According to the Fraser Institute, people are being misguided if they are being led to believe that the top income earners in Canada aren’t paying their fair share of taxes. In fact, it appears to be the bottom 20 per cent who aren’t pulling their weight. The institute says high-income families pay a disproportionately large share of all Canadian taxes, with the top 20 percent of income-earning families paying 63 per cent of the country’s personal income taxes and 54.7 per cent of total taxes.
On the other hand, the bottom 20 percent of income-earning families are estimated to pay only 1.0 percent of all federal and provincial personal income taxes and 2.3 percent of total taxes in Canada.
The Institute says raising taxes on high-income earners ignores the economic consequences of tax rate increases and the associated behavioural responses of taxpayers when faced with higher tax rates or new taxes. In response to a tax increase, many taxpayers will change their behaviour in ways that reduce their taxable income through tax planning, avoidance, or evasion that results in governments raising less revenue than anticipated.
The institute says, tax increases also reduce Canada’s competitiveness with other industrialized countries, particularly 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.