Research: Taxation

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Want to learn more about taxation in Canada?

CPJ's research report, “Taxes for the Common Good,” is a series of six fact sheets highlighting the positive role taxes play in a democratic society and summarizing up-to-date information on the costs and opportunities afforded by various federal tax policy options.

“Taxes for the Common Good” reported the following findings:

Public services deliver significant benefits across the income spectrum

In 2006, median income households received $41,000 worth of public services, an amount equivalent to about 63% of their total income.

For low- and modest-income households, the delivery of public education, health care, and transfer payments is essential and is only possible through taxation. The value of these services for those earning less than $20,000 per year is more than two times higher than their average incomes. Even those living in households in the $80,000 to $90,000 range — just below the richest 20% — received benefits from public services equivalent to about half of their total household income.

Public programs – such as education, health care, and, early childhood education care – play an important role in reducing income inequality.

The wealthy have benefited the most from two decades of tax cuts

Changes introduced through the 1990-2005 period reduced rates for top income earners considerably, while rates for bottom income earners actually increased as a result of changes in consumption, payroll and property taxes and other provincial taxes and fees.

In 2005, total rates of tax paid ranged from 30.7% for individuals in the bottom 10%, to 36.5% for those in the middle, to 30.5% for the top 1% of families.

The richest 1% of Canadians actually paid a lower rate than the poorest 10% of Canadians.

Tax changes since 2006 have continued to disproportionately benefit the wealthy, particularly single earner families with children and senior couples with substantial pension incomes.

As corporate tax rates decline, Canadians households are picking up the slack

Successive rounds of tax cuts have cost Canadian families dearly by shifting the balance between individual and corporate taxes.

In 2014-15, for the first time ever, more than half of the federal government’s revenue is projected to come from personal income taxes, up from a 30% share 50 years ago. The share of taxes paid to government by corporations, however, has been trending down. Despite record profits, corporate taxes now make up roughly 14% of federal government revenues, down from over 20% before 1970.

The overall share of corporate taxes paid to all levels of government is even lower – at 8.3%. Taken together, cuts to corporate taxes since 2007 are costing the federal government up to $13 billion per year in foregone revenue.

Many tax expenditures target the wealthy

There are over 200 income and GST-related tax expenditures at the federal level, a number that has steadily grown over the past decade. According to the Parliamentary Budget Office, federal tax expenditures represented over $100 billion in foregone tax revenues in 2009.

Studies also show many tax expenditures disproportionately benefit middle- or upper-income brackets – a result of their non-refundable design. Tax filers receive the benefit of a deduction or credit only if its value is greater than taxes owed. If you pay no income tax – or only a small amount – you receive little or nothing by way of support.

Poor families who would benefit the most from fitness or arts programming simply cannot afford these “extras” when they struggle daily with the choice of paying the rent or feeding the kids.

"Taxes for the Common Good"

Taxes for the Common Good May 2015
Download the Report

Taxes are not simply about money or fees collected by governments. They are equally about public programs and services, reducing poverty and the harmful effects of inequality, and protecting the environment.

“Taxes for the Common Good” is a series of six fact sheets highlighting the positive role taxes play in a democratic society and summarizing up-to-date information on the costs and opportunities afforded by various federal tax policy options.

Taxes and the Common Good: Backgrounder & position paper

May 2011
CPJ’s public justice framework supports the notion that taxes are an important contribution to the common good. Taxes are one way in which we as citizens fulfill our obligation to promote justice and to respect the right of all people to live in dignity. For governments, tax policy can be used to foster justice, in addition to tax revenues paying for infrastructure that benefit all and promote an equitable society. Public justice also supports a progressive distribution of taxes, and transparent and accountable decisions from governments on taxation and spending.
 
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