OUR REVILED TAX HEROES.
People at the top of the income distribution get a lot of grief these days. The popular view seems to be that no one making a lot of money really deserves it. And the rich supposedly hide all this “unearned” income in Panama or Paradise or — who knows? — maybe Papua New Guinea. In fact, the amounts these top- enders do declare are outshone only by their contributions to Canada’s various revenue ministries. ( The recent StatCan release on “high- income trends” came with several fully updated data tables that reward noodling around in. The accompanying chart is based on one of them: CANSIM 204- 0001.)
To get into the top 0.01 per cent of earners in 2015 — we’ll call them “earners” even if progressives don’t — you needed to make $3.6 million, which obviously is not beanbag. Only 2,710 Canadians did that in 2015. Their median income was $5.6 million, their average $7.5 million. They were 89.5-per-cent male. Or rather, 89.5 per cent of them declared as male, as we in the universities say now. If you’re doing gender- based budgeting, as Ottawa says it is, I guess that means you can lower the tax boom on them, since they’re overwhelmingly not women.
Actually, the tax boom already has been lowered. As the chart shows, these one in 10,000 earned 1.8 per cent of all market income (which counts what people earn before they pay taxes or receive transfers from governments). But they paid 3.1 per cent of all taxes. To repeat: the one- in-10,000s paid 3.1 per cent of all income taxes. Their median tax was $2.0 million, their average tax $ 2.6 million. Put those two together and you could almost buy a temporary federal hockey rink.
The top 0.1 per cent of taxpayers — the one in 1,000, which includes the one in 10,000 — made 4.9 per cent of all income and paid 8.9 per cent of the country’s income taxes. That’s one in 1,000 taxpayers paying not far from $1 in every $10 of income tax. Yes, they did well. To get into this group you needed $824,000 of income and their median income was $1.3 million. But their median tax was $476,100 and their average tax $735,800. When anyone signs over a cheque for almost three-quarters of a million dollars to the minister for national revenue, the rest of us should tip our hats to him (83.6 per cent) or her (16.4 per cent).
Then comes the infamous one per cent, who are right up there in the public mind with terrorists and Hollywood producers doing business in bathrobes. They number more than a quarter million — 270,925, to be exact. You needed to earn almost a quarter million dollars — $ 232,400 — to get into this much- resented group, the not deplorable but actually generally deplored. This one in 100 Canadians made 12.8 per cent of all market income ( basically one- eighth) and paid 22.2 per cent of all income taxes. That’s one in 100 taxpayers picking up nearly a quarter of the entire income tax tab.
Continuing down the ladder, the top five per cent of taxpayers made more than a quarter of all income ( 27.7 per cent) and paid 41.5 per cent of all income taxes. Again, that’s just one in 20 taxpayers.
The top 10 per cent made $90,600 or more, earned two-fifths of all income and paid more than half (54.9 per cent) of all income taxes.
The top 50 per cent of taxpayers — all 13.5 million of them (which includes the aforementioned 10 per cent, one per cent and richer) — earned 89.9 per cent of income and paid a whopping 95.5 per cent of income taxes.
That’s right. We’re only halfway down the income ladder and essentially all the country’s income taxes are already paid. The bottom half of tax filers, the other 13.5 million, made only 10.1 per cent of income and paid only 4.5 per cent of all income taxes. Maybe they shouldn’t have paid anything. Median taxes paid in this group were in fact zero, which means at least the bottom 25 per cent of earners didn’t pay any income tax. That may be perfectly all right. Median market income in the bottom 50 per cent was just $6,200. We don’t want those folks paying income tax.
Despite their group’s big average contribution, some top earners probably aren’t paying much income tax, either. If so, that’s our fault, not theirs, for providing so many tax breaks for things we want them to do. And maybe all top earners should pay more. We can debate that. But it would be a lot fairer to them and a lot healthier for society if in asking them to do more we recognized the impressive contribution they’re already making.