Tax the rich? It would be far better to improve the whole taxation system
“Tax the rich” has been a popular rallying cry for many people who feel victimized, entitled or have a weak understanding of how Canada and other countries tax their residents and redistribute income.
The phrase has for decades been good politics for many left-leaning politicians and political parties who use it, or something similar, to capitalize on the above group of people for their votes. Such a phrase is intellectually lazy despite its political appeal.
Given Canada’s progressive taxation system, the so-called “rich” already pay a disproportionate share of their income in taxation. For example, in 2020, the top 0.01 per cent of income tax filers represented a group of people who earned $2,829,000 or more. There were only 2,885 of those taxpayers for that year, but they paid 2.6 per cent of all the federal and provincial income taxes collected during 2020.
The top one per cent (representing the 288,400 taxpayers earning $253,900 or more) paid 21.1 per cent of the federal and provincial income taxes collected that year. The top five per cent (representing the more than 1.4 million taxpayers earning $132,300 or more) paid 40.1 per cent. The top 10 per cent (representing the almost 2.9 million taxpayers earning $102,400 or more) paid 53 per cent.
The bottom 50 per cent (representing the more than 14.4 million taxpayers who earned $40,700 or less) paid 6.5 per cent, which clearly shows the top 50 per cent of income earners paid 93.5 per cent of all federal and provincial income taxes paid. All this information is available from Statistics Canada.
Absorb that for a moment. The top income earners are obviously paying a disproportionate amount of the collected income tax. And, again, that is what you expect from a
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