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Alberta’s Income Inequality the Worst in Canada

Return to progressive tax would help reverse troubling trend

The gap between the rich and the poor in Alberta is the widest in the country, and the disparity between those Albertans at the top of the income ladder and those at the bottom has been growing faster than in any other province, according to the findings of a new fact sheet released today by the Parkland Institute.

“From Gap to Chasm: Alberta’s Increasing Income Inequality” compares levels of income inequality between Alberta and the other provinces using two different measures. It found that Alberta went from being roughly comparable to national averages of income inequality levels in 1990 to being the worst province by 2011, the most recent year for which data is available.

“The data show clearly that Alberta is now the most unequal province in Canada, and that the gap between those at the top and those at the bottom widened in Alberta over the past 20 years twice as much as the national average,” explains author and public finance economist Greg Flanagan. “Equally worrisome is the fact that because Alberta is the only province without a progressive taxation system, Alberta saw the least improvement in income equality after taxes.”

Another measure used in Flanagan’s research reveals that the share of total income enjoyed by the top 10% of income earners in Alberta climbed by almost 30% between 1992 and 2007, peaking at 40.5% of all income before dipping slightly following the 2008 recession. Meanwhile, the share of total income that went to the bottom half of earners in the province dropped over the same period, and has flatlined at or below 16% of total income since 2000.

“All the parties in this election should be presenting plans to address what is clearly a serious inequality problem in Alberta, and one that is getting worse, not better,” says Flanagan. “One of the contributing factors is Alberta’s single-rate 10% taxation system. While the budget that was tabled in March proposed a moderate level of progressivity, a much more significant shift to progressive taxation in Alberta is required to reverse this troubling trend.”

The Parkland Institute is a non-partisan public policy research institute in the Faculty of Arts at the University of Alberta. From Gap to Chasm: Alberta’s Increasing Income Inequality is available for download on Parkland’s website at parklandinstitute.ca.

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