The topic of income inequality continues to be a top-of-mind issue for many politicians, media commentators, and interest groups. Many believe income inequality has been on the rise in Canada, even though the data provide scant support for the claim. For example, the Gini co-efficient, a widely used measure of economic inequality, shows absolutely no evidence that income inequality has increased in either Canada or B.C. since 2000 (see Figure 1), as my colleague David Williams has noted. This is the case regardless of whether income is defined on a pre-tax basis or after accounting for direct taxes.

Figure 1

For the moment, we leave aside the question of whether inequality has been growing and instead summarize some important characteristics of the “top 1%” in the B.C. context. All the data cited are for calendar year 2018 as reported by Statistics Canada.[1]

How much income must a B.C. resident earn to be included in the top 1%?

• A B.C. tax-filer needed an income of $244,800 to enter the vaunted 1% in 2018. Four years earlier, the threshold was $227,100.

How many people are in the 1%?

• Approximately 38,400 British Columbians made enough to be in the top 1% group in 2018.

What proportion of the highest earners are men?

• In 2018, 76% of the top 1% were men, down fractionally from 77% four years earlier.

What share of all income do the top 1% garner?

• In 2018, the top 1% received 10.3% of the aggregate income reported by B.C. tax-filers. The top 1% income share has been fairly stable since the early 2000s.

How much income does a typical person in the 1% earn?

• In 2018, the median[2] annual income of B.C.’s top 1% was $335,600. This was up from $309,300 in 2014.

How much of the overall income tax burden falls on the top 1%?

• The most affluent 1% of British Columbians accounted for 22.4% of the income taxes collected by the federal and provincial governments in 2018. This percentage has hovered around 19-22% over the past decade.

How much income tax did a typical member of B.C.’s top 1% pay in 2018?

• The average amount of federal and provincial income tax paid by an individual in the top 1% reached $180,600 in 2018, up from $148,300 in 2014. The median amount of income tax paid by top 1% tax-filers was lower, at $109,500.

What proportion of the income reported by the top 1% is derived from wages and salaries?

• In 2018, almost 59% of the income received by the top 1% came from wages and salaries, down from 62% in 2014. The rest consisted of dividend and interest income, rents, business profits, government transfers, and other sources. This finding indicates that most affluent Canadians generate the bulk of their income from work rather than from returns on investments.

Table 1

B.C.'s Top 1%: Summary Statistics
Number of tax-filers in the top 1%	38,400
Income threshold needed to be in the top 1%	$244,800
Share of total income received by the top 1%	10.3%
Share of income taxes paid by the top 1%	22.4%
Median age of member of the top 1%	54 years

Owing to Canada’s progressive income tax system, when individuals earn more income, they generally face higher marginal income tax rates. This is clear from the table: B.C.’s top 1% pay 22.4% of all income tax collected from provincial residents, but account for only 10.3% of all income. If B.C. and other Canadian policy-makers want to increase the income tax revenues collected from people who are well-paid, the best way to do so is to develop an economic environment in which wages, salaries and other sources of income rise over time, including among the most economically successful segments of the population.

[1] Statistics Canada, “High income tax filers in Canada,” Table 11-10-0055-01.

[2] The median represents the mid-point within the top 1% group. Median income is lower than average income because of very high incomes earned by a relatively small number of individuals in the top 1%.