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Index for my Toronto Budget 2004 project
The Income Gap in Toronto
07/04/2004

I downloaded the United Way's report on poverty in Toronto, Poverty by Postal Code. You may have read about it in the newspapers recently, with headlines focusing on the shift of poverty to the inner suburbs -- i.e., the outer edges of the megacity.

I'm reading through it, and one interesting point I came across was about income disparity. The City of Toronto has the widest gap between rich and poor of any city in Canada (page 15). In fact, Toronto's bottom 10% have the lowest average family income of any major Canadian city ($9,571 - 2001 numbers), while Toronto's top decile ($261,042) is the highest in the nation.

Now, please excuse me while I repeat a point about how inappropriate the Mike Harris Who-Does-What reforms were... reforms that have not been adjusted by Ernie Eves or Dalton McGuinty.

When the Tories downloaded social support costs onto municipal governments, Toronto was requried to pay significant sums out of property tax to support disadvantaged families. At the same time, income taxes from Torontonians -- including that top-performing decile that earns more than Canadians in any other city -- continued to flow only to the provincial and federal governments.

But property tax is a miserable tool for attempting to redistribute money. It isn't very progressive. And there are also competitive pressures between adjacent municipalities. It is painful for the City of Toronto to charge dramatically more for property tax -- but how can it be avoided when the incidence of poverty is more than double that found in the rest of the GTA (19.4% vs. 8.8% -- page 23 of report)?

This is both bad policy (in that it forces Toronto into an unnaturally uncompetitive position vs. its sprawling neighbours) and unfair (in that wealthy Torontonian's income taxes are diverted away from solving real problems in their own city).

This is why, when I write about a New Deal for Cities, the number one thing I call for is "uploading of income-redistributing social services to a level of government that collect income tax". The principle of social support is supposed to be that people with the means contribute a bit to helping those less well off. Only income tax can do this well, not property tax.


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