Income inequalities are growing in Quebec, despite its wealth distribution mechanisms, and despite what the usual measurement tools say.
A reference indicator in this area, the Gini coefficient will tell you that income inequalities have only slightly increased by 3.3% in Quebec from 1982 to 2019 once the redistributive effect of taxes and benefits is taken into account. social transfers (disposable income). But if you compare the trajectory of Quebecers belonging to the richest 1% to that of the poorest half of their fellow citizens, you will see that their income gap has widened by 52%, reports the Chair in Taxation and Finance public at the University of Sherbrooke in a study unveiled Wednesday.
Expressed differently, the richest 1% of Quebecers earned 12 times more on average than the poorest half in 1982, and 19 times more in 2019.
This does not invalidate the indicators generally favored by experts and major institutions in the field, explained in an interview with Duty the economist François Delorme, co-author, with Camille Lajoie, of the study entitled “Putting the Gini back in its bottle” and where they also tested another (Palma index) with the same result. This only highlights their particularities – in particular measuring the gaps between all income strata – and the importance of adopting a “much more surgical” approach if we want to describe the explosion in the income of the richest since 40 years unlike all the others.
A top that flies away and a middle that deflates
In 1982, the 90% of Quebecers who did not belong to this select club accounted for a little less than three-quarters (73.7%) of all disposable income. This proportion fell by 3.2 percentage points (or 4.3%) in 2019.
We see, in fact, that it is not the poorest of this group who have fallen back, the 50% of Quebecers with the lowest income after tax and transfers having even gained a little ground, going from 20.9%. at 22.5% of the total. No, these are rather the following income brackets, going from 50e at 90e percentile rank, and earning between $36,300 and $75,800 in 2020, which fell from almost 53% of the total to 48%.
Meanwhile, the richest 10% saw their share of the pie grow by almost 12%, the richest 1% by 65% and the richest 0.1% by almost 142%.
In 2020, you had to have a disposable income of at least $75,800 per year to belong to the 10% of Quebecers with the highest income. Nearly 67,000 people were above the threshold of $175,000 necessary to be in the 1% of the richest Quebecers, while it was necessary to earn $596,000 to be among the 6,700 people in the 0.1% and that 670 Quebecers earned at least 1.85 million and were 0.01%.
Less strong than in the United States, but stronger than in Europe, the surge in income of the richest and the widening of the gap which separates them from others have been described several times in the past, recalls the French expert and guest professor at the Chair, Clément Carbonnier, in another study also unveiled on Wednesday.
They arise from a set of factors, including the propensity of new technologies to create winners and losers, the decline in unionization and tax rules that are particularly favorable to higher incomes.
Taxes, social transfers and other wealth distribution mechanisms have managed to attenuate the sharp increase in market income gaps, particularly in Quebec, but not completely. Less unequal in the early 1980s than Ontario, for example, Quebec has remained so and has even slightly widened its favorable gap since the mid-1990s, observe Delorme and Lajoie.
More than tax increases
The widening of income inequalities is not good news, they point out, not only for moral reasons, but also because it has, among other things, a negative impact on economic growth, social cohesion and crime. .
Faced with this context, we are naturally inclined to think that the ideal solution would be to increase taxes on the richest. However, the more diversified and fluid nature of their income would allow them to adapt in order to reduce the amount of this additional bill without even resorting to tax evasion or avoidance maneuvers, they explain.
We should also act at the other end of the income spectrum, they say, “by providing more support to the most deprived in society”.