Inequality and the Fading of Redistributive Politics.
Inequality and the Fading of Redistributive PoliticsEdited by KEITH BANTING and JOHN MYLES. Vancouver: UBC Press, 2013. Pp. xiii, 462, bibliographic references, index.
Tax is Not a Four-Letter Word: A Different Take on Taxes in Canada
Edited by ALEX HIMELFARB and JORDAN HIMELFARB. Waterloo, Ontario: Wilfrid Laurier University Press, 2013. Pp. viii, 293, bibliographic references, index.
Every day we hear stories highlighting inequality as the key issue of our times. From the OECD's seminal work Divided We Stand (2011), to the Occupy Protest against social and economic inequality in 2012, to Thomas Piketty's Capital in the Twenty-First Century (2014), more and more information is coming forward to illustrate how the top one per cent of the population is capturing a disproportionate share of overall income growth, leaving the poor and middle class worse off and struggling to manage on stagnant incomes. These big income gaps not only bar talented poor people from access to education and opportunity, they can also feed resentment and create societal instability.
A big driver of income distribution is government policy. The key instruments governments use to reduce inequality are taxes, transfers and regulation. How does the inequality story play out in Canada? Are we more unequal today than in the past? If we are more unequal today, what changes were made to taxes, transfers and regulations? Why did we make these changes? Do we need to do something different? What might that be?
Two recent edited volumes take on these big questions--Inequality and the Fading of Redistributive Politics, edited by Keith Banting and John Myles and Tax is Not a Four-Letter Word: A Different Take on Taxes in Canada, edited by Alex Himelfarb and Jordan Himelfarb. Both volumes chunk the issues down in ways that are readily understandable to a broad readership and provide answers to these questions with a view to building an agenda for reform to reduce inequality in Canada.
Banting and Myles assemble twenty eminent Canadian academics--known for their social policy and tax expertise--to reflect on these issues through a peer-reviewed scholarly volume. They conclude that, since the mid-1990s, the redistributive state has faded in Canada, and social Canada has become much smaller. While the tax-transfer system offset rising inequality in market incomes of families through the 1980s and the recession of the early 1990s, Canadian society since then has become more unequal. The progressivity of the tax system has been reduced and social transfers like Employment Insurance and social assistance have been deeply retrenched. The editors note that the redistributive fade in Canada was among the most dramatic in the OECD world.
Their first set of authors look at the role of politics in increased inequality in Canada, and they consider how and why this happened. There are dedicated chapters on how Canada has transformed its social architecture from the building of the welfare state post World War II to today; an analysis of changes in the key actors involved and their roles; a reflection on the drivers of increased market inequality; the role of public opinion on social spending; how the party system impacted the policy choices made; the impact of federalism; and how redistribution in Quebec compares to the rest of Canada. A second group of authors look in more detail on how the fading state has played out with respect to defined policy areas: pensions, education, health care, Employment Insurance, social assistance, child benefits, and child care. For those interested in social policy in Canada, these separate chapters provide an excellent overview of both historical and recent developments.
Assessing this collected material, the editors conclude that moving into the twenty-first century Canadians are confronting a new and unfamiliar inequality; that if we continue down this road we will be courting significant social risks. While retrenchment has mattered, inaction and policy drift have mattered more. In their view, we face a political choice: to reconcile ourselves to a permanent increase in inequality, or adjust our public policies to have greater effect. Tackling the problem will require a new kind of politics, including a realization among Canadians that many public policies impacting redistribution will increasingly be determined at the provincial--not the federal--level.
In the Himelfarb and Himelfarb volume, seventeen authors--academics, journalists, advocates, social researchers, and civil servants--consider why taxes have become an evil that governments of all stripes consistently promise to reduce. This collective work was inspired by the cuts to the GST from seven cents on every dollar to five in Conservative budgets between 2006 and 2008. The editors conclude that not only have tax reductions made us a more unequal society, they have also reduced the services that citizens get from their governments, resulting in diminished trust in our ability to act collectively. For the contributors to this volume, a conversation about taxes is a conversation about the role of government--what kinds of things we should do and pay for together--and what kind of Canada we want in the future. This book is more partisan and explicitly political than the Banting and Myles collected work.
The authors walk us through the issues in four parts. Part one assesses the state of the conversation today--the mix of taxes paid and how taxes relate to spending; the complications of being a federal state; and attitudes of Canadians towards taxes. Part two looks at how we got here, outlining the neo-liberal rhetoric and the "tax-cut mania" that has shaped the psychology of taxes in Canada today. Section three looks at alternatives, and it makes concrete suggestions on the right mix of taxes and what a simpler and economically smarter tax system in Canada would look like, including a revenue-neutral carbon tax and financial transaction taxes. The final section of the book examines in detail the infrastructure that the conservative movement in Canada has built to support their low tax mantra, including think tanks releasing ideas, and dedicated communicators selling low tax policy proposals again and again and again. The volume concludes with a detailed plan that progressives in Canada could use to change the prevailing narrative from "taxes are bad" to "taxes are good"; demonstrating that taxes are an obligation we have to one another as citizens of Canada.
Both volumes agree that we need a conversation on inequality in Canada; that the path we are on is a result of political choices made; that we get the future we are willing to pay for; and that we can choose something better. Both point out that the current federal government under Prime Minister Harper does not want to choose anything different. The federal Conservatives are clearly committed to keeping taxes low and not increasing transfers, either to persons or provincial governments. Rather than being concerned about growing inequality, they have downplayed the problem, pointing to studies that show that the Canadian middle class has done relatively well in the last decade.
But many others do not agree. Certainly the OECD will continue to raise the issue in both the international and Canadian context. In their most recent analysis FOCUS on Top Incomes and Taxation in OECD Countries: Was the crisis a game changer? (May 2014), they demonstrate that Canada is among the worst countries in the developed world in terms of the widening income gap between top earners and others in society. In Canada the top one per cent of pre-tax income earners captured 37 per cent of the overall income growth between 1981 and 2012, and now swallows up 12.2 per cent of the country's income pie. The OECD analysis shows that income inequality is on the rise in most developed economies, but the trend has particularly taken hold in the United States and Canada. They conclude that in countries like Canada where inequality is increasing, a comprehensive policy strategy is needed to promote equality of opportunities, which includes effective and well-targeted transfer policies and other social policies, as well as labour market and education policies.
Inequality in Canada is becoming a major political issue, with both the Liberals and NDP likely to focus on it in the 2015 federal election. Increased awareness is also being raised by organizations such as the Canadian Centre for Policy Alternatives, which runs tax workshops, and organizations like Canada 2020 and the Broadbent Institute, which dedicate a stream of their research to income inequality issues. If the issue captures public interest and lands on the political agenda in 2015, these two volumes provide a wealth of information on Canada's inequality story and are required reading for any citizen concerned over the future of Canada.
Donna E. Wood is an adjunct assistant professor at the University of Victoria. In May 2014 she concluded a cross-Canada conversation on the challenges of social policy coordination in our federation, using the more institutionalized European Union practices as a reflecting mirror.
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| Author: | Wood, Donna E. |
|---|---|
| Publication: | Canadian Public Administration |
| Geographic Code: | 1CANA |
| Date: | Sep 1, 2014 |
| Words: | 1464 |
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