One of the public policy issues I think about frequently is income inequality. It is becoming increasingly understood and accepted that this is a real problem that is contributing to societal unrest. Are there ways where we could change laws on the extreme ends of the income scale only? In other words, what follows is unlikely to have any direct impact whatsoever on the people who read this. Hear me out:
Only about 50% of all individual working Canadians are making over $17,000 a year. I find that statistic to be utterly shocking. Many people work part time and many work for minimum wage. In some cases, both statements hold true. Meanwhile, the average annual earnings of the top 1% of Canadian income earners is nearly $500,000. Stated differently, if your income is more than $17,000, but less than (say) $375,000, this will not concern you.
What if, on the low end, a policy of ‘17 and 17’ was put in place… a minimum wage of $17 an hour and the basic personal exemption set at (read: raised to) $17,000? Then, nearly half the Canadian population could work part time (1,000 hours a year) and pay no tax at all. Then, at the very high end (say $500,000), we could add a new bracket (at say 4% higher than what we have currently) to increase both government revenues and help address a perceived social injustice. Note that the highest federal tax rate is currently 33%. I have no idea about whether this idea would be revenue neutral, add to the federal coffers or subtract from them, but I suspect the impact would modestly reduce government revenues.
One thing I want to be clear about is that I am not some leftist agitator who is trying to start a revolution of sorts. I’m just a simple, middle of the road Canadian citizen who is concerned about social justice and long-term societal health and welfare. Like many of my clients, I am a one percenter, but not a 0.1%er. Almost everyone I meet thinks the ‘rich’ should pay more. The devil is in the detail of how the word ‘rich’ is to be defined. The 1% earners (over about $220,000 minimum) I know are nearly universal in thinking the line for a tax hike ought to be drawn at an income level higher than what they are earning. I get it and mostly agree. If we’re going to do this or something like it, however, we’ll need to draw the line somewhere. I’m intrigued by the idea of a Universal Basic Income (UBI), but I’m not yet sold. This might be a good stepping stone toward a UBI if it works. I also doubt it would do much harm if we simply stopped here and went no further.