The rich already pay their fair share of income tax in Canada

- April 15th, 2012

I’ve written before about the issue of whether the rich pay their fair share of tax. Using data from the past on tax brackets and who paid what, I showed that prior to a whole range of tax cuts since 2005, the “rich” were already paying most of the taxes in Canada. The tax cuts that have come in since then have primarily been aimed at the lower end of the income spectrum – cutting the lowest tax rate but not touching the upper rates.

That hasn’t stopped Canada’s left from braying on about how the rich don’t pay their fair share.

Importing their thoughts and their slogans from the US, where even there the rich pay most of the tax and the bottom half pays next to nothing, Canada’s left is trying to reignite class warfare.

On Saturday I posted a column from John Robson that cast doubt on the Broadbent Institute’s claim, through a rather strange poll, that said Canadians want to pay more in tax.

Robson disputed the poll and that led to online comments regarding the need for the wealthy to “pay their fair share.”

income tax tweets

It seems facts don’t matter in this argument, just a well worn slogan.

So what is the truth?

Well according to Stats Canada figures put forward by the Canadian Taxpayers Federation, Canada’s tax system does not squeeze the middle and let the wealthy off without “paying their fair share.”

The chart below breaks down how many people are in each income bracket according to their tax filings. It details how much each group earns, what share of the national income pie that amounts to and what their share of the tax pie is.

CTF Tax Stats

The top 10.3% of Canadians, by income – meaning people making $80,000 and up – paid 56.9% of all income tax in 2009. This group earned 36.7% of all income claimed on tax returns but paid 56.9% of all tax.

The top 2.1% of Canadians by income – meaning people making $150,000 and up – paid 29.9% of all income tax in 2009. This group earned 16.1% of all income claimed on tax returns but paid 29.9% of all tax.

In fact if you look at “Total tax paid” column and compare each income group to “Total income declared” you will see that all groups below $60,000 in income take a bigger share of the income pie than they pay into the tax pie. The disparity grows as you go down the income scale. The reverse happens as you go above $60,000, the share of the tax pie grows while the share of the national income pie shrinks by comparison.

Defenders of the so-called “progressive” tax system will claim that this is as it should be. But if the rich are already paying more, significantly more, how can these people then claim that the rich also are not paying their fair share.

It makes no sense.

Categories: Politics

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15 comments

  1. Thumbnail says:

    I have just added your blog onto my favourites. I followed with interest the election in Canada which delivered Stephen Harper his majority. We have just had our election in Queensland which delivered Newman (conservative) a thumping majority.
    I love it – “You are entitled to your own opinion, but not your own facts”

  2. Dan says:

    Thanks Brian, for posting this. I had not yet seen this reported in Canada. Many American think-tanks like the Heritage Foundation have had published data in the news. I was hoping the same would happen up hear and indeed it now has.

  3. Lance in Calgary says:

    Two comments.
    First, nice to see Wendy doesn’t let little things like facts get in the way of her opinion.
    Secondly, Brian, you have missed a key calculation. If you add up the total taxes paid by your top 2.1% ($43.4 Billion) this number is the same as the total taxes paid by everyone making under about $63,000. Based on the number of returns, the “rich” pay on average the same tax as 40 “average Canadians”. While I agree that we need to contribute to the care of those less fortunate I work hard for my income and believe that supporting 39 other people is more than my fair share. And then some.

  4. Master Wooten says:

    And that’s income tax. When you add the fact that rich people pay more in terms of gross revenue from sales taxes owing to the type of expenses they make and the value of the goods and services which they purchase, the argument that the rich pay the most taxes generally is that much stonger of an argument. All this gets us right down to the heart of the issue because, “who pays the most taxes” isn’t really the issue and “paying their fair share” as Obama likes to claim the rich don’t do is not the issue either, the issue is whether or not we have a revenue problem (that advocated mostly by liberals) or a spending problem which conservatives more often claim to be the case.

    Fact is liberal lawmakers are turning over every stone to find more revenue in order to maintain government spending at levels that are often obscene, while not addressing deficits and debts. Those issues are rarely on the radar of the left because when after all of their searching and demanding that the top earners pay their “fair share”, when they do not find that additional revenue liberals are perfectly fine with deficit financing and adding to the overall debt.

  5. Reeza says:

    We’re definitely not as bad as the USA, but I think you need to look at the effective tax rate per group instead of the numbers you’ve presented. This is the amount of taxes paid/income for each group. The information is provided in the charts above to get what you need though. Looking at the data I don’t see why that couldn’t be changed, ie a slower increment from 150 to say 1million plus with it maxing out at 35% instead of 29%.

    Note for the group 250+ with returns=173570 and income declared at 98273613 that averages out to 566,000 per return. So the groups they’ve chosen to display may not be representative of the issue people are trying to state.

    Income Tax Rate
    Loss or nil 0%
    <10 0%
    10 to 20 1%
    20 to 30 5%
    30 to 40 9%
    40 to 50 11%
    50 – 60 13%
    60 – 70 15%
    70-80 16%
    80-90 17%
    90-100 18%
    100-150 20%
    150-250 24%
    250+ 29%

  6. Ramjet says:

    My first visit to your site after listening to you on Sun TV and CFRA. Thanks for sharing. I appreciate the information posted here and it will help with debates I have regularly with some of my left leaning ‘friends’.
    All the best.

  7. Fred says:

    It would be good to know who pays what after accounting for transfers from the government.

    For example, at what income level do taxpayers break even on tax paid vs. transfers received? After adjusting for transfers, how much of the burden are the top 25% shouldering? The top 10%?

  8. Exurban says:

    Interesting arithmetical feature I noticed there … if you start at the bottom of the column titled “Total Tax Paid by This Group”, the figures 19.7 + 10.2 + 14.7 + 5.4 = exactly 50%. This means:

    Tax filers reporting over $90,000 income — a group that comprises 7.5% of everyone filing — are paying exactly half the income taxes.

    Tax filers making less than $90,000 — a group that comprises 92.5% of everyone filing — are paying the other half.

    The first group’s declared income is 30.9% of the total; therefore the second group’s declared income is 69.1% of the total.

  9. Economist says:

    The real truth of the matter is easy.

    Neither the Right nor the Left are using real facts and relative arguments.

    Both sides distort the numbers and the truth to suit their needs.

    However, there are some basic truths that the Right will not accept.

    Such as the simple fact that the rich benefit more from public services than the poor. Take the roads for example. Those who are in a management role make more than their workers, for a good reason, the more people they manage the more they make. Should none of those people be able to get to work. Our rich management type would be out of work. Therefore, the roads that his underlings take to get to work also benefit him. Although he benefits personally as much as everyone else. Professionally he gets an incremental benefit from each and every worker under him. Based on this simple yet effective logic, we can see that the wealthy benefit far more from roads, public transit, education and police services than do the poor.

    Anyone that cannot see, or argues against such an obvious statement of reality is likely so blinded by class that they will never accept the truth.

    Now the Left will never accept some truths either, such as Welfare Entitlement. They whine every time that someone brings up Workfare. The simple truth here is that working brings a sense of structure and dignity to an individuals life. It has other benefits when implemented in a Welfare state such as ours. These are many fold and again cannot be argued against.

    Both the Right and the Left are so caught up in their maniacal distrust and hatred of each other that they are both blind to reality.

    I am a Radically Progressive Centrist. That is my viewpoint. I am neither Right nor Left as both sides are WRONG. Often for the same reason.

  10. george lenard says:

    Oil companines report record profits, while tax rate is lowered and national deficit is at record highs. Liars figure!

  11. Fbomb says:

    Whats unfair is big corporations that do not provide profit sharing. Instead they offer bonuses to some workers and told not to tell anyone, how is that good?

  12. Master Wooten says:

    “Such as the simple fact that the rich benefit more from public services than the poor. Take the roads for example. Those who are in a management role make more than their workers, for a good reason, the more people they manage the more they make. Should none of those people be able to get to work. Our rich management type would be out of work. Therefore, the roads that his underlings take to get to work also benefit him. Although he benefits personally as much as everyone else. Professionally he gets an incremental benefit from each and every worker under him. Based on this simple yet effective logic, we can see that the wealthy benefit far more from roads, public transit, education and police services than do the poor.”

    Economist? Really? Lets break this fiction down.

    The rich do NOT benefit more from public services. When you say “benefit from public services”, you have to break it down into personal benefits versus those of a collective nature. Personal benefits such as EI, government jobs and services or other government assistance that goes to the individual is MOSTLY if not exclusively dolled out to the lowest income earners. To say that roads benefit the wealthy or the poor more is a stupid argument in that you can in no way quantify who is using the roads, how often and for what. Automobile users and those who receive goods from others who use the roads to transport people and goods constitutes everybody! Public transit, public education and the police? Their clients are largely middle and lower class people. They use those services and work in those professions FAR more than do the rich. As a result the middle and lower classes benefit DIRECTLY from those services. The rich who are FAR more likely to consume private sector services may benefit IN-DIRECTLY from the DIRECT use of public service by their middle and lower class counterparts, provided their income is based on the output of such folk which is a major UNCHECKED assumption on your part.

    Now your statement about management needing more people to manage to make more money? Really? I seriously doubt this applies to public sector managers whose salaries are NOT dependant on the numbers of people working for them. What about businesses who downsize to realise less cost and more profit? How then would more people to manage result in more income for them?

    “Economist”, your theory has just been punk’d.
    Me thinks you have been influenced Thomas Walkom somewhat.

  13. Master Wooten says:

    “Whats unfair is big corporations that do not provide profit sharing. Instead they offer bonuses to some workers and told not to tell anyone, how is that good?”

    Bonuses are needed to keep much needed leadership capital to keep the company nd hence everyone afloat.

    Yes I do agree profit sharing is the the answer… the answer to killing union membership. The more of a stake the worker has in his employer, the less likely he’d be willing to listen to some economically challenged union looking to bankrupt that employer.

  14. franc black says:

    @ Economist

    Well said. Where do I sign up ?

  15. Your Grannie says:

    Whiners about our tax system have obviously never “jumped a tax bracket”, only to find that they have LESS spending money AFTER THEY GOT A RAISE.

    Just tax everybody the same flat rate for income tax. Let the people who take the biggest risks (entrepreneurs and small business owners) actually use their money to HIRE MORE PEOPLE who SPEND their money at local stores and businesses, and music lessons for their kids, etc.

    Oh, and don’t bother “taxing” welfare money. Just remove the VOTE from people who do not CONTRIBUTE to the public pool. After all, why is it deemed “fair” that people who do not pay into the system (inmates included) should get a say on how the money of the rest of us gets spent?

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