Let’s take a look at those folks in the very top of income in Canada. The top one percent of income earners has been highlighted repeatedly by the media over the past few years and it always brings a refreshing perspective on so-called income inequality.
I long ago recognized that in a capitalist system, the market is willing to pay people at different levels. I never viewed my income as an indicator of inequality. Rather, it was an indicator of the relative value of my labour as dictated by the market. If I wanted to make more money, I needed to find ways to increase the relative value of my labour. And that is not very easy to achieve particularly in a highly competitive marketplace. I also learned that there would always be a very small and a very elite group that would be truly wealthy. And the marker of being truly wealthy has very little to do with the relative value of labour.
Well, with all of that preamble out of the way, what did the government statisticians find when they prowled through the income data of high-income earners over the past few decades?
There are not very many high income earners in Canada. Out of 25.5 million tax filers, only 254,700 break into the top one percent of income. And to get there in 2010, they needed an annual income of $201,400 or higher. These folks also accounted for 10.6% of Canada’s total income in 2010.
A bit different in the United States. 1.4 million Americans made 16.9% of the United States total income in 2010 and they needed an annual income of $369,691 or higher in 2010 to break into the top one percent.
The median income of the top one percent of filers in Canada was $283,000. If you made more than $283,000 you were in the top .5 percent.
The top one percent in Canada paid 21.2% of federal and provincial taxes. The top one percent redistribute their earnings at a more progressive level than any other income level.
Most high income earners are male. Women represent only 21% of high income earners in Canada.
The report goes on to highlight other details and if you are interested you can follow the link above or go to it here.
High income is not a reflection of wealth. Assets matter far more.
Until recently, most studies just broke out the top 1% as a group. Data on net worth distributions within the top 1% indicate that one enters the top 0.5% with about $1.8M, the top 0.25% with $3.1M, the top 0.10% with $5.5M and the top 0.01% with $24.4M. Wealth distribution is highly skewed towards the top 0.01%, increasing the overall average for this group. The net worth for those in the lower half of the top 1% is usually achieved after decades of education, hard work, saving and investing as a professional or small business person. While an after-tax income of $175k to $250k and net worth in the $1.2M to $1.8M range may seem like a lot of money to most Americans, it doesn’t really buy freedom from financial worry or access to the true corridors of power and money. That doesn’t become frequent until we reach the top 0.1%.
Yes, that very top 0.1% is quite a different world.