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CTF study: Who pays Canada's income tax bill?

September 25, 2017
CTF study: Who pays Canada's income tax bill?
  • Those with incomes over $100,000 are 8.4% of all tax filers and pay almost 52% of all federal income tax

  • As a percentage of the economy, Canadian taxes and fees were lower under Pierre Trudeau

OTTAWA, ON: In the midst of the debate over the federal government’s proposed tax changes, the Canadian Taxpayers Federation (CTF) today released a new study, Who Pays Income Tax? Based on the most recent CRA filing data available (2014), here are the facts about who pays income tax and in what proportions:

  • In 2014, 27.5 million Canadian filed a tax return; 33% (9.1 million) paid no income tax; 67% (18.4 million tax filers) paid all the federal and provincial income tax.
  • Those with incomes under $50,000 accounted for 68.4% of all tax filers and paid 13.2% of all federal income tax.
  • Filers between $50,000 and $99,999 represented 23.3% of all filers and paid 35% of all federal income tax.
  • Those with incomes at $100,000 and above represented 8.4% of all filers and paid 51.8% of all federal income tax
  • Of note, those with incomes at $250,000 or higher represented 1% of all tax filers and paid 21.1% of all federal income tax.

“Prime Minister Justin Trudeau recently claimed that ‘the middle class pay too much in taxes and the wealthiest don't pay enough,” said study author Mark Milke. “The middle class could always use a tax break. But it is false to say higher income Canadians do not pay their fair share.”

“The CRA data shows the opposite: Six figure incomes make up less than one-tenth of all tax filers but pay almost 52% of all federal income tax and 54% of all provincial income tax,” continued Milke.

“The real numbers expose the lie that any Canadian should pay more,” said CTF Federal Director Aaron Wudrick. “Before any tax hikes in 2015 and 2016, anyone earning more than $50,000 already paid a higher proportion of their income in federal and provincial taxes than those below that threshold. How much more ‘fair’ do governments intend to get?”  

Of note, with another data set from the federal finance department that totals taxes, fees and other revenues to all Canadian governments, the most recent statistics from 2015 show that general revenues to all Canadian governments amounted to 38.6% of GDP.

In the 1970s, under Pierre Trudeau as Prime Minister for most of that decade, general revenues to government as a percentage of the economy ranged from 35.2% to 38.1% of the economy.

“In the 1970s at least, Pierre Trudeau’s era was a lower-taxed time than the Justin Trudeau era,” noted Wudrick.

To read a copy of the CTF’s report Who Pays Income Tax? by Mark Milke, please click HERE.

CTF response to first comment:

An anonymous posting on this CTF article alleged the CTF report from Mark Milke was misleading because it didn’t note why 9 million Canadians pay no income tax, and that the report provides no specific tax burdens and specific income levels. 

That poster was incorrect and his or her mistakes resulted from not reading the report or not understanding the data. The report in fact notes on page 6 why some people pay no income tax, including the existence of a basic personal exemption “which also helps exclude almost nine million tax filers”. On the same page, the report also provides the example of unused RRSP deductions as another reason why many Canadians might pay zero income tax. 

As for a percentage of taxes paid at each income level, again, it appears the poster has not read the report: Average taxes paid per cohort are provided in figure 3d and 4d (federal income tax and provincial income tax) according to the income cohorts provided by the CRA. There are plenty of other estimates of tax burdens relative to dollar-specific income levels (in provincial budgets and by tax firms for example) but the CRA data provides data by cohort and thus the data and averages in the study are provided by cohort. The conclusions from the CRA data are thus clear: As one examines ever-higher income cohorts, an ever-smaller number of tax filers pay an ever-larger share of federal and provincial income taxes. It is obvious then, for example, that 9.8 million people who pay $17.6 billion in federal income tax (the $0 to $49,999 cohort in figure 3c) would each, on average, pay significantly less per person than 268,000 tax filers who pay $28.1 billion in federal income tax (the $250,000 and above cohort).  

Lastly, as also noted in the report, the ratio of taxes paid to income is, as the report notes, calculated using total income, not taxable income. That means before deductions and credits are applied, we already have a sense of total income and income taxes paid relative to that total income. It appears that the poster does not like what the CRA data shows, but as someone once said, one is entitled to one’s own opinion but not one’s own facts. The facts from the CRA data, from all 27.5 million returns filed in 2014, is that the higher the income cohort, the more taxes are paid by that cohort, and the individual tax filers within that cohort.

on September 25, 2017
TERRIBLE SELF-SERVING REPORT. SO MISLEADING. "Federally, 33% of tax filers pay no federal income tax; in Quebec, for provincial filers for provincial income tax, that figure is 37%. It does not mention that these tax filers paid zero taxes because their income was so so low. How many people earning over $100k paid no taxes? No where can I find % of income paid at each income level. Rather all it shows is how much that class pays as a % of all the taxes collected. The reader cannot decide if this is enough or not. It does not show how much tax a person or family earning say, $50k pays vs. a person earning $100k or $250k. It does not show how many earning over $250k pay no taxes but is did show that in QC 37% of those who filed paid no taxes but we have no idea if they paid no tax because thay earned less than $10k. TAKEAWAY: A self-serving useless report serving the wealthy. Doesn't answer the Buffet question: Do you pay more taxes than your assistant as a %? Yes or no. It doesn't say and that is dishonest. Gotta go to sip my latte.

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By J Petes
on September 26, 2017
@Anonymous above...As if people making over $250k or those under 23k pay zero taxes, they buy food and energy like everyone else and pay income taxes as well as PST/HST depends on where you live etc. Go dunk your head in your latte.

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