the first of three days of studying income inequality.
The study, first proposed by Kings-Hants MP Scott Brison, was almost shot down in the House of Commons last year by the Conservative government. But it was saved when a number of Conservative MPs voted with the opposition in favour of discussing the issue.
The conflicted origins of the study were echoed in the first day of hearings, when two separate groups of experts largely argued opposing points.
The first group included Diana Carney, vice-president of research for progressive think-tank Canada 2020. She has become an icon of the movement against income inequality, partly because she is married to former Bank of Canada governor Mark Carney.
“It’s our view at Canada 2020 that it matters a lot, that our attitudes towards inequality go to the very heart of the type of society that we wish to build,” she said.
Carney argued that income inequality, taken too far, leads to the deeper issue of inequality of opportunity — essentially that poor people are unable to escape poverty.
She was backed up by Craig Alexander, chief economist and senior vice-president of the TD Bank Financial Group.
“Moderate income inequality can actually be healthy,” he said. “Excessive income inequality can actually create enormous social, health and economic strains.”
Alexander pointed to barriers in the system, such as the employment insurance clawback, that act as a disincentive for people moving out of poverty.
But there was considerable debate on the question of whether people are facing inequality of opportunity in Canada.
Charles Lammam of the Fraser Institute’s Vancouver office argued that fears about income inequality are overblown because people become wealthier over time and most studies ignore that.
Instead of looking at the overall numbers of how many rich and poor people there are, you have to look at specific people, he said.
Lammam authored a study that argued most people in the lowest 20 per cent of wealth actually move to higher income brackets over time.
“If we don’t understand that people’s income are changing over time, I think that we can get misled by looking at snapshots of the income distribution, which is what most people do,” he said.
Lammam argued against higher taxes on the rich, saying it would only discourage people from moving out of lower income brackets.
Representatives from the Canadian Taxpayers Federation and the Montreal Economic Institute also argued that fears of income inequality are overblown.
At times, the questions from MPs verged on overt partisanship. Toronto Conservative MP Mark Adler at one point tried to goad Poschmann into denouncing former Liberal prime minister Pierre Elliott Trudeau’s Just Society plan to lessen income inequality.
“Has the Just Society experiment of the 1970s been a dismal failure, and did the ’90s governing party bring us back to the Just Society?” Adler said.
While Poschmann’s answer dodged around politics — “Mr. Chairman, some of us know a loaded question when we see one” — he highlighted one area in which Trudeau and every prime minister since has failed: First Nations education.
While young people across Canada have seen a large jump in opportunities in recent decades, a huge portion of First Nations youth do not finish high school and show “absolutely appalling” test scores that suggest a failure of the system, Poschmann said.
Manny Jules, chief commissioner of the First Nations Tax Commission, proposed a solution. He said the government should create a voluntary system for reserves to opt out of the Indian Act and own reserve properties in their own name.
“We need to relearn how to build and run a tax system, build infrastructure, facilitate investment and to be an entrepreneurial people,” Jules said.
Original Article
Source: thechronicleherald.ca
Author: PAUL McLEOD
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