The Gap in Purchasing Power between High- and Low-Income Households in Canada
University of Calgary, The School of Public Policy
July 30, 2021
Description / Summary
Progressive taxation and redistributive spending programs are designed to transfer income from high to low-income earners and in this way reduce differences in after-tax purchasing power. The figure describes the difference, in the average real (inflation-adjusted) after-tax income, between earners in the top income quintile of Canadian households, and that of earners in the bottom income quintile of households. The difference represents the greater purchasing power of the top 20% of households relative to the bottom 20% of households ranked by after-tax income. In 1976, the difference was roughly $58,000 when measured in 2019 dollars. By 2019 this had increased to over $84,000.