23rd October 2017
When it comes to the question ‘who should pay the most in taxes’, the pervading philosophy has been to raise taxes on the wealthy. The rich have more money, so they can afford to pay a bit more. But how much do the wealthy actually pay in taxes? Are they truly paying their fair share? A recent survey by the Canadian Taxpayers Federation (CTF) aimed to address just this question.
What percentage of Canada’s taxes are paid by the wealthy?
A recent study by the CTF has revealed some surprising results. Canada’s wealthiest individuals are actually footing a large amount of the country’s tax bill. The two tax groups who pay the most in taxes are Canadians who earn over $100,000 a year (before tax) and Canadians who make more than $250,000 a year.
According to the study, Canadians who make over $100,000 pay the largest amount of Canada’s tax bill. While this group is made up of only 8.4 percent of the population, 52 percent of all Canada’s income tax was paid by this group in 2014.
Next, Canadians who earn more than $250,000 annually constitute 1 percent of the population. According to the CTF survey, this group was responsible for 21 percent of all income tax revenue collected by the federal government.
Between these two high earning groups, 73% of all Canada’s tax revenue is collected. Still, while few people will likely feel sorry for these wealthy individuals, the survey shines a light on the common argument that “the wealthy don’t pay enough tax.”
A history of high tax rates for the wealthy
As Canada’s tax system is based on the amount of money individuals earn, higher taxes on the wealthy are nothing new. However, since the Liberals took office in late 2015, they have concentrated on fulfilling their campaign promise of raising taxes on the upper class. A new income tax bracket was formed dedicated to Canadians who earned $200,000 per year or higher. This group’s tax bill was raised from 29 percent to 33 percent.
Recently Prime Minister Justin Trudeau claimed this is still not enough, falling back on the old argument that “the middle class pay too much in taxes and the wealthiest don’t pay enough” noted Mark Milke, author of the CTF study.
Milke’s study shows that this belief is simply not true, and he commented, “The middle class could always use a tax break. But it is false to say higher income Canadians do not pay their fair share.”
While the statistics revealed by the survey are surprising, the CTF may have another agenda. The group is also asserting that Canada’s taxes are too high in general, noting, “The most recent statistics from 2015 show the general revenues to all Canadian governments amounted to 38.6 percent of (gross domestic product).”
Whether or not the results of the CTF’s survey change the perception of the wealthy’s tax responsibility, is yet to be determined. Will current tax policy change? Will taxes be reduced for all Canadians? This survey may play a role in answering these questions in the coming years.