Study
| EST. READ TIME 2 MIN.More than 80 per cent of middle-income families face higher federal income taxes
Measuring the Impact of Federal Personal Income Tax Changes on Middle Income Canadian Families
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- During the 2015 federal election campaign, the Liberals pledged to cut income taxes on Canada’s middle class. Since coming into office, the government has repeatedly claimed that it has delivered on this commitment. While the federal government did reduce the second lowest federal personal income tax rate, it also simultaneously introduced several other broader changes to the federal personal income tax system.
- For instance, it introduced a new, higher top income tax rate and eliminated several tax credits, which had the effect of increasing taxes on Canadian families who previously claimed those credits. In fact, the elimination of many tax credits may partially, or even completely, offset the tax rate reduction targeted at middle class families.
- This paper measures the net overall effect that the federal government’s changes to the personal income tax system have had on the amount of tax that Canadian families with children pay. It finds the federal government’s income tax changes have resulted in 60 percent of the 3.88 million families with children covered in this paper (representing 13.9 million individuals), paying more in taxes. The average tax increase amounts to $1,151 each year.
- Among middle income families—the group of families the federal government claims to want to help—81 percent are paying more in taxes as a result of the federal income tax changes. The average income tax increase for this group of middle income families is $840.
- For the subset of middle income families consisting of couples with children, an even greater share (89 percent) pays higher income taxes ($919 on average).
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Charles Lammam
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Milagros Palacios
Director, Addington Centre for Measurement, Fraser InstituteMilagros Palacios is the Director for the Addington Centre for Measurement at the Fraser Institute. She holds a B.S. in IndustrialEngineering from the Pontifical Catholic University of Peru and a M.Sc. in Economics from the University of Concepcion, Chile. Ms. Palacios has studied public policy involving taxation, government finances, investment, productivity, labour markets, and charitable giving, for nearly 10 years. Since joining the Institute, Ms. Palacios has authored or coauthored over 70 comprehensive research studies, 70 commentaries and four books. Her recent commentaries have appeared in major Canadian newspapers such as the National Post, Toronto Sun, Windsor Star, and Vancouver Sun.… Read more -
Hugh MacIntyre
Senior Policy Analyst, Fraser InstituteHugh MacIntyre is a Senior Policy Analyst at the Fraser Institute. He holds an M.Sc. in Political Science from theUniversity of Edinburgh, a Post Baccalaureate Diploma in Economics from Simon Fraser University, and an Honours B.A. from the University of Toronto. Mr. MacIntyre has published over 25 studies and has written over 80 original commentaries appearing in national and regional media outlets including the Globe & Mail and the National Post. His research covers a wide range of economic policy issues including taxation, government finances, government performance, public-private partnerships, labour policy, income mobility, poverty, and charitable giving.… Read more