personal income tax

Trudeau government’s small business tax changes won’t help the middle class

Ottawa has exacerbated the tax-rate gap between small businesses and employees.

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Measuring the Impact of Federal Personal Income Tax Changes on Middle Income Canadian Families

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  • During the 2015 federal election campaign, the Liberals pledged to cut income taxes on Canada’s middle class. Since coming into office, the government has repeatedly claimed that it has delivered on this commitment. While the federal government did reduce the second lowest federal personal income tax rate, it also simultaneously introduced several other broader changes to the federal personal income tax system.
  • For instance, it introduced a new, higher top income tax rate and eliminated several tax credits, which had the effect of increasing taxes on Canadian families who previously claimed those credits. In fact, the elimination of many tax credits may partially, or even completely, offset the tax rate reduction targeted at middle class families.
  • This paper measures the net overall effect that the federal government’s changes to the personal income tax system have had on the amount of tax that Canadian families with children pay. It finds the federal government’s income tax changes have resulted in 60 percent of the 3.88 million families with children covered in this paper (representing 13.9 million individuals), paying more in taxes. The average tax increase amounts to $1,151 each year.
  • Among middle income families—the group of families the federal government claims to want to help—81 percent are paying more in taxes as a result of the federal income tax changes. The average income tax increase for this group of middle income families is $840.
  • For the subset of middle income families consisting of couples with children, an even greater share (89 percent) pays higher income taxes ($919 on average).

Higher taxes, less competitive economy potentially on the way for British Columbia

The NDP-Green agreement calls for a 67 per cent increase in B.C.’s carbon tax.

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Impact of Proposed NDP-Green Tax Changes on BC Families

Main conclusions

  • An NDP-Green government in British Columbia would result in a marked shift in tax policy in the province. The new government would impose several significant tax increases including a rise in personal income taxes, carbon taxes, and business taxes. These increases would add a further $1.4 billion to the tax burden of British Columbians, assuming that the carbon tax increase was fully implemented.
  • Under the proposed NDP-Green tax changes, the average family’s tax bill would increase by $594, including a $482 increase in fuel and carbon taxes.
  • BC families across the income spectrum can expect to pay more in taxes. Specifically, the increase in total taxes ranges from $144 for an average family in the $20,000 to $50,000 income group to over $1,000 for an average family in the $150,000 to $250,000 income group. The NDP-Green proposed Climate Action Rebate will likely protect those in the lower income group from some or all of the tax increase though details of the rebate are unknown as of this writing.
  • Given the spending initiatives outlined in the NDP-Green Agreement and the billions of dollars of un-costed promises in the NDP election platform, an NDP-Green government would almost certainly institute tax increases beyond those listed above and/or run annual budget deficits (i.e., deferred taxation), neither of which are included in this analysis.

Election results could spell trouble for B.C.’s tax competitiveness

The NDP and Green Party both want to raise B.C.’s top personal tax rate.

Canada’s income tax started small but grew much larger over 100 years

As the tax deadline looms, here’s a brief history of Canada’s federal income tax, which has changed dramatically over the years.
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