Are the rich taxed to death — or are they getting off easy? As Ian McGugan explains, both sides of the tax debate tend to avoid the inconvenient details. (Subscribers)
“Middle class,” for instance, is a vague, catch-all term without any official definition. People who make the median income – $89,610 for a family in 2016, according to Statistics Canada – obviously belong in the middle class. It is not clear, though, how far the term should extend above and below that mid-point.
Some of those differences in benefits can be dramatic. In Canada, taxes pay for most health care. In the United States, they do not, and that can lead to financial distress for people who suffer a medical calamity. More than 42 per cent of the 9.5 million Americans diagnosed with cancer between 2000 and 2012 drained their life savings within two years, according to a study published last year in the American Journal of Medicine.
So if typical Canadians are enjoying a good deal, are the rich being gouged to pay for it? This is where the debate gets heated.What galls many on the right is the whopping amount of the total tax burden that falls on those at the top end of the income distribution. In 2016, the top 2.7 per cent of tax filers paid 32.6 per cent of taxes, according to Statistics Canada. Anybody who fell into that group – that is, anyone with an income of more than $140,388 – has to think: Ouch.
The tax burden on the well-to-do has not stopped them from accumulating a growing concentration of Canada’s wealth. Between 1999 and 2012, the top fifth of Canadian families saw their wealth gallop ahead by 80.1 per cent – slightly faster than the rate of increase among people in the middle of the wealth spectrum, and nearly double the rate among the bottom fifth. By 2012, the top 20 per cent of families held 47 per cent of the country’s total family wealth, Statistics Canada estimates.
This year, the top rate applies to income over $210,371, a threshold that can be reached by many doctors, dentists, small business owners and similar folks who fall short of qualifying as seriously rich. “The threshold is just too low,” Mr. Laurin says. He argues Ottawa should double the level at which the top rate bites, applying it only to income over $420,742.
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