Friday, October 19, 2007

AFL Demo Falls Flat On Its Face

Ouch. Suppose we called a demonstration and no one came?

The majority of the 15 workers that did show up were probably Wobblies who have been active on every wildcat picket line over this last month. Dual carders, folks who belong to both the IWW and their regular trade union. The IWW has been gaining support amongst the building trades union rank and file pissed off at their union's lack of democracy.

While the union bosses couldn't organize a rally, demo, or meeting bigger than a gathering in a phone booth, cause they are pork choppers, far removed from the rank and file. And when they do organize rallies its the paid union staff that show up.

This is not only disappointing but shows that the real resistance of the workers in Alberta not only to our bad labour laws, but to the Oil royalty rip off will be led by rank and file militants not the labour bureaucracy. That was what made last months wildcat actions successful. But as soon as the labour bureaucrats joined in well it died.

While the Oil Bosses bused in their workers and paid them to attend their Anti-Royalty Rally at the Leg on Wednesday the AFL's excuse is that their demo was poorly attended cause it was payday. Well that was a brilliant move wasn't it. The pork choppers don't even know when pay day is up in Fort McMurray. Or when shift changes occur. Talk about being out of touch. They should have just organized a counter demo in Edmonton instead.

Unions drive message home despite poor turnout

By CAROL CHRISTIAN
Fort McMurray Today staff
Friday October 19, 2007

It may have been a tiny crowd at a royalty rally for oilsands workers Thursday night but that didn’t undermine their support for changes to the current royalty system.
About 15 people attended the rally hosted by the Alberta Federation of Labour (AFL). Gil McGowan, AFL president, wasn’t really surprised at the turnout given it was payday, and shift change day so many workers had already left town.
He explained the AFL went ahead with the meeting because of concerns Premier Ed Stelmach was going to announce his decision on the royalty panel recommendations today. That didn’t happen at press time; the premier is rumoured to have television airtime booked next Wednesday.
McGowan presented his top 10 reasons why big business won’t leave Alberta even though companies are “rattling their sabres” and threatening to pull out of the province.
“The oil is here. They’re going to stay here because there’s money to be made and there’s nowhere else to go,” stated McGowan. Other reasons included that oil companies have always known the government has the right to unilaterally raise royalties and companies are not going to turn their backs on billions of dollars of investments already made here.
He mentioned other jurisdictions like Alaska and Britain have increased royalty rates by as much as 80 per cent yet it hasn’t scared off investment. The royalty review panel is recommending a 20 per cent increase for Alberta.
McGowan pointed out some of the same companies threatening to leave Alberta continue to invest in Venezuela where royalties are higher than here and profit margins lower.
“We don’t have to be intimidated by the scare tactics being employed by big oil,” said McGowan.

While the premier is talking tough, there’s still a concern about closed door meetings between government and big oil companies, he said. Believing the companies are trying to intimate the government McGowan is urging workers and Albertans to tell their MLAs not to lose their nerve.
“We have to help them get the backbone they need to stand up to big oil,” he stated. “The time for accepting bargain basement royalties is over.” If government cows to oil companies, McGowan added Albertans can show their displeasure at the ballot box.
Petition letters to the premier available at the rally said the royalty report should be seen as a bare minimum for action. Anything less than that is a failure by government to stand up for the best interests of Albertans.
“Any effort to water down the recommendations would be a unnecessary capitulation to big oil,” said McGowan.
The local rally was held for workers in contrast to the one the day before at the legislature in Edmonton organized by business. Referring to that rally as a “paid political commercial brought to you by ownership,” Barry Salmon, an International Brotherhood of Electrical Workers (IBEW) official, said owners are more interested in their own bottom line than the best interests of Albertans.
Salmon said the panel came up with a mediocre report that was already a compromise favouring big oil.
This was intended to set a marker so when government introduces its decision, it will be seen as a compromise. “Albertans will believe its acceptable because they will be told it’s a compromise between the royalty recommendations and big oil demands.
“We’re being had,” he said, adding Albertans are now involved in a shell game with the government and big oil.
As part of their scare tactics, oil companies are threatening some 19,000 jobs, said Mel Kraley, IBEW assistant business manager. Yet, he noted, there some 21,000 temporary foreign workers in Alberta. McGowan believes the number of workers is closer to 60,000.
Several workers in attendance took the opportunity to express their concerns.
Ron Davidovich said the government should “feel ashamed” for finally asking for royalty review. “We’ve got billions of dollars lost in this province,” he added at a time when seniors can’t get the care they need and are struggling on fixed incomes. The extra $2 billion from increased royalties could help seniors among other things, he said.
“As soon as we encroach on them (oil companies) ... we hear some nice stories,” said Roland Lefort, an official with the Communication, Energy and Paperworkers union.
He added when the Kyoto Accord was first introduced, oil companies bemoaned the financial hardship it would cause. As a result, “Albertans believed Kyoto was going to destroy the economy.” The royalty review is no different, Lefort said.
Don't Let Big Oil Set Our Royalty Rates make sure Ed hears from you

See:

I Am Malcontent

Who Will Decide About Royalties

Alberta's Tar Sands Gamble

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How Do You Spell Sell Out?

B U Z Z.

CAW shelves right to strike

In Alberta workers are fighting to change our regressive labour laws to allow the right to strike which was recognized this summer by the Supreme Court. In Ontario workers are being sold out by once progressive talking union leader Buzz Hargrove. All so he can increase his declining membership and assure his pork choppers their salaries. It is sending a chill through out the Canadian labour movement.

Hey maybe Buzz would like to move to Alberta, since the bosses here would love this kind of agreement. In fact thats why CLAC is so popular with employers out here. So what's the difference between CAW and the employee management consultants from CLAC....nothing.

If workers vote in favour of the CAW and the contract at their plant, any subsequent collective bargaining disputes would be resolved through binding arbitration rather than a walkout by the union or a lockout by the company.

The fundamental right to withdraw labour is a provision that unions have protected vigorously for decades as its only ultimate power against management.

But the CAW's decision to give up the right to strike triggered criticism from other labour leaders.

"It's a pretty drastic measure and ultimately is not good for workers because they no longer have the right to withdraw their labour," said Wayne Samuelson, president of the Ontario Federation of Labour.

"It's pretty fundamental to the labour movement and collective bargaining. This is not good, especially if it's exchanged for voluntary recognition of the union. It certainly sets a precedent that working people need to be concerned about."

"Hargrove is creating CAW-employer associations," added Wayne Fraser, Ontario-Atlantic director of the United Steelworkers. "What's to stop other employers, especially Magna competitors, from rightfully asking the CAW for the same no-strike right."

Hargrove said it wouldn't be possible for other auto-parts companies with a union to demand the same provision. However, a non-union employer could get a similar arrangement, he said. "Invite us in."

Hargrove recognizes the need for his business union to adapt to modern business practices, mergers and acquisitions to expand the base of capital (union dues). This began when CAW raided SEIU for its members, claiming it was doing it in the name of democratic social unionism. Which got CAW temporarily removed from the CLC. AUPE in Alberta followed CAW's lead and left the AFL and CLC declaring itself an indepedent union, with support from Buzz.

Neither of these moves were not about democracy or workers rights, since both unions have hired staff and their own management structures. Rather it was about money. In the CAW's case busting a rival union and gaining its members, in AUPE's case retaining affiliation fees they could use themselves.

Now Buzz has gone even further with the potential of 20,000 dues paying workers with a forced dues check off, the Rand Formula, and no right to strike, he will be able to use those funds to balance the books as more attrition hits the auto sector and more of his members retire.

It's a cynical and shallow motive but one that should be expected by business unions that no longer see their purpose as overthrowing capitalism but as getting their members the best deal they can under capitalism.

Once upon a time unions like CAW and others called themselves Social Unions
somehow different from their American International business union counterparts. They were about fighting globalization and neo-liberalism. Buzz has repeatedly claimed he is left wing. Yep the left wing of capitalism.

Today the CAW as I predicted, is all about adapting to globalization and neo-liberalism in order to give Canadian corporations a fighting chance in the world market.



Oct 19, 2007 Sam Gindin The CAW and Magna: Disorganizing the Working Class
Through the 1980s and 1990s, as the attacks on past working class gains intensified, the Canadian Auto Workers Union (CAW) was widely recognized – not just in North America but abroad – as standing at the forefront of working class resistance. With the Magna-CAW Agreement signed on October 15, 2007, the CAW now seems at the forefront of working class desperation and defeat...


This is not unlike the recent mergers of the International Transportation and Steel unions and other international unions that are facing declining memberships and lack of bargaining power.

Once again the unions show they are merely an extension of capitalism not an alternative to it.

That alternative exists and it is Revolutionary Syndicalism that was birthed with the IWW over a hundred years ago.


The employing class and the working class have nothing in common."
Preamble to the IWW Constitution

"When the working class unites, there will be a lot of jobless labor leaders."
Eugene Debs, 1905 speech to the IWW Convention


See:


Unions the State and Capital

Global Labour in the Age of Empire


WHITHER SOCIAL DEMOCRACY?
THE CRISIS OF CAPITALISM, LABOUR AND THE NDP

A SOCIALIST PERSPECTIVE

Will Canadian Labour Accept Free Trade?

Business Unions Sell-out B.C. General Strike

Nationalism Will Not Stop North American Union

This is Class War

CAW To Leave CLC?

Sniveling NDP

Labour Abandons the NDP

Unite the Left

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Support Public Radio

CJSR is winding up its Fund Drive as CKUA launches there's.
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And they both offer you swag and prizes over and above that!!

And as an added incentive both the Alberta and Federal governments will top up them donations. So support YOUR radio. Public Radio for the People.

You can listen to both stations online via your computer so donations can come from anywhere in Alberta, Canada, around the world (no tax reciept for you though, bwaa)

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Fundrive is coming



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Campaign Starts Tomorrow!

Are you ready? We are!! A fantastic new phone system is in place, excellent volunteers are anxious for your calls, and all CKUA staff are ready to make this the BEST campaign yet!

The fun begins tomorrow at 6 AM! Make your pledge online or call in to speak to one of our awesome volunteers. While you are here - online, I mean - be sure to check out the fabulous prize line up...which do you want to win??

We wish you all the best of luck and thank you in advance for showing your support, and celebrating this amazing 80 year old radio station with us. With your support, we look forward to celebrating the next 80 years.

"Thank you so much for what you do. I love that I can listen to Canada (home) and the whole world on CKUA via the internet...you enrich and enliven me every day."
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SEE:

CKUA: Ten Years After The Privatization Putsch

The End of Public ACCESS


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Burma's Blood Rubies

More than 90pc of the world's rubies come from Burma

Thursday, October 18, 2007

Nationalize The Oil Patch


Under workers control!

A publicly owned Petro-Alberta would have a democratically elected board of directors, including representatives of the workers, consumer advocates, environmentalists, and the public.

Share ownership by the public and the workers, union investment with profit sharing and public debentures.
The Stelmach government should tax energy companies' profits up to nearly 100 per cent and the government should take ownership of part of the oil sector, rather than adopt the tamer recommendations of the royalty review panel, an Edmonton-based think tank said today.

In stark contrast to the energy industry's complaints that the review's proposed hikes go way too far and would cripple the economy, The University of Alberta's Parkland Institute said Albertans deserve to capture at least 90 per cent of available economic rent on oilsands project.

The left-leaning institute also noted that the nationalized oil companies in Norway, China, Korea and Japan have taken stakes in Alberta's oilpatch, and that a predecessor to energy giant EnCana was once partly province-owned.

"Public ownership is the best way to capture royalties, as 100 per cent goes to the owners, the people of Alberta," the report says.

Parkland research director Diana Gibson says Albertans should expect the same kind of return on the province‘s resources as an oil and gas executive earning a multimillion-dollar paycheque would get for his shareholders.

Selling Albertans Short: Alberta's Royalty Review Panel fails the public interest by Diana Gibson, Parkland Institute October 17, 2007
Release View Executive Summary Download Report (pdf)


SEE:

It's Time to Take Back Our Oil and Gas

NDP And Workers Control

Nationalize the Oil Industry

I Am Malcontent

Who Will Decide About Royalties

The Myth of the NEP

Aren't you sorry you sold your shares

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Robot Protest

Robot comes from the Russian word Robotnichki, meaning drudgery and worker. A wage slave by any other name.

And when the Oil Rig bosses pay their wage slaves to protest on their behalf against the workers own self interest this is what you get.

During the speeches, the workers showed little emotion, cheering only sporadically.

The image “http://www.edmontonsun.com/PhotoGalleries/energyworkersdemo/2007/10/17/rally10.jpg” cannot be displayed, because it contains errors.

The Alberta government said yesterday that only $15.2-million was spent on new exploration rights for conventional oil and natural gas in a bimonthly auction.

It is the lowest total this year for conventional energy, a sector in which proposals for higher royalties have provoked considerable anger from industry.

For exploration rights in the oil sands, $15.7-million was collected, which ranks as a median result for the year, ahead of 10 other auctions. With oil prices at a record, the call for higher royalties on that resource has caused less controversy.

In sum, the sale of exploration rights so far this year is down 62 per cent to $1.18-billion from $3.14-billion in the same period a year earlier.

Exploration rights on Crown land in Alberta are posted for sale by the provincial government at the request of individual companies and are awarded in a blind auction where energy firms submit sealed bids. The government take from these auctions can vary dramatically as energy companies spend aggressively when commodity prices are high but pull back quickly when they fall.

A record take of $3.43-billion was reached in 2006, up more than 50 per cent from the previous record of $2.26-billion in 2005. That, in turn, surpassed the long-standing record of $1.15-billion set in 1997, which was reached in part because of the first oil sands boom following the adoption of a generous royalty regime.

This year's decline mirrors collapses recorded in 1981, 1999 and 2002.

That's because such auctions tend to generate less money in Alberta than in other jurisdictions, generally because access to drill for oil and natural gas is seasonal and in the oil sands the raw resource is of lower quality than in major oil fields elsewhere.


Don't Let Big Oil Set Our Royalty Rates make sure Ed hears from you

See:

Real Oil Workers Rally

I Am Malcontent

Who Will Decide About Royalties

Alberta's Tar Sands Gamble

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Tax Cuts For All

Instead of capital gains tax cuts (which only impact the rich) or further tax cuts for corporations how about eliminating income taxes (payroll taxes) for working Canadians and families who earn less than $100,000 a year.


Tax break not dead: Flaherty
The Harper government is examining how to make good on its pledge to grant Canadians a capital gains tax break in the 2008 budget, says Finance Minister Jim Flaherty, who avoided the measure in the last two fiscal plans because of cost and design difficulties.

Mr. Dion's tax strategy, so far, is promising enough. He aims to cut the corporate rate to 18.5%, a rate that, however, coincides with the rate some corporate insiders have heard Conservative officials talk about. Is Mr. Dion scalping Tory policy?


While the average Canadian family earns far less than $100,000, those in professions and in trades earn above the average. Revenue Canada and Stats Canada define high income earners as having an income of over $113,000 annually.

An argument could be made for elimination of taxes at the $80,000 a year level, however due to geography this would have a negative impact on higher paid workers in the Arctic, Northwest Territories, Yukon, etc. where prices are also higher.

Also family incomes can be blended to reach $100,000. Whether we speak of eliminating income taxes for individuals at the $50,000 per annum income level or families at $100,000, I am open to debate on this issue. So far I have seen few who were willing to take me up on it right or left. Despite the tax tinkering being promoted by the Liberals and Conservatives.

Eliminating Income taxes on workers and working families would go a long way to eliminating the prosperity gap the NDP talks about. You will see from the statistical studies below that the income gap between rich and the working class grew, and that they benefited from reductions through tax cuts and tax credits, including the myth of how they pay more GST. In fact they don't since their monies are tied up in cars and homes and other consumer goods, but in stocks and investments, and in fact they pay less luxury tax than the average worker does when GST and PST are added up.

And while the stats show that income support payments from EI, welfare, AISH, etc. have a positive economic impact on the working poor, this would be better offset by a program that created a Guaranteed National Living Wage. Something the Green Party has joined the NDP in calling for though neither of them go far enough.

The Libertarian Party of Canada does advocate for the reduction of and maybe the elimination of income taxes. To be replaced by user fees to pay for the privatization of public services! While the CPCML adovcates Make The Rich Pay! which I agree with and in fact take a more libertarian position than the LPC or the so called fiscal libertarians in the Conservative Party!

During the last federal election, the Marxist-Leninist Party of Canada (MLPC) addressed the question of government revenue and taxation as follows:

"The Marxist-Leninist Party of Canada does not agree with the manner in which the issue of taxes is posed by the big parties and most media. Income taxes were introduced during World War I as a temporary measure and reflect an archaic viewpoint that owners of equity and debt are the centre of the economy, and Canadians and the state should serve the most powerful corporations."

Governments should keep their hands off personal incomes. Governments should fund program expenditures from their claim on the aggregate social product, not from that portion of social product the working people have managed to claim in the form of wages and salaries.

Who produces that wealth? The working people do. After the claims of the workers who produce the wealth have been distributed at their workplaces, the government should make its claim on the workplaces itself. It should appropriate directly from companies over a certain size enough social product to fund the costs of the social programs and infrastructure required for modern production in a modern society and a human and natural environment fit for human beings. A modern transportation and energy infrastructure for example are needed for modern production to take place in a society. Why then shouldn't those requirements be paid for from the aggregate social product of the society and appropriated directly at the point of production? Government revenue is a claim on the provincial social product. In its self-proclaimed drive to modernize, the Ontario government should stop the unacceptable practice of stealing the claims of working people on the social product and abolish the archaic income tax system, sales taxes and the myriad other taxes and service charges that takes money from the people. The claim (revenue) of the Ontario government should come directly from enterprises above a certain size that are engaged in producing social product or distributing, servicing and financing it.


The point is that no existing parliamentary party is talking about eliminating income taxes for the majority Canadians who now carry the burden of funding the government, which should be paid for by the Corporations and the rich since it's their state after all.


Income Inequality and Redistribution in Canada: 1976 to 2004

After remaining stable across the late 1970s and 1980s, family after-tax-income inequality rose during the 1990s. This increase occurred at the same time as a reduction in the generosity of several income transfer programs, including the Employment Insurance and Social Assistance Programs (in some provinces), and decreases in income tax rates. This potentially reflects a weakening of the redistributive role of the Canadian state.

However, while rising after-tax-income inequality can result from a weakening redistribution system, it can also result from rising inequality in family market (pre-tax, pre-transfer) income. In this report we address the following question: Is income redistribution playing a smaller equalizing role in recent years than it did in the past, or is increasing inequality being driven by rising familiy market-income inequality?

A close examination of after-tax income reveals that from 1989 to 2004, income fell for lower-income families but grew for middle- and higher-income families. Average income in the bottom 10% fell by 8% over this period, but rose by 8% at the median and by 24% in the top 10%. As a result, the absolute range between those with income in the bottom 10% and those in the top 10% also rose. In real dollars, after-tax income for a four-person family was stable at about $110,000 higher in the top decile compared to the bottom decile all through the 1976-to-1995 period, but grew thereafter, reaching $147,600 by 2004. This indicates that the increase in after-tax-income inequality is of significant absolute magnitude as well as relative magnitude.

Income polarization also rose over the 1990s. The share of Canadians with family after-tax income from 75% to 150% of the median after-tax income fell from 52.1% in 1989 to 47.3% in 2004, a drop of 4.8 percentage points. Closer inspection of the data reveals that the trend away from the middle class (defined by income) was both towards lower-income and higher-income persons. The share of persons with after-tax income below 75% of the median rose by 2.6 percentage points, while that share with income above 150% of the median rose by 2.0 percentage points.

The share of persons with adjusted income below one half of the 1979 level of adjusted family median income fell across the 1980s but rose in the 1990s, ending at 10.2% in 2004, which is slightly higher than it was in 1989.

There are several reasons to suspect that the role of the tax-transfer system in equalizing incomes may be different in the 2000s than in earlier decades. While the paper does not go in to these in great detail, we note that changes in social assistance and employment insurance eligibility and entitlement levels (these generally became more generous across the 1980s and then less across the 1990s), the introduction of new programs such as the Canada Child Tax Benefit and the Goods and Services Tax credit, as well as the maturation of the Canada Pension Plan and the Québec Pension Plan were important developments which may have affected the amount of income redistribution that is done through the transfer system. Moreover, increases in real tax rates across the 1980s, followed by their reduction in the 1990s, may have had implications for redistribution through the tax system.

This study shows that, after remaining stable for several decades, family after-tax-income inequality rose in the 1990s, settling at a higher level in the 2000s. At the same time, the share of middle-income families was reduced and the share of low- and high-income families grew larger. The absolute gap between bottom- and top-income families also increased in a substantive way, indicating that these increases in inequality have an important magnitude. These trends appear to have been driven by rising inequalities in income received from market sources (wages, salaries, self-employment income, private pensions and investment income) among families.

Perspectives on Labour and Income - September 2007

High-income Canadians

Brian Murphy, Paul Roberts and Michael Wolfson

Thresholds defined in nominal dollar terms are the
simplest. Absolute thresholds refer to a particular dollar
amount—for example, $100,000. Those with
incomes higher than a given figure are considered to
have high income.

Examples of commonly applied absolute nominal
thresholds include $250,000, the highest income
grouping used for many years by the Canada Revenue
Agency (CRA);2 $150,000, used in Statistics Canada’s
census tables; $100,000, used by the province of
Ontario in their ‘sunshine list’ made available under the
Public Sector Salary Disclosure Act (Campbell 1996); and
the threshold at which the top federal tax rate begins—
$113,804 in 2004.3

  • In 2004, 5% of Canadian taxfilers had an income of $89,000 or more; only 1% reached $181,000 or more.
  • In 2004, the top 5% of taxfilers received 25% of total income and paid 36% of income and payroll taxes.
  • The prevalence of high income peaks in the 45-to-64 age group. In 2004, individuals of that age represented less than a third of all income recipients, but made up more than half of the top 5%.
  • Calgary had the highest proportion of families with income over $250,000 in 2004, but Toronto had by far the most families with such incomes, almost one-third of the national total.
  • Of the 1.2 million taxfilers who made up the top 5% of income recipients in 2004, three-quarters were men, even though men accounted for less than half of all taxfilers. However, since 1982 there has been an 11% increase in the portion of women in the top 5% of tax filers.

Average income and net worth

In 1999, the average income for the bottom 80% of families was $38,000 while their average net worth was about five times higher at $192,000. The top 1% had average income of $366,000 and average net worth of $1.9 million, also roughly five times income. It follows that both the average income and average wealth of the top 1% are about 10 times that of the bottom 80%. The implication is that some lower-income families have relatively high net worth (for example the elderly) while some high-income families have relatively low net worth (the young).

Not surprisingly, the importance of housing and vehicular assets declines as income increases. While houses and cars accounted for 31% of average net worth for the 80% of families with the lowest incomes, they accounted for only 16% for the top 1%. These top income families had 61% of their net worth in financial assets compared with 37% for the bottom 80%. Pension assets are far more evenly distributed—21% of net worth for the top 1% of families, 32% for the bottom 80%.

The ratio of taxes to total income rises with income. In 2004, the bottom 95% of the taxfiler population received 75% of income and paid 64% of taxes, while the top 5% received 25% of income and paid 36% of taxes.11

A number of different tax rates can be examined. Nominal (statutory) tax rates are provided in legislation and are higher for higher incomes. The marginal tax rate applies to the last dollar of income. These rates are sensitive to the kind of income and the unit of analysis—individual or family. The effective tax rate (ETR) is simply the ratio of taxes paid to total income.

For the bottom 95%, ETRs generally increased through the 1980s, remained roughly constant at just over 15% throughout the 1990s, and declined at the turn of the millennium, remaining steady through 2004. More fluctuation was evident in the high-income population because of high-income surtaxes and numerous changes to top federal tax brackets. They had a more pronounced rise in the mid-to-late 1980s, declining more sharply in 1988 with the introduction of tax reform, which reduced 10 brackets to 3 and converted many deductions to tax credits.

Over 85% of the 5% of Canadians with the lowest incomes in 2004 paid no income or payroll taxes (Chart F). While some individuals may have no income taxes payable, Employment Insurance and Canada or Quebec Pension Plan contributions may still be payable.

The proportion paying no taxes drops sharply after the first vingtile but remains over 40% until the 35th percentile. It then drops quickly to below 1% approximately two-thirds of the way up the income distribution.

Chart F - The proportion of taxfilers paying zero taxes declined at almost all income levels

Some 5% of individual taxfilers had incomes of $89,000 or more in 2004. Regardless of the threshold used, incomes in the upper tail of the distribution as well as the share of total income increased substantially from 1992 to 2004. In contrast, individuals in the bottom 50% to 80% generally saw little improvement in constant dollar income.

Compared with the U.S., Canada had significantly fewer high-income recipients in 2004, and their incomes were considerably less. High-income Canadians increasingly receive more of their income from employment than from other sources.

Investment income has been a decreasing proportion, even among those with the highest incomes.


Income Instability of Lone Parents, Singles and Two-Parent Families in Canada, 1984 to 2004

This paper examines income instability of lone parents, singles and two-parent families in Canada in the past two decades using tax data. We attempt to answer the following questions: Has there been a widespread increase in earnings instability among lone parents (especially lone mothers) and unattached individuals over the past 20 years? How do the trends in earnings instability among lone parents and unattached individuals compare to the trends among the two-parent families? What is the role of government transfers and the progressive tax system in mitigating differences in earnings instability across different segments of the earnings distribution among the above-mentioned groups? We find little evidence of a widespread increase in earnings instability in the past two decades and show that government transfers play a particularly important role in reducing employment income instability of lone mothers and unattached individuals.

Similar to Morissette and Ostrovsky (2005), we find that earnings instability varies considerably with employment income and is much higher among families in the bottom tertile (one third of all families) than among families in the top tertile. The magnitude of these differences varies for different age groups and family categories; however, it is fair to say that for two-parent families the bottom–top earnings instability ratio is generally smaller mostly due to lower instability in the bottom tertile.

In all age groups, social assistance appears to be the single most important factor reducing income instability of lone mothers. For lone mothers, SA plays a much greater role in reducing income instability than for the two-parent families. In the youngest age group, for instance, it reduces instability in the bottom tertile by 32%. As social assistance has little effect on the lone mothers in the top tertile, this also results in the largest drop in the differences between bottom and top tertiles (23%). The impact of social assistance on instability is somewhat smaller for the 45-to-49 age group although it is still larger than the impact of any other factors.

Employment insurance also lowers income instability of lone mothers. In all age groups, it is the second most important factor mitigating instability among lone mothers in the bottom tertile. Overall, the reduction in instability (relative to market income) due to EI and SA in the bottom tertile varies between 32% and 48%.

The role of the progressive tax system has two different aspects. On the one hand, in all age groups, the instability of the after-tax income in the bottom tertile is lower than the instability of the total income although the reduction is 6% at most, and in some age groups it is close to zero. On the other hand, in some age groups the tax system has a larger effect in the top tertile, so the after-tax difference between bottom and top tertiles is actually larger for the after-tax income than for the before-tax income.

Personal debt — PDF

Personal consumption expenditure constitutes a larger share of GDP in the U.S.

Consumer spending is a key contributor to a country's economic health. Consumer spending as a percentage of GDP is much lower in Canada, ranging from 52.8% to 58.9% over the last 25 years, compared with 61.4% to 70.0% in the U.S. In other words, consumer spending has boosted the economy more in the U.S. than in Canada.

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Canadians pay more income taxes and transfers to government

Even though both countries have a progressive income tax system, their marginal tax rates, methods of taxation, and allowable deductions vary considerably. In Canada, a relatively larger share of personal income goes for federal and provincial income taxes, Canada or Quebec Pension Plan contributions, and Employment Insurance premiums (17.3% in 1980 and 23.4% in 2005). Americans, on the other hand, paid 18.3% and 18.7% of their income for federal and state income taxes, social security contributions, and unemployment insurance.1 The gap between total and disposable income has widened over time in Canada while remaining almost unchanged in the U.S. However, the mix of deductions in the U.S. has changed considerably: Income taxes accounted for 79.4% of deductions in 1980 compared with 57.7% in 2005..


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Both Canadians and Americans have increased their debt-to-income ratios

Credit can be used to meet regular or unexpected consumption needs, or even to acquire assets. Debt load, measured by the ratio of total debt to disposable income was almost the same for Canadians and Americans at the beginning of the 1980s. After that, they parted ways: Americans had the greater debt load between 1983 and 1991 and Canadians between 1992 and 2000. From 2001, debt grew steadily in both countries and by 2002 had surpassed disposable income. By 2005, for each dollar of disposable income, Canadians owed $1.16 and Americans $1.24.

Some of the increased indebtedness between 2001 and 2005 may be attributed to relatively low rates of interest, easy credit through home equity loans, and increased limits and incentives on credit cards issued by competing financial institutions.


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Canadians use more consumer credit for their personal spending

Between 1980 and 2005, consumer credit represented between 21 and 38 cents of each dollar of personal spending in Canada. In the U.S., the amount was between 19 and 27 cents. Since 1986, when the Reagan administration cancelled tax deductibility for interest paid on consumer loans, Americans have been using less of this kind of credit. Consequently, since 1988, the gap between the U.S. and Canada in the use of consumer credit has widened.

Non-homeowners in both countries, who have neither mortgage debt nor access to home-equity line of credit, can increase limits on their credit cards or use personal loans to finance unexpected needs or other budgetary shortfalls. http://www.statcan.ca/english/freepub/75-001-XIE/comm/11-5.gif


On a per-capita basis, consumption expenditure outpaced disposable income in both Canada and the U.S.

Over the 1980-to-2005 period, per capita consumption expenditure in Canada more than tripled from $6,870 to $23,560, while disposable income rose proportionally less—$8,390 to $24,400 (2.9 times). In the U.S., expenditures and disposable income rose more steeply—from CAN$8,770 to $37,980 (4.3 times) and from CAN$9,710 to $39,260 (4.0 times). The disparity between Canada and the U.S. in both per-capita spending and disposable income has increased and, as consumer spending has outgrown disposable income, both Canadians and Americans have had to finance their spending through credit.


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In both countries, total household debt outgrew consumer spending as well as disposable income

In terms of aggregates in their respective currencies, household debt rose in Canada from $134 billion in 1980 to $916 billion by 2005 (6.8 times), and in the U.S. from $1.3 trillion to 11.2 trillion (8.6 times). Even though inflation was almost the same in both countries, consumer spending and disposable income increased less in Canada. Consumer spending, for instance, rose from $168 billion to $760 billion in Canada and from $1.8 trillion to $8.7 trillion in the U.S.

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Young pensioners
Ted Wannell

  • Although public retirement pensions cannot be collected until one's seventh decade (age 60 for the Canada and Quebec Pension Plans, and 65 for Old Age Security), many private pension plans allow long-serving employees in their 50s to draw benefits. Tax data indicate that about one-fifth of workers begin collecting benefits from such plans before their 60th birthday.
  • The pension take-up rate is very low (less than 1%) from ages 50 to 54. It spikes at age 55 (5% for men and 4% for women) as many plans commence unreduced benefits at this milestone, given sufficient tenure. This peak is not surpassed until workers exit their 50s.
  • About half of young pensioners worked for pay the year after they began receiving their pension. However, much of that work was either part-time or intermittent since only 30% earned at least $5,000. Men were more likely than women to surpass the $5,000 benchmark (34% versus 26%).
  • The probability of non-trivial re-employment falls as the age at retirement increases. Those who retired at 50 were almost twice as likely as those retiring at 59 to earn at least $5,000 in the following year.
  • Very few young pensioners turn to self-employment as a significant source of income. Less than 1 in 10 earned some self-employment income, and 1 in 20 or less earned at least $5,000.
  • Early pensioners generally retired from high-paying jobs. Their average earnings in the year before retirement were about 50% greater than those who did not retire. Among women, the post-retirement income of young pensioners exceeded the income of those who remained in the workforce.
  • Young pensioners typically bring in about two-thirds of their pre-retirement income the year after they begin collecting their pension—very close to the 70% replacement rate recommended by many financial analysts. Pension income accounts for a greater proportion of the total income of women in this group (66% in 2004 compared with 61% for men).

The 2001 Census figures on income, released on Tuesday May 13, are telling us two very important stories. The first is that Canadian society is becoming increasingly polarized. The richest 10% of our population has seen its income grow by a whopping 14% while the bottom 10% has seen only a slight increase of less than 1%. Moreover the income of many working families has actually declined!

Overall, government transfers have decreased. Although Statistics Canada declined to reveal the dollar value of the decrease, they did provide analysis of the changing significance of government transfers to different income groups.

Among working age families, the proportion of total income represented by government transfers dropped over the decade, from 6.4% to 5.6%. This drop did not actually begin until after 1995, and it reversed a trend of growth in government transfers to working age Canadians which had been evident since 1980.

However, the proportion of income attributable to government transfers has increased throughout the 1990s for the 30% of families at the bottom end of the income distribution. The proportion of their income derived from government transfers increased from 58.4% to 62.2%. Transfers to the other 70% decreased over the decade.

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Median total income, by family type, by province and territory
(All census families)

2001 2002 2003 2004 2005

All census families1

$
Median total income
Canada 53,500 55,000 56,000 58,100 60,600
Newfoundland and Labrador 41,400 43,200 44,800 46,100 47,600
Prince Edward Island 46,900 48,600 49,600 51,300 53,400
Nova Scotia 46,900 48,600 50,000 51,500 54,000
New Brunswick 45,200 46,800 48,000 49,700 51,500
Quebec 49,700 51,600 52,600 54,400 57,000
Ontario 58,400 59,600 60,500 62,500 64,500
Manitoba 49,800 51,200 52,100 54,100 56,100
Saskatchewan 48,900 50,500 51,500 53,500 56,300
Alberta 59,900 61,700 63,000 66,400 71,000
British Columbia 51,700 52,800 53,600 55,900 58,500
Yukon Territory 61,000 63,900 64,300 67,800 71,700
Northwest Territories 70,300 76,000 76,400 79,800 83,900
Nunavut 44,800 48,100 47,900 49,900 52,300

Table 7
Incidence of Low Income: Various Groups, Canada

Market Basket Measure 2000, 2001, 2002
and LICOs-IAT 2002

MBM-2000 MBM-2001 MBM-2002 LICOs-IAT 2002
All persons 14.8 13.6 13.7 11.6
Under 18 years of age 18.4 16.8 16.9 12.2
18-64 15.2 14.0 14.1 12.1
65 and over 5.8 5.5 5.6 7.6
Males 14.0 13.0 13.2 10.7
Under 18 years of age 18.2 16.9 17.7 12.7
18 to 64 13.9 12.9 13.0 11.0
65 and over 5.0 5.1 5.3 4.9
Females 15.6 14.2 14.1 12.4
Under 18 years of age 18.7 16.6 15.9 11.8
18 to 64 16.5 15.1 15.2 13.1
65 and over 6.5 5.8 5.9 9.7
All families 17.7 16.7 16.3 15.5
Economic families 2+ 12.0 10.8 11.2 8.6
Elderly families 4.7 3.9 4.5 2.9
Elderly married couples 2.5 2.8 3.1 1.9
Other elderly families 12.9 8.2 10.0 6.9
Non-elderly families 13.2 11.9 12.3 9.5
Married couples 9.7 8.7 9.0 7.1
Two-parent families with children 11.9 10.6 9.8 6.5
Married couples with other relatives 5.8 6.3 7.1 5.0
Lone-parent families 38.4 37.3 41.1 34.2
Male lone-parent families 18.6 17.8 21.8 12.2
Female lone-parent families 42.5 41.4 45.6 39.4
Other non-elderly families 13.2 9.8 12.0 10.8
Unattached individuals 29.5 28.7 26.5 29.5
Male 28.6 28.4 26.2 27.1
Female 30.4 29.1 26.7 32.0
All Elderly 12.0 11.6 10.0 19.4
Elderly Male 14.2 13.9 11.8 15.9
Elderly Female 11.2 10.7 9.4 20.7
All Non-Elderly 35.8 34.8 32.5 33.2
Non-Elderly Male 31.0 30.8 28.7 29.0
Non-Elderly Female 42.3 40.3 37.6 39.0

  • Two groups among the working age population - those commonly referred to as the "working poor" and five socio-demographic groups at disproportionate risk of persistent low income are featured in this report.
  • The risk of experiencing annual and persistent low income for "working" families (those where the Major Income Recipient (MIR) works 910 hours or more for pay annually) is much lower than for families with weaker attachment to paid work. However, "working poor" families still accounted for almost 30% of all working-age low income families in 2002 and for just over 40% of low income children living in such families in that year.
  • Regardless of the low income measure used, five socio-demographic groups have a disproportionate risk of persistent low income. Two out of the five high-risk groups - unattached individuals aged 45-64 and persons with work-limiting disabilities - significantly improved their incidence of low income between 2000 and 2002. Changes in the incidence of low income for the other three groups - lone parents with at least one child under 18, recent immigrants and Aboriginal Canadians living off-reserve during this period were not statistically significant.
  • Between 2000 and 2002, the Market Basket Measure identified a somewhat larger low income population than is calculated using Statistics Canada's post-income tax Low Income Cut-offs (LICOs-IAT).
  • This difference is more than accounted for by the more stringent definition of economic family disposable income which is compared to the MBM low
  • income thresholds. Several more items are deducted from gross income using the MBM than the LICOs-IAT.
  • These additional deductions from gross income are particularly important in increasing the incidence of low income for children (as deductions include out-of-pocket child care costs) and for working-age families with a strong attachment to paid work (as deductions include payroll taxes and other mandatory payroll deductions).
Taxation in Canada



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