Canada’s wealth gap among fastest growing in developed countries: OECD

This may come as no surprise to most Canadians as they begrudgingly file their annual tax returns, but there’s a growing gap between and the richest people in the country and the rest of the population.

According to a new report from the Organisation for Economic Co-operation and Development (OECD), the increasing disparity in Canada is among the highest in developed nations.

The report shows the richest 1 per cent in total pre-tax income have increased in most OECD countries in the past three decades. It says the surge is due to a “disproportionate share" of overall income growth captured by the top 1 per cent.

English-speaking countries were the biggest beneficiaries. In Canada, the highest earners saw income growth of 37 per cent over the past 30 years, and up to 47 per cent in the United States.

“This explains why the majority of the population cannot reconcile the aggregate income growth figures with the performance of their incomes,” the report states. “At the same time, tax reforms in almost all OECD countries reduced top personal income tax rates as well as rates of other taxes affecting the highest income earners.”

The report looks at pre-tax income and for Canada includes data up until 2010.

For the 1 per cent in Canada, wages and salary account for about 85 per cent of their income. Among the “richest of the rich” in Canada, which the OECD says is the top 0.1 per cent, about 20 per cent of their income is from capital gains.

“In addition to the important role played by capital income at the top of the income ladder, higher labour compensation has also been driving the rapid rise of top incomes, the report says. “The share of wages in total incomes of the rich has grown especially in Canada and the United States.”

At the same time, capital income has also grown in the period studied, the report notes.

Statistics Canada says the top 1 per cent of tax filers earned more than $209,600 in 2011. The top 5 per cent earned more than $108,300. The bottom 50 per cent earned less than $29,700.

It said the top 5 per cent of tax filers held 23.8 per cent of the nation's income in both 2010 and 2011. The top 1 per cent held 10.6 per cent and top 0.1 per cent held 3.7 per cent.