The top 20 per cent is likely paying 70 per cent or more of all income taxes
Many people were upset with Prime Minister Justin Trudeau this week for saying “low-income families don’t benefit from tax breaks because they don’t pay taxes.”
Of course, some were upset because they felt it was untrue. But Trudeau was speaking the complete truth when it comes to income taxes (HST, realty taxes and other consumption taxes are another story). It is just a truth that he may not want many Canadians to know.
On average, two of every five Canadian households do not pay anything towards federally and provincially funded expenses such as health care, education, community and social services, national defence, public safety and even the good old Canada Revenue Agency. One household of every five pays much more than 70 per cent of all of those costs.
The Fraser Institute’s Canadian Tax Simulator 2017 looked at Canadian households with income ranging from zero to $80,843, representing the bottom 40 per cent of households by income, and found they paid 4.6 per cent of all the personal tax paid. That seems like a low number, but it still isn’t zero.
How does 4.6 per cent become zero? It happens when the tax that is paid is then given back (and more) by the federal and provincial governments.
As it turns out, quite a few benefits are paid out to Canadians with household income in the lower 40 per cent — particularly those with children. The CRA even has a wonderful online calculator that will quantify just how large those benefits might be.
It didn’t used to be this way, but it is now.
