Canada's Tax System Inequitable
Nov 20, 2007
A new study by the Canadian Centre for Policy Alternatives (CCPA) has demonstrated that the overall tax system in Canada no longer meets the test of fairness across income groups. Canada’s upper income earners are paying less of their fair share of taxes than they were some 15 years ago.
In Eroding Tax Fairness: Tax Incidence in Canada, 1990 to 2005, Marc Lee has completed the first comprehensive study of tax incidence (the influence of taxes on economic welfare) in more than a decade. And it’s somewhat unique in that it includes all sources of income (including inheritances, workplace benefits and capital gains) as well as all types of taxes.
The findings are somewhat surprising, to say the least. The tax rates for the top one percent of Canadians has dropped significantly since 1990, while Canadians of lesser means have seen their rates rise steadily. Although the tax system is still somewhat fair for middle income earners, it is appalling that not only do the top earners pay less than they did in 1990, but that their tax rate is actually slightly lower than that paid by the poorest 10 percent of Canadians.
The report also finds that it is has been the provinces that have been guilty of introducing regressive tax changes. Although they often complain of a fiscal imbalance within Canada, it has actually been provincial income tax cuts that have played a major role in eroding Canada’s tax fairness.
For most Canadians, tax rates fell about two percentage points between 1990 and 2005. Canadians in the top one percent of earners saw their rate fall by about four points over this same period. And Canadians amongst the bottom 10 percent of income earners saw their tax rate increase by more than five percentage points over this time.
The study concludes that there is room for raising income taxes at the top end of Canada’s income distribution so that the distribution of taxes among income classes becomes more equitable. They would help ensure that those most able to pay for public goods and services that we value as citizens do so. While some will no doubt argue that tax increases will do nothing but hurt Canada’s economy, it is apparent that Canada is nowhere close to hitting tax rates that have negative economic consequences. And if that is true, then don’t we deserve a much more equitable system, where those who can afford to pay taxes actually pay a reasonable share?
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How about this. Let's just end all income taxes and stop punishing people for working hard. Let's depend on consumption taxes. That way the rich will pay more ( because they have more to spend) and the poor will pay less ( because they have less to spend )
JimCotton - 2007-11-20 10:18