More than 80 per cent of middle-income families face higher federal income taxes
#LSN_Opinion Impact of Federal Personal Income Tax Changes on Middle Income Canadian Families
Thunder Bay, Ontario October 6, 2017 (LSN) Contrary to rhetoric from Ottawa, the vast majority of middle-class
Canadian families are paying higher income taxes due to changes made by the federal
government, finds a new study released today by the Fraser Institute, an independent,
non-partisan Canadian public policy think-tank.
On average, middle-class families will pay $840 more in federal income taxes this
“The federal government has repeatedly claimed they’ve lowered income taxes for the
middle class while in reality, taking their major income tax changes into account,
they’ve actually raised taxes on the vast majority of middle-class families,” said
Charles Lammam, director of fiscal studies at the Fraser Institute and co-author of
Measuring the Impact of Federal Personal Income Tax Changes on Middle Income
The study finds that the federal government’s income tax changes will result in higher
income taxes for 81 per cent of middle-class Canadian families with children
(including both single parents and two-parent households) whose incomes fall
between $77,089 and $107,624.
While the government did reduce the second-lowest personal income tax rate (from 22
to 20.5 per cent), Ottawa also scrapped income-splitting for couples with young
children and eliminated a series of tax credits, which more than offset the tax savings
from the rate reduction and ultimately increased the tax burden for most middle-class
The eliminated credits include: the children’s fitness tax credit, the education tax
credit, the textbook tax credit and the public transit tax credit.
“The often repeated claim from the Trudeau government, that it reduced income taxes
for the vast majority of middle-class Canadian families, is false,” Lammam said.
“By promoting one of its many income tax changes and downplaying the others,
Ottawa is leaving Canadians with an incomplete picture of the overall impact of their
tax changes, which is burdening the vast majority of middle-class families with a
higher income tax bill.
To find out how much more your family will pay in income tax because of the news changes
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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).
By: Charles Lammam
Director, Fiscal Studies, Fraser Institute
Associate Director, Addington Centre for Measurement, Fraser Institute
Senior Policy Analyst, Fraser Institute