CIA4U0 Analyzing Current Economic Issues

1. CIA4U0Analyzing Current Economic Issues Chapter 15: Equity and Income Distribution Topic 3: Redistribution of National Income P 347-352

2. Redistribution of Nat. IncomeTopic Overview • Reflecting on Equality, Equity and General Welfare • The Welfare State Compromise • Redistribution for the Common Good • Attacking Poverty • Relief Programs to Combat the Symptoms of Poverty • Structural Remedies to Combat Poverty

3. Redistribution of Nat. IncomeReflecting on Equality/Equity/Welfare • Unjustifiably high incomes are a necessary evil • Promotes (provides incentive for) efficiency and growth • Great weakness of communism: if everyone knows they are going to get the same pay as everyone else no matter what, most people stop trying

4. Redistribution of Nat. IncomeReflecting on Equality/Equity/Welfare • Every economy tries to find a comfortable place on the spectrum between communism and free market capitalism • Provide enough incentive to take risks and motivate efficient use of resources v. • Taking care of those income potential is lowered due to illness, accident, age or other circumstances

5. Redistribution of Nat. IncomeReflecting on Equality/Equity/Welfare • Welfare State Compromise • A philosophy that government should intervene to help people who are poor, sick or unemployed as well as provide equal access to education, heath care and social services • Adopted by Canada during/after the Great Depression

6. Redistribution of Nat. IncomeReflecting on Equality/Equity/Welfare • Welfare State Compromise • Taxation is the cornerstone of this process • Low income earners should be able to keep more of what little income they make • Spawned our progressive tax system • More income means more taxes • Allows low income earners to take care of themselves and to be consumers • Can’t tax the wealthy too much (disincentive)

7. Redistribution of Nat. IncomeRedistribution for the Common Good • Based on the 3 Pillars: • Public education, social services, health care • Tangibles: schools, libraries, recreation centres, transportation, hospitals, national security, parks and law enforcement • Financial programs: OHOSP, OSAP, RRSP’s, RESP’s, LLP’s, Business grants, research grants

8. Redistribution of Nat. IncomeRedistribution for the Common Good • Have v. Have Not provinces • BC, Ontario (?), Alberta v. rest • Income taxes from them transferred to other provinces • Wealth gap widening • Low income families tend to run up more debt

9. Redistribution of Nat. IncomeAttacking Poverty-Approach #1 • Structural Strategies: • long-term economic adjustments implemented to reduce disparities • Attack the root causes of disparities • Education/Re-education • Day Care • Increasing Employment/employability • Training/Re-Training • Relocation

10. Redistribution of Nat. IncomeAttacking Poverty-Approach #2 • Relief Strategies • Programs designed to reduce the symptoms of poverty (short term and/or “band-aids”) • Welfare • Seniors’ Benefits (OAS, GIS) • Canada Pension Plan (CPP) • Employment Insurance • Child Tax Credits • Disability Insurance • Charities/Community based relief (United Way/food banks)