Canada’s income tax rates have become uncompetitive, and the economy will pay the price

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Jamie Golombek: High tax rates, which reduce the reward of earning more income, discourage people from engaging in productive economic activity

Canada’s top marginal tax rates are punitively high, have put Canada in an uncompetitive position and discourage individuals from engaging in productive economic activity, ultimately hindering economic growth and prosperity. These are the observations of the Fraser Institute, based on a study of Canada’s top tax rates and how they compare to other jurisdictions.

To compound matters, the increase in the top federal rate came on top of numerous recent provincial increases. Nova Scotia bumped up its top rate in 2010, and, in nearly every year since then at least one Canadian government has increased its top personal income tax rate. To wit, since 2010, seven out of ten provincial governments increased their tax rates on upper-income earners. The net result is an increased top combined federal/provincial tax rate in every province over the past decade.

And it’s not just at the highest income levels that we’re uncompetitive. Canada’s top tax rates are often applied to lower levels of income than in the U.S. For example, the U.S. top federal rate kicks in at US$510,300 in 2019. The report looked at incomes of $150,000, $75,000 and $50,000 and concluded that our combined rates are uncompetitive, even at these lower levels of income.

Knowing this, why then do our Canadian governments insist on raising rates? The obvious answer is to raise more revenue as they pay for more spending, while trying to tackle deficits and an increasing debt load. But, as the Institute points out, the tax increases are unlikely to raise as much revenue as governments expect since taxpayers, and, in particular, upper-income earners, tend to change their behaviour in response to higher tax rates in ways that reduce the amount of tax they pay.

 

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Coltaine777 You mean the taxpaying Canadians will pay the price. If it wasn't for us there would be no economy.

Income tax rates in a race to the bottom...and will take society and the ecosystem with them. The corporate masters will of course tell the masses to collect the crumbs and be grateful. Constricting the trickle in the economics, old man problems... 💦

If high taxes were a deterent to economic expansion than the Nordic Countries would be cesspools of Poverty. Reality Buisness will go whereever there is a market and a profit to be made (no matter how small the profit)

Income taxes went down under Trudeau and we now pay less than Americans

Welcome to the modern slavery ! Sunny ways my friends, sunny ways!

Income tax rates magically became ‘uncompetitive’? Or someone & something made them uncompetitive? You have any ideas on that? Any notions at all?

And then somebody said 'The budget will balance itself' . It is 'The Society will balance itself'

Time to seek refugee status in Monaco

monica_barona I agree

monica_barona Sad, get Trudeau out!

monica_barona Give it a few months to catch up, we already are!!

Don't need Sherlock Holmes to already know this financial reality. 🇨🇦 is taxed to death.

OneProudCanadia DUH

AGREE. Don’t expect it to change though.

Tax. The. Corporations.

And, starkly, so will every individual Canadian. Some more than others, but all will pay.

But ,but Canada is doing so well, we have to increase taxes.

The real problem are the tax evaders and tax havens Multinational corporations are finding too many ways to avoid taxes Small businesses should be taxed less

BernieSanders have a say

Great piece to brainwash ppl to vote for the conservatives. How about another perspective now?👇

Canada is 7th highest of 34 industrialized nations. All provinces higher that 49 US states... This is without consideration of GST and the CO2 tax on everything!!!

Canada is the only country in the world taxed to the teeth & people happy to see more new taxes. Falsely assuming more taxes = more better gvt services. all the while getting poor quality gvt services in every area.

Got a job? Then you're rich. Hand it over.

TaxationIsTheft

But muh roads! Muh education! MUH HEALTHCARE!!!

NOT A SURPRISE

I'm a young business owner. I stop working once I hit the 93k tax bracket. It makes no sense to me to bust my balls for say a 10 hour job to end up giving 4 of those hours to Trudeau, Notley and their cohort. Plus municipal taxes, and whatnot. It's all a massive scam

Wow. Its taken long enough for media to recognize this. The world bank says that Canada GDP has fallen by 250 billion under anointed sock. Gross national income has fallen $10,000 under anointed sock. Tax releif day is June 17 but thr kids seem to want a new carbon tax 🙄🙄

awudrick It is morally unjust for a government to make more from a citizen’s labour than the citizen himself...especially considering consumption (and soon to be carbon) taxes.

60% plus in tax is pretty much a communist state.

Really it took until March 2019 to make this announcement. Please let the LPC know about this,

DavRo13 JustinTrudeau hasn’t done anything right.. as I’ve read, he should’ve been a PM not acted as one

Gee....I hadn't noticed.

happyfinko For sure we are hooped

'Envy was once considered to be one of the seven deadly sins before it became one of the most debilitating virtues of the far left new age socialist - under its new name, 'social justice.''

Duh.

I'm considering retiring early as I feel abused by tax system. After income tax, CPP, EI, GST, PST, gas tax, carbon tax, municipal tax, I only keep about 30-35% of earnings. Why not live on less & retire? The uber rich have tax accountants to mitigate tax using boutique credits.

Governments are grossly incompetent with our money. Need a pay for play system. Our current system is, at best, a money pit.

JODYMITIC Taxing fisherman, farmers and rural doctors into leaving.

JODYMITIC Bill_Morneau well done Bill......well done.

The economy already is paying the price.

Maybe top earners taking too much in the way of salaries & bonuses is what is really making us uncompetitive here? Selfishness is not conducive to competitiveness!!!

Booooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooolshite

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