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Colette Smithers is photographed in the doorway of her building, a three story housing complex in Calgary's mount royal neighbourhood. Smithers, has lived in the affordable housing for 6 months now since the women-only development was opened. Prior to her moving in she was in transitional housing offered through the YWCA. (Chris Bolin for The Globe and Mail/Chris Bolin for The Globe and Mail)
Colette Smithers is photographed in the doorway of her building, a three story housing complex in Calgary's mount royal neighbourhood. Smithers, has lived in the affordable housing for 6 months now since the women-only development was opened. Prior to her moving in she was in transitional housing offered through the YWCA. (Chris Bolin for The Globe and Mail/Chris Bolin for The Globe and Mail)

How paying people's way out of poverty can help us all Add to ...

Behind corridors lined with contemporary Canadian art, sitting at a dark wooden table in his downtown Toronto office, Ed Clark offers some economic advice that might not typically come from Bay Street.

Give the poor a tax break.

"I say, 'Why don't you cut the taxes of the most overtaxed people?' It isn't Ed Clark," the Toronto-Dominion Bank CEO said in an interview earlier this year. "It's the people at the low end, because they face the highest marginal tax rates."

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It may seem an uncommon prescription in his neck of the woods. But there's an increasing awareness, among even the country's most wealthy, that poverty reaches beyond the tables of the hungry and digs into their own pocketbooks.

When people are poor, out of work or homeless, it hurts the bottom line of all Canadians. And as the country struggles to maintain a shaky recovery amid growing global economic uncertainty, that's not a hit they can afford to take.

If Ottawa and the provinces fail to make this a priority, Tory Senator Hugh Segal predicts, "over time, we will begin to run out of the money that we need to deal with the demographic bulge because it will be consumed in the health care requirements of the poor, which will increase. It will be consumed in the costs of the illiteracy and unemployment which relate to poverty. ... And it'll be unsustainable."

It's not just Canada's problem: Income inequality is sparking social unrest in the Middle East, North Africa and China.

It rang alarm bells at the Organization for Economic Co-operation and Development's conference in Paris this week, where the think tank warned that if a slew of countries - from Sweden to Canada to the United Kingdom - don't take drastic action by raising taxes for the richest, they risk runaway increases in inequality.



That growing polarization hasn't been lost on Canada's neighbour to the south: In unveiling his deficit-cutting plan last month, U.S. President Barack Obama included significant tax increases for America's richest.

Canada's polarized 41st Parliament reflects the country's growing income gap. And Prime Minister Stephen Harper's success in this election hinged in large part on his ability to play off fears of unstable prosperity.

Now, these 308 denizens of a redrawn House of Commons have their work cut out for them: Mind the income gap, or pay the economic penalty.

It's already on the radar of some provinces: One of Christy Clark's first actions as B.C. Premier was to raise the province's minimum wage for the first time in a decade and offer a tax cut for low-income families. Ontario has launched a sweeping review of social assistance programs that Community and Social Services Minister Madeleine Meilleur has admitted are failing the province's neediest.

"It's not in our interest to have a mortgage-holder foreclose," said Tamara Vrooman, CEO of Vancouver-based VanCity credit union.



"The way we do business affects the economy not only in terms of profitability," she said, "but ... how able the people who use our services are to continue to do that in the future."

The problem: True North, polarized

Despite Canada's reputation for a strong social safety net, the country is becoming economically polarized. And the decades-old dominant economic dogma that growing wealth among society's highest earners would trickle down to those less fortunate is being challenged by an alternative approach: Eliminate crushing poverty among the lowest earners, and wealth will trickle up.

As the incomes of the country's top earners have risen, the incomes of Canada's lower- and middle-income earners have stagnated.

The recession widened the chasm, and a subsequent recovery hasn't closed it.

While economic slumps tend to hurt those already vulnerable, this one has been especially deep and especially unequal in who recovers: On paper, almost as many jobs have been added as were lost during the financial crisis. But they offer fewer hours and less pay - and some of the hardest-hit sectors aren't coming back.



Food bank use hit a record high in 2010. Tellingly, more of the people using those food banks have jobs - they just don't make enough to pay the bills or feed their families.

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