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Canadian Taxes Highly Progressive, Think Tank Says

by Mike Godfrey, Tax-News.com, Washington

13 December 2017


The top 20 percent of income earners in Canada will pay 55.9 percent of all taxes this year, according to research by the Fraser Institute.

The think tank's latest report measured the distribution of the tax burden in Canada. It said that the top 20 percent earns 49.1 percent of the nation's income but pays 55.9 percent of total taxes. By contrast, the research found that families in the bottom 20 percent earn 4.1 percent of the nation's income but collectively pay 1.8 percent of taxes.

The research also focused on the amount of tax paid by the top one percent of income earners. The Institute said that, at 14.7 percent, this group's share of total taxes paid is four percent higher than its share of total income earned. In addition, its share of total taxes has risen over the past two decades, from 11.3 percent in 1997.

Taking income tax as an example, the Institute concluded that the top 20 percent of income earners pay nearly two-thirds of all income tax, while the bottom 20 percent pays 0.6 percent.

In 2016, the Liberal Government introduced a new 33 percent income tax rate on income in excess of CAD200,000 (USD155,360). It also cut the 22 percent middle-income tax rate to 20.5 percent.

Charles Lammam, report co-author and Director of Fiscal Studies at the Institute, said: "The notion of tax fairness has come up recently to justify even higher taxes on top earners, but in reality, they already pay a disproportionate share of the tax bill. Despite rhetoric to the contrary, the reality is that Canada's top earners already pay a disproportionate share of the taxes, and that share has grown over the years."

TAGS: tax | Canada | revenue statistics | individual income tax

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