New analysis shows that a majority of both total taxes and income taxes in Canada are paid by the top 20% of income-earning families.
According to a study by the Fraser Institute, high income households pay a “disproportionately large” share of Canada’s taxes when compared to other groups.
“Despite the common misperception that top earners don’t pay their ‘fair share’ of taxes, in reality these households pay a disproportionately large share of the total tax bill,” said Fraser Institute director of fiscal studies Jake Fuss.
“While the top 20 percent earn a large share of total income at 45.7%, they pay an even higher share of total taxes (53.1%).”
On the flip side, the bottom 20% of income earners in Canada pay only 2% of total taxes despite earning over 5% of total income in Canada.
“The assertion that the top 20% of earners in Canada are not paying their fair share is simply not supported by the evidence,” explained Fuss.
According to the Fraser Institute, further tax hikes will only reduce Canada’s competitiveness, especially with its biggest trading partners, the United States.
“Specifically, increasing taxes on top income earners makes Canada a less attractive place to live and to work for highly skilled people such as doctors, scientists, managers, and software engineers,” wrote analysts.
Despite this, the Liberal government has targeted high-earning Canadians with even more taxes. Early on in his first term, Prime Minister Justin Trudeau raised the top tax rate from 29% to 33% but despite promises that it would increase tax revenues, the hike resulted in a net revenue loss.
Last year, the CD Howe Institute warned that Canada was struggling behind other Organization for Economic Co-operation and Development countries to attract business investment into the country.
Investment in Canada is 50 cents per worker compared to every dollar invested in the United States.
“Business investment is so weak that capital per member of the labour force is falling, and the implications for incomes and competitiveness are ominous,” wrote researchers.
“Investment per available worker lower in Canada than abroad tells us that businesses see less opportunity in Canada, and prefigures weaker growth in Canadian earnings and living standards than in other OECD countries.”
