High income-tax rates killing competitiveness

[Anonymous]

You don't need to earn a rock star income in my indebted province to be paying over 53% income tax.



Canadian workers at almost every economic level are paying significantly higher personal income-tax rates than their U.S. counterparts, undermining economic growth, says a new study by the Fraser Institute.



The report, Canada's Rising Personal Tax Rates and Falling Tax Competitiveness, co-authored by Robert P. Murphy, Milagros Palacios and Jake Fuss, studied combined federal and provincial marginal income-tax rates on annual earnings from $50,000 to $300,000, adjusting for the U.S.-Canada exchange rate.



(The marginal income tax rate is the percentage of income you are taxed in the highest tax bracket for which you qualify.)



"At virtually every level of income, Canada's tax rates are uncompetitive with the U.S.," said Murphy, a senior fellow with the Fraser Institute.



The report warns "high and increasing marginal tax rates — that is, [size=150]the tax rate on the next dollar earned — discourage people from engaging in productive economic activity, ultimately hindering economic growth and prosperity. This occurs because marginal tax rates reduce the reward of earning more income [/size]and, in the case of personal income taxes, more labour income."



The study says while U.S. income-tax rates have historically been lower than Canada's, a series of federal and provincial income-tax hikes between 2009 and 2018 significantly increased the discrepancy.



The report found that as of 2018, in the 61 jurisdictions surveyed (10 Canadian provinces, 50 U.S. states and the District of Columbia), marginal income-tax rates in Canada's 10 provinces were higher than in any U.S. state, or higher with only a handful of exceptions.



For the top combined marginal income-tax rate, the study found, seven Canadian provinces had higher rates than any U.S. jurisdiction, and all 10 provinces were in the top 12.



Nova Scotia had the highest top marginal income-tax rate of any of the 61 jurisdictions studied in Canada and the U.S. at 54%, followed by Ontario at 53.53%; Quebec 53.31%; New Brunswick 53.30%; Prince Edward Island 51.37%; Newfoundland & Labrador 51.30% and Manitoba 50.40%.



California had the eighth highest rate at 50.30%; British Columbia ninth at 49.80%; Alberta tied with Hawaii in 10th place at 48.0% and Saskatchewan had the 12th highest rate at 47.50%.



All of the remaining 49 U.S. jurisdictions had lower top marginal income-tax rates than any Canadian province, ranging from a high of 46.9% in Oregon to a low of 37% in Wyoming.



The study also found combined marginal income-tax rates at annual incomes of $50,000, $150,000 and $300,000 were all higher in the 10 Canadian provinces than any of the 51 U.S. jurisdictions.



At $75,000, eight provinces were among the 10 jurisdictions with the highest top marginal income tax rates, followed by Ontario in 13th place and B.C. in 25th.



The study also found Canada's top tax rates are often applied at lower levels of annual income compared to the U.S. and other countries.



In 2017, Canada had the seventh highest combined top marginal tax rate of 34 industrialized countries surveyed, the survey found, compared to 13th in 2014, before the Trudeau government increased it in 2016.



While Canadian governments have hiked tax rates to "uncompetitive" levels to grapple with mounting deficits and debt, the report says, the strategy will likely fail, because taxpayers, especially higher-income earners, will find ways to reduce the amount of taxes they pay, including lowering productivity.

[Anonymous]

The study also found Canada's top tax rates are often applied at lower levels of annual income compared to the U.S. and other countries.



In 2017, Canada had the seventh highest combined top marginal tax rate of 34 industrialized countries surveyed, the survey found, compared to 13th in 2014, before the Trudeau government increased it in 2016.



While Canadian governments have hiked tax rates to "uncompetitive" levels to grapple with mounting deficits and debt, the report says, the strategy will likely fail, because taxpayers, especially higher-income earners, will find ways to reduce the amount of taxes they pay, including lowering productivity.

Justine and some premiers have hiked taxes, increased regulations and sent industrial jobs abroad. We have declined as an investment destination under Trudeau's recklessness and the middle class has suffered.

[JOE]

I support tax cuts only if there's enough money in the kitty/budget to pay for them.



And it's silly to think that every year is a bumper crop. As in Nature, the economy doesn't produce surpluses or stellar performance every single year. If farmers ran their farms the  way politicians run our economy,we'd all starve.



Everything costs money including tax cuts and social programs.



There's no Free Lunch.



Given the amount of debt our governments are carrying around, I suspect we all should be paying higher taxes, rich or poor, lower or upper class.



If we really were paying for all the services we get and balanced the budget, we'd be paying a lot more than we currently are.



Those who want medical services, police protection, armed services, social programs, have gotta be willing to pay for it.



It's a fallacy of the rich who want massive tax cuts when government budget deficits are skyrocketing in places in the United States.



Truth be known, Americans cannot afford the Trump tax cuts anymore than they could afford the W Bush tax cuts.



It's also a fallacy for the middle class to demand all sorts of social services if it puts the government in red ink.



Conservative Leader Andrew Scheer is correct in stating the Trudeau government spends too much and is leaving too much debt behind.



Case in point - if a progressive Left Wing NDP provincial government can balance its books Trudeau and the Liberals should be able to as well.



Incidentally, Ontario was correct in replacing Wynn and the Liberals with Ford and the Conservative government. If he's slashing services but bringing down their debt, that's the tough medicine Ontario needs. Ford is often compared to Trump, but while Ford is actually bringing down Ontario's debt, Trump is destroying America's fiscal health with tax cuts it cannot afford.



Bottom line - you can call yourself left wing progressive or Right wing capitalist, but at the end of the day if you can't balance the books, then its time ta give you the boot.

[Zetsu]

Joe you're not making much sense here man, bottom line is if you pay less than $10,000CAD of taxes a year, you're in no position to tell others looking to reduce tax rates for social/welfare service they never needed from the beginning.



IMO they should just add a balance/equal rate, everyone pays $4000-5000 of minimal taxes, and a 12% flat rate of their remaining salary.

[Anonymous]

Joe you're not making much sense here man, bottom line is if you pay less than $10,000CAD of taxes a year, you're in no position to tell others looking to reduce tax rates for social/welfare service they never needed from the beginning.



IMO they should just add a balance/equal rate, everyone pays $4000-5000 of minimal taxes, and a 12% flat rate of their remaining salary.

Joe knows as little about the economy as he does about investing. He doesn't read anybody's posts anyway.



I am an old school socialist. I believe in workers guaranteed some basic services at a fair price. As SB's article shows, that is not the case in Canada anymore. We have seen our taxes rise a lot in the last four years, but the quality of services has not improved at all.



The bureaucracy, provincially and federally is too damned large and powerful. We cannot afford all those defined benefit pension plans and paid sick days that the private sector doesn't get. But, any government that wants to fire these unnecessary pencil pushers will be crucified in the media. They will spare no amount of due paying members money to buy an election.

[Zetsu]

Joe you're not making much sense here man, bottom line is if you pay less than $10,000CAD of taxes a year, you're in no position to tell others looking to reduce tax rates for social/welfare service they never needed from the beginning.



IMO they should just add a balance/equal rate, everyone pays $4000-5000 of minimal taxes, and a 12% flat rate of their remaining salary.

Joe knows as little about the economy as he does about investing. He doesn't read anybody's posts anyway.



I am an old school socialist. I believe in workers guaranteed some basic services at a fair price. As SB's article shows, that is not the case in Canada anymore. We have seen our taxes rise a lot in the last four years, but the quality of services has not improved at all.



The bureaucracy, provincially and federally is too damned large and powerful. We cannot afford all those defined benefit pension plans and paid sick days that the private sector doesn't get. But, any government that wants to fire these unnecessary pencil pushers will be crucified in the media. They will spare no amount of due paying members money to buy an election.

I totally agree with ya friend, aside from working too much just to only end up paying nothing but taxes, I really think it's time the conservatives should consider passing a law that requires public sector workers to be paid based on the average market wages, just like private business.  I mean there's an obvious reason why the West is in so much debt compared to East Asia, not to mention public sector unions are quite powerful from what my brother says.

[JOE]

Joe you're not making much sense here man, bottom line is if you pay less than $10,000CAD of taxes a year, you're in no position to tell others looking to reduce tax rates for social/welfare service they never needed from the beginning.



IMO they should just add a balance/equal rate, everyone pays $4000-5000 of minimal taxes, and a 12% flat rate of their remaining salary.

Well that might be feasible in Hong Kong where you live Zetsu. Where the average ultra efficient Chinese worker will willingly make sacrifices, work 70 hours a week, 6 or 7 days week. But other than that middle class Vancouverite who's trying to pay down a million dollar mortgage, the average Bloke (including me) wants all his perks and his 37.5 workweek.



Comparing China with Canada is like apples oranges comparison. HK tax rates wouldn't work in North America. We simply don't work hard enough.

[JOE]

Joe you're not making much sense here man, bottom line is if you pay less than $10,000CAD of taxes a year, you're in no position to tell others looking to reduce tax rates for social/welfare service they never needed from the beginning.



IMO they should just add a balance/equal rate, everyone pays $4000-5000 of minimal taxes, and a 12% flat rate of their remaining salary.

Joe knows as little about the economy as he does about investing. He doesn't read anybody's posts anyway.



I am an old school socialist. I believe in workers guaranteed some basic services at a fair price. As SB's article shows, that is not the case in Canada anymore. We have seen our taxes rise a lot in the last four years, but the quality of services has not improved at all.



The bureaucracy, provincially and federally is too damned large and powerful. We cannot afford all those defined benefit pension plans and paid sick days that the private sector doesn't get. But, any government that wants to fire these unnecessary pencil pushers will be crucified in the media. They will spare no amount of due paying members money to buy an election.

Well I do know one thing...the National debt keeps going up hitting record highs under Trump:



https://www.usnews.com/news/politics/articles/2019-03-11/one-cut-not-seen-in-trump-budget-the-debt">https://www.usnews.com/news/politics/ar ... t-the-debt">https://www.usnews.com/news/politics/articles/2019-03-11/one-cut-not-seen-in-trump-budget-the-debt



If you have evidence to refute this fact then please provide it and I'll take back what I said.



I don't mind cutting taxes like Klein, Martin or Harper provided, but they balanced the books first then gave out tax breaks



If Trump cant balance the budget then he shouldcrsise tge taxes on the ultra wealthy like himself.



There might be a case for tax cuts for lower entrepreneurial millionaires who create jobs at home but not ultra billionaires if the budget deficits/national debt reach record highs like they appear to be these days.

[Anonymous]

Joe you're not making much sense here man, bottom line is if you pay less than $10,000CAD of taxes a year, you're in no position to tell others looking to reduce tax rates for social/welfare service they never needed from the beginning.



IMO they should just add a balance/equal rate, everyone pays $4000-5000 of minimal taxes, and a 12% flat rate of their remaining salary.

Joe knows as little about the economy as he does about investing. He doesn't read anybody's posts anyway.



I am an old school socialist. I believe in workers guaranteed some basic services at a fair price. As SB's article shows, that is not the case in Canada anymore. We have seen our taxes rise a lot in the last four years, but the quality of services has not improved at all.



The bureaucracy, provincially and federally is too damned large and powerful. We cannot afford all those defined benefit pension plans and paid sick days that the private sector doesn't get. But, any government that wants to fire these unnecessary pencil pushers will be crucified in the media. They will spare no amount of due paying members money to buy an election.

I totally agree with ya friend, aside from working too much just to only end up paying nothing but taxes, I really think it's time the conservatives should consider passing a law that requires public sector workers to be paid based on the average market wages, just like private business.  I mean there's an obvious reason why the West is in so much debt compared to East Asia, not to mention public sector unions are quite powerful from what my brother says.

It's unfair that the people that serve us in the public sector are getting perks that we don't. I have a very good defined benefit pension plan, but it's no longer feasible. Guys are retiring at 55 and collecting gold plated pensions for 30 yeas. Any employee hired after 2013 gets defined contribution plans, not defined benefit plans.



I have Manulife sick leave with a doctor's note, but I can't call in sick and get paid for it like provincial and federal civil servants do. This is where the money is going. But, no party has the gonads to stand up to public service unions. So, we pay more tax, we grow deficits, we delist health care services just to pay for surplus pencil pushers.

[Zetsu]

Joe you're not making much sense here man, bottom line is if you pay less than $10,000CAD of taxes a year, you're in no position to tell others looking to reduce tax rates for social/welfare service they never needed from the beginning.



IMO they should just add a balance/equal rate, everyone pays $4000-5000 of minimal taxes, and a 12% flat rate of their remaining salary.

Well that might be feasible in Hong Kong where you live Zetsu. Where the average ultra efficient Chinese worker will willingly make sacrifices, work 70 hours a week, 6 or 7 days week. But other than that middle class Vancouverite who's trying to pay down a million dollar mortgage, the average Bloke (including me) wants all his perks and his 37.5 workweek.



Comparing China with Canada is like apples oranges comparison. HK tax rates wouldn't work in North America. We simply don't work hard enough.

Hong Kong people used to work half a day on Saturdays too but that has been a thing of the past.  Now it's really only 9 hours a day before OT.  I do admit HKer can enjoy a average tax rate of 10-12% and completely free of sales tax mainly b/c they have an extremely efficient infrastructure due to having the highest world's population density(though probably a quarter of the GTA's land mass, they have more bridged freeways than any city in the world), a public/private hybrid health care system, and it cost money for students to continue on their grade 11 & 12 education.  



But the thing is Joe, even with only a average tax rate of 10-12%, HK's government is by far one of the wealthiest in the world.  I fail to understand if HK can do it, why can't Canada just cut tax rates by half to spur some growth in the economy.

[Anonymous]

Joe you're not making much sense here man, bottom line is if you pay less than $10,000CAD of taxes a year, you're in no position to tell others looking to reduce tax rates for social/welfare service they never needed from the beginning.



IMO they should just add a balance/equal rate, everyone pays $4000-5000 of minimal taxes, and a 12% flat rate of their remaining salary.

Joe knows as little about the economy as he does about investing. He doesn't read anybody's posts anyway.



I am an old school socialist. I believe in workers guaranteed some basic services at a fair price. As SB's article shows, that is not the case in Canada anymore. We have seen our taxes rise a lot in the last four years, but the quality of services has not improved at all.



The bureaucracy, provincially and federally is too damned large and powerful. We cannot afford all those defined benefit pension plans and paid sick days that the private sector doesn't get. But, any government that wants to fire these unnecessary pencil pushers will be crucified in the media. They will spare no amount of due paying members money to buy an election.

Well I do know one thing...the National debt keeps going up hitting record highs under Trump:



https://www.usnews.com/news/politics/articles/2019-03-11/one-cut-not-seen-in-trump-budget-the-debt">https://www.usnews.com/news/politics/ar ... t-the-debt">https://www.usnews.com/news/politics/articles/2019-03-11/one-cut-not-seen-in-trump-budget-the-debt



If you have evidence to refute this fact then please provide it and I'll take back what I said.



I don't mind cutting taxes like Klein, Martin or Harper provided, but they balanced the books first then gave out tax breaks



If Trump cant balance the budget then he shouldcrsise tge taxes on the ultra wealthy like himself.



There might be a case for tax cuts for lower entrepreneurial millionaires who create jobs at home but not ultra billionaires if the budget deficits/national debt reach record highs like they appear to be these days.

This thread is not about Trump..



And as Seoul showed you, congress controls spending..



This thread is about our steadily increasing tax burden killing competitiveness and jobs.

[Thiel]

You don't need to earn a rock star income in my indebted province to be paying over 53% income tax.



Canadian workers at almost every economic level are paying significantly higher personal income-tax rates than their U.S. counterparts, undermining economic growth, says a new study by the Fraser Institute.



The report, Canada's Rising Personal Tax Rates and Falling Tax Competitiveness, co-authored by Robert P. Murphy, Milagros Palacios and Jake Fuss, studied combined federal and provincial marginal income-tax rates on annual earnings from $50,000 to $300,000, adjusting for the U.S.-Canada exchange rate.



(The marginal income tax rate is the percentage of income you are taxed in the highest tax bracket for which you qualify.)



"At virtually every level of income, Canada's tax rates are uncompetitive with the U.S.," said Murphy, a senior fellow with the Fraser Institute.



The report warns "high and increasing marginal tax rates — that is, [size=150]the tax rate on the next dollar earned — discourage people from engaging in productive economic activity, ultimately hindering economic growth and prosperity. This occurs because marginal tax rates reduce the reward of earning more income [/size]and, in the case of personal income taxes, more labour income."



The study says while U.S. income-tax rates have historically been lower than Canada's, a series of federal and provincial income-tax hikes between 2009 and 2018 significantly increased the discrepancy.



The report found that as of 2018, in the 61 jurisdictions surveyed (10 Canadian provinces, 50 U.S. states and the District of Columbia), marginal income-tax rates in Canada's 10 provinces were higher than in any U.S. state, or higher with only a handful of exceptions.



For the top combined marginal income-tax rate, the study found, seven Canadian provinces had higher rates than any U.S. jurisdiction, and all 10 provinces were in the top 12.



Nova Scotia had the highest top marginal income-tax rate of any of the 61 jurisdictions studied in Canada and the U.S. at 54%, followed by Ontario at 53.53%; Quebec 53.31%; New Brunswick 53.30%; Prince Edward Island 51.37%; Newfoundland & Labrador 51.30% and Manitoba 50.40%.



California had the eighth highest rate at 50.30%; British Columbia ninth at 49.80%; Alberta tied with Hawaii in 10th place at 48.0% and Saskatchewan had the 12th highest rate at 47.50%.



All of the remaining 49 U.S. jurisdictions had lower top marginal income-tax rates than any Canadian province, ranging from a high of 46.9% in Oregon to a low of 37% in Wyoming.



The study also found combined marginal income-tax rates at annual incomes of $50,000, $150,000 and $300,000 were all higher in the 10 Canadian provinces than any of the 51 U.S. jurisdictions.



At $75,000, eight provinces were among the 10 jurisdictions with the highest top marginal income tax rates, followed by Ontario in 13th place and B.C. in 25th.



The study also found Canada's top tax rates are often applied at lower levels of annual income compared to the U.S. and other countries.



In 2017, Canada had the seventh highest combined top marginal tax rate of 34 industrialized countries surveyed, the survey found, compared to 13th in 2014, before the Trudeau government increased it in 2016.



While Canadian governments have hiked tax rates to "uncompetitive" levels to grapple with mounting deficits and debt, the report says, the strategy will likely fail, because taxpayers, especially higher-income earners, will find ways to reduce the amount of taxes they pay, including lowering productivity.

Employers are all too aware of tax creep. It has accelerated in the last few years. It's a deterrent to me adding personnel.

[Gaon]

Israel has six tax brackets for individual income and three brackets for passive income,  e.g. flat rental and interest. Corporate tax rate is 23%.



I was surprised until we came here that when provincial and federal taxes are combined plus payroll taxes, Canada has higher taxes than Israel. When combined with provincial rates, everywhere in Canada has higher corporate taxes than Israel.



The social safety net here is not as extensive as in Israel. Health care here only covers the basics. Infrastructure here is third world compared to Israel. If you lose your job or you are self employed you don't have pharma and dental care. Post secondary education is really expensive. There's no income support. There are no school lunch programs. I wondered where all the money went and now I know. Tax money is not being allocated wisely. A bloated and inefficient bureaucracy is consuming too many tax dollars.

[Anonymous]

Israel has six tax brackets for individual income and three brackets for passive income,  e.g. flat rental and interest. Corporate tax rate is 23%.



I was surprised until we came here that when provincial and federal taxes are combined plus payroll taxes, Canada has higher taxes than Israel. When combined with provincial rates, everywhere in Canada has higher corporate taxes than Israel.



The social safety net here is not as extensive as in Israel. Health care here only covers the basics. Infrastructure here is third world compared to Israel. If you lose your job or you are self employed you don't have pharma and dental care. Post secondary education is really expensive. There's no income support. There are no school lunch programs. I wondered where all the money went and now I know. Tax money is not being allocated wisely. A bloated and inefficient bureaucracy is consuming too many tax dollars.

Excellent post Gaon..



My family has made similar observations..



We pay so much tax here and three different levels that you would think the state looks after us from cradle to grave, but nothing could be further from the truth..



Besdes having health care that puts Canada to shame, Taiwan has comparable labour insurance, old age pensions, disability pensions without gouging workers and employers alike..



Taiwan's infrastructure is not as good as Korea for example because of the frequency of earthquakes on the island..



There are survivor benefits, self employed pensions, income guarantees that Canada doesn't have..



And Taiwan has done this with much more competitive tax rates than Canada..



Taiwan didn't have to discourage investment with high taxes to pay for services that are as good and in many cases better than Canada.

[Anonymous]

I have never counted on the government to look after me when I can no longer look after myself. Canada and the US spend a shitload of money on social services, but they deliver shit programs.



Don't believe a word the feds and the provinces say. Ottawa does not deserve a loonie more of our money. They should give everyone a thirty five per cent cut in their taxes and let them manage their own social services like Singapore does. Everyone will get better value for their money. But, the useless fatcat civil service will riot in the streets if that happened