Yahoo Finance Posthaste: Is income tax rate on the wealthy too high? A lot of Canadians seem to think so, poll suggests
Many Canadians think high-income earners should pay their “fair share” of taxes, but they also think there should be a limit to just how much they’re required to fork over to the Canada Revenue Agency, with their idea of an appropriate ceiling lower than reality, recent research suggests.
Though a majority, or 70 per cent, of Canadians believe some people aren’t paying enough in taxes, only 35 per cent think the wealthy should be paying more than they already do, according to a new survey from think tank the Fraser Institute conducted by Leger Marketing.
Further, for taxes on extra income, more than three-quarters think the highest marginal rate charged on an additional $100 shouldn’t exceed 50 per cent and half agreed it should be 20 per cent or less. And when it comes to the top tax rate, 58 per cent think it shouldn’t be more than 50 per cent, and almost half said it should be at 45 per cent or less.
That’s a far cry from the current combined provincial and federal tax rate. As it stands, the top 20 per cent of earners are taxed at a combined marginal rate of more than 47 per cent across the provinces. The rate rises to more than 50 per cent in all but Alberta and Saskatchewan, the Fraser Institute said.
“Clearly there’s a difference between income tax rates in most provinces and the rate most Canadians believe is appropriate,” Jake Fuss, co-author of the report analyzing the poll results, and director of fiscal studies at the Fraser Institute, said in a press release.
According to the report, Newfoundland and Labrador is home to the highest combined marginal personal income tax rate at 54.8 per cent, followed by Nova Scotia at 54 per cent, Ontario at 53.53 per cent, British Columbia at 53.5 per cent, Quebec at 53.31 per cent, New Brunswick at 52.5 per cent, Prince Edward Island at 51.37 per cent, Manitoba at 50.4 per cent, Alberta at 48 per cent and Saskatchewan at 47.5 per cent.
The federal government has made policy changes in recent years to ensure high-income Canadians pay enough income tax. “We’re making sure the very wealthy and our biggest corporations pay their fair share of taxes,” Finance Minister Chrystia Freeland said in her speech announcing the 2023 budget, which included changes aimed at the richest 20 per cent, such as increasing the alternative minimum tax.
In 2022, the budget raised the top federal tax rate to 33 per cent from 29 per cent, set in 2016. The government said at the time that “some high-income Canadians still pay relatively little in personal income tax as a share of their income.” It said 28 per cent of people earning more than $400,000 pay a federal tax rate of 15 per cent by making use of deductions and tax credits.
Responses to the Fraser Institute’s poll varied across regions, incomes and ages. For example, 86 per cent of those aged 65 and older agreed that some people aren’t paying enough taxes. That’s compared to those aged 18 to 24, of which 49 per cent said the same. People in British Columbia were also more likely to say some aren’t contributing their fair share, with 51 per cent agreeing, compared to only 38 per cent in Alberta.
Still, across all ages, incomes and locations, 42 per cent said the wealthiest taxpayers should be paying the same or less than they already do. Altogether, the poll suggests most Canadians think tax rates are too high, even for high-income earners, the report said.
“Despite the common refrain from Ottawa and elsewhere that the ‘rich’ don’t pay their fair share, more Canadians oppose tax increases for higher-income families than those who support tax hikes,” Fuss said.
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China’s gross domestic product rose less than one per cent from the first quarter, figures released on July 17 showed, as retail sales in June rose less than forecast.
United States Treasury Secretary Janet Yellen said China’s economic slowdown risks causing ripple effects across the global economy. Still, she doesn’t expect that will lead to a recession in the U.S.
“Many countries do depend on strong Chinese growth to promote growth in their own economies, particularly countries in Asia — and slow growth in China can have some negative spillovers for the United States,” Yellen said after the data was released.
In the U.S., “growth has slowed, but our labour market continues to be quite strong — I don’t expect a recession,” Yellen said. The economy is on a “good path” to bring inflation down without a major weakening in the labour market, she said.
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Canada Mortgage and Housing Corp. will release its monthly housing starts report for June.
Deputy Prime Minister Chrystia Freeland will hold a teleconference following the G20 Finance Ministers and Central Bank Governors Meetings.
Today’s data: Consumer price index, housing starts; U.S. retail sales, industrial production and capacity utilization
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Why the real estate industry is closely watching the sale of two Vancouver office towers
If you think this stock market rally is based on fundamentals, think again
Home prices to end year 8.5% higher, despite Bank of Canada rate hikes: Royal LePage
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Confusion abounds over the pension tax credit. A lot of people think they should should automatically convert all or some of their RRSP to a RRIF and draw $2,000 per year to claim the pension tax credit once they enter the year they turn 65. But that’s not necessarily correct. Expert Allan Norman explains the ins and outs of splitting RRIF income with a spouse to get the $2,000 credit in this week’s instalment of FP Answers.
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Today’s Posthaste was written by Victoria Wells (@vwells80), with additional reporting from Financial Post staff, The Canadian Press, Thomson Reuters and Bloomberg.
Have a story idea, pitch, embargoed report, or a suggestion for this newsletter? Email us at posthaste@postmedia.com.
