Rich, Poor

The Toronto Star had a front page story on the gap between rich and poor in Ontario.

What I find interesting is the definition of rich. Affluence is not based on total net worth. It is based on income.

The Star takes a report from the Canadian Centre for Policy Alternatives and describes a scenario where half of Ontario families have seen their fortunes fall while the income of the richest 10% have soared.

And what defines the richest in Ontario? The top 10 percent of families with children who earned more than $146,000 in 2004.

I suppose it is all a matter of perspective but is total household income of $146,000 a year really rich? In a city like Toronto?

Here is an excerpt from the Toronto Star’s article:

The Ontario numbers show that the richest 10 per cent of families raising children ”“ those with earnings of more than $146,000 in 2004 (not including investments and other assets) ”“ earned 75 times the amount of the poorest 10 per cent. In 1976, the richest earned 27 times as much.

As the richest break away from the pack, those households with incomes less than $56,000 in 2004, earned less or stayed the same, in inflation-adjusted terms, compared to a generation ago, the report states.

The gap narrows considerably in after-tax income, which takes into consideration income tax deductions and any government programs that prop up families with low-incomes. But the report shows even that gap has grown in the last decade. The after-tax income of the richest 10 per cent of families grew from eight to 10 times greater than the poorest 10 per cent nationally since 1998. In Ontario, the income of the richest families grew from eight to 11 times greater than the poorest.

Here is the link to download the full report as well as a website dedicated to the issues of income inequality.

I am not sure why a focus on income inequality, the division of “rich” and “poor”, is relevant to the issues of poverty. I don’t see how rich people cause poor people. For that matter, many so-called rich people, families with relatively high levels of income, overspend. They may have a high level of income but they do not have much in the way of net worth. 

By the way, you can use this tool to determine where you stand. If you make more than $200,000 a year before taxes, you are in the highest one percent of all families in Canada. Making more than $200,000 a year in the United States puts you in the highest 2.7% of all families according to Wikipedia’s article on U.S. income.