Editorial
The
Rich Get Richer and the Poor Get Poorer
On
September 27, Prime Minister Stephen Harper and Finance Minister Jim Flaherty
announced a $13.8 billion budget surplus for 2007. They also announced that
$14.2 billion would be used to “pay down the debt”, claiming that this will
result in a $750 million reduction in interest payments next year. Those
savings, according to Harper and Flaherty, will be “passed on to Canadians” in
the form of a reduction in personal income taxes.
Because
of the mystery surrounding the national debt and the income tax system, Harper
and Flaherty are able to pretend that the surplus budget, paying down the debt
and reducing income tax rates are things that benefit all Canadians. However,
in reality all three are euphemisms for transferring billions of dollars from
the pockets of ordinary Canadians into the pockets of the rich.
A
surplus budget is achieved by collecting excessive taxes, cutting social
spending or both. Middle and low-income Canadians pay approximately two-thirds
of the income taxes collected, so the major portion of the surplus comes from
their taxes. At the same time the bulk of the national debt is held by the
richest Canadians – the finance capitalists. Paying down the debt means that
tax dollars are being handed over to these richest of Canadians (and some rich
foreigners). In addition, tax cuts invariably benefit high-income earners far
more than low-income earners. In other words, the cat is being skinned at least
twice; even more times if the huge profits raked in by the monopoly capitalists
on government contracts, kickbacks to cronies and the 101 other ways in which
government coffers are put at the disposal of the rich are factored in.
Statistics
Canada recently confirmed this reality of Canadian life, a reality that
reflects the relatively constant tendency under capitalism for the rich to get
richer and the poor to get poorer. During the past 25 years the average annual
income of the top-income earners in Canada rose by 34 percent (from $133,000 to
$178,000). During the same period, middle-income earners, with an average
annual income of $25,000, saw no increase in their incomes at all while the
incomes of the poorest Canadians fell, especially during the massive cutbacks
in social spending, including welfare and unemployment insurance, that took
place in the 1990s. Of course, the cutbacks to social spending also affected
middle-income Canadians because they were forced to spend more of their
disposable income on health, education and various user fees for services that
used to be provided free-of-charge. In other words, although their average
income may have remained constant, in reality their real income fell.
If
the federal and provincial governments were concerned about this growing income
disparity in Canada, they would reduce the handouts to the rich while
increasing spending on social services. If they were actually concerned about
the huge portion of the federal budget that is spent on debt repayment they
could declare a moratorium on debt servicing to free up money for
infrastructure repair and environmental protection. However, as we can see from
the Harper-Flaherty announcement on September 27, not only are they unconcerned
about these things, they are determined to accelerate the process of the rich
getting richer and the poor getting poorer.