The richest people in Canada got a lot richer in 2021, even as the poorest half of all tax filers saw their incomes decline by $1,400.
That’s one of the main takeaways of a new data analysis released by Statistics Canada on Friday looking at tax filings from 2021 and comparing them with the previous year.
According to the data agency, incomes of the top 1 per cent of all tax filers in Canada rose by 9.4 per cent to $579,100 in 2021.
That figure includes all forms of taxable income, from salary and bonuses to things like capital gains, dividends and other payments that were registered with tax authorities.
The 10 per cent pay bump for the top 1 per cent contrasts with incomes moving in the opposite direction for many other Canadians.
While the 1 per cent got an almost 10 per cent pay bump, the tiny group of people above them fared better still. “Filers in the top 0.1 per cent saw their average total income increase by 17.4 per cent to $2,086,100, while those in the top 0.01 per cent saw their average total income increase 25.7 per cent to $7,731,400.”
Asset prices were inflated in 2021, expert says
Stephen Gordon, a professor of economics at Université Laval, said most of the uptick in incomes in 2021 came from capital gains, as opposed to something like a higher salary.
Capital gains come from increases in the price of assets like stocks, businesses or real estate, and those types of assets gained a lot of value in 2021.
But they’re mostly concentrated in a comparatively small number of hands: Statscan says only about 12 per cent of tax filers had any sort of capital gain to report in 2021, with the average coming in at $37,600. Five per cent of recipients received $131,100 or more.
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“2021 was a year where the economy was overheating and interest rates were still at rock bottom, which boosted things like stock prices and housing prices,” Gordon said in an interview Friday. “Anybody that had assets saw their value go up quite a lot and that’s mainly at the top end of income distribution.”
If capital gains are stripped out, the income distribution looks a lot less stark.
“The median income for all tax filers is still above what they were in 2019,” Gordon said.
Income gap getting wider
Taken together, the figures released Friday show that the share of income taken in by the richest 1 per cent of Canadians got even more top-heavy during the years in question.
The top 1 per cent received 10.4 per cent of all the aggregated income earned by tax filers that year, “up from 9.4 per cent in 2020 and the highest level posted since 2015,” StatsCan reported.
If there was a sector of society where income distribution got more equitable during the year, it would be the balance between men and women within the 1 per cent.
“Overall, women composed 26.1 per cent of the top 1 per cent of income tax filers, up from 25.4 per cent in 2020,” the data agency reported. “The share of women in the top 1 per cent has been increasing steadily since this series started in 1982, when the share was 11.4 per cent.”
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