‘Fair­ness’ rhe­to­ric masks an in­co­me tax im­ba­lan­ce

Not only does the top one per cent pay a dis­pro­por­tio­na­te sha­re of Ca­na­da’s ta­xes, its sha­re has in­crea­sed over the past two de­ca­des

La Jornada (Canada) - - NEWS -

For months, the Tru­deau go­vern­ment has used the term “tax fair­ness” to jus­tify hig­her ta­xes on en­tre­pre­neurs and in­cor­po­ra­ted pro­fes­sio­nals.

Whi­le what’s a fair dis­tri­bu­tion of ta­xes is ne­ver de­fi­ned by the go­vern­ment, such rhe­to­ric fuels the mis­per­cep­tion that

Ca­na­da’s top ear­ners co­llec­ti­vely get away with pa­ying very little tax. And if that we­re true, it would cer­tainly be cau­se for con­cern.

The reality, ho­we­ver, is qui­te dif­fe­rent. Ca­na­da’s top ear­ners pay a dis­pro­por­tio­na­te and gro­wing sha­re of the country’s ta­xes.

An ob­jec­ti­ve way to as­sess fair­ness is to com­pa­re the sha­re of to­tal ta­xes paid by top ear­ners to the sha­re of to­tal in­co­me they earn. If the­se sha­res are pro­por­tio­nal, then this sig­nals a fair dis­tri­bu­tion of ta­xes.

Whi­le the Tru­deau go­vern­ment seems preoc­cu­pied with in­co­me ta­xes, to pro­perly mea­su­re the sha­re of ta­xes paid by top ear­ners we must look be­yond in­co­me ta­xes. Ca­na­dians pay a my­riad of ot­her fe­de­ral, pro­vin­cial and lo­cal ta­xes, in­clu­ding pay­roll ta­xes, sa­les ta­xes, pro­perty ta­xes, fuel ta­xes, car­bon ta­xes, pro­fit ta­xes, im­port ta­xes, al­cohol ta­xes and mo­re. A com­ple­te as­sess­ment of tax fair­ness must al­so ac­count for the­se ta­xes.

In a re­cent study, the Fra­ser Ins­ti­tu­te mea­su­red the dis­tri­bu­tion of to­tal ta­xes in Ca­na­da. The top 20 per cent of in­co­me-ear­ning fa­mi­lies is the only group that pays a big­ger sha­re of ta­xes than the sha­re of in­co­me they earn. They pay 55.6 per cent of all fe­de­ral, pro­vin­cial and mu­ni­ci­pal ta­xes whi­le ear­ning 49.1 per cent of the country’s to­tal in­co­me.

All ot­her Ca­na­dian fa­mi­lies, with in­co­mes lo­wer than the top 20 per cent, pay pro­por­tio­nally less in to­tal ta­xes than they earn in in­co­me. For ins­tan­ce, the bot­tom 20 per cent pays 1.8 per cent of all ta­xes whi­le ear­ning 4.1 per cent of to­tal in­co­me.

But what about the top one per cent? This group fea­tu­res pro­mi­nently in dis­cus­sions of tax fair­ness and inequa­lity, so let’s look at the amount of ta­xes the­se Ca­na­dians pay.

Ca­na­dian fa­mi­lies in the top one per cent pay 14.7 per cent of all fe­de­ral, pro­vin­cial and lo­cal ta­xes, which is al­most 40 per cent hig­her than their 10.7 per cent sha­re of Ca­na­da’s to­tal in­co­me. In fact, the top one per cent paid ap­pro­xi­ma­tely the sa­me amount of ta­xes as the bot­tom half of Ca­na­dian fa­mi­lies (14.6 per cent) who co­llec­ti­vely earn 20.2 per cent of the country’s in­co­me.

Not only does the top one per cent pay a dis­pro­por­tio­na­te sha­re of the Ca­na­da’s ta­xes, its sha­re has in­crea­sed over the past two de­ca­des - from 11.3 per cent in 1997 to 14.7 per cent to­day.

By the ob­jec­ti­ve fair­ness stan­dard of pa­ying ta­xes pro­por­tio­nal to the sha­re of in­co­me ear­ned, rai­sing ta­xes on Ca­na­da’s top ear­ners can’t be jus­ti­fied. Par­ti­cu­larly when it co­mes to per­so­nal in­co­me ta­xes, the fo­cus of Pri­me Mi­nis­ter Justin Tru­deau’s go­vern­ment.

The im­ba­lan­ce bet­ween per­so­nal in­co­me ta­xes paid and in­co­me ear­ned is even lar­ger for top ear­ners.

The top 20 per cent pays nearly two-thirds of all in­co­me ta­xes (64.4 per cent) whi­le ear­ning ap­pro­xi­ma­tely half of all in­co­me (49.1 per cent). And the top one per cent pays 17.9 per cent of in­co­me ta­xes whi­le ear­ning 10.7 per cent of all in­co­me.

Ca­na­dians should not be mis­led by rhe­to­ric on tax fair­ness - the top ear­ners pay a dis­pro­por­tio­na­te sha­re. -TROYMEDIA

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