Tax Fairness

Our tax system isn’t fair. The wealthy in Canada do not pay their fair share in taxes—they haven’t for a long time. And yet, they continue to lead the anti-tax blitz. It’s an easy target for them. “Death and taxes” and all that. But here are two tax facts to keep front and centre:

  • Taxes are an investment that save money for the vast majority of people. From hospitals to school buses, food inspection to police cars—taxes are the ultimate bulk buy.
  • Canada's corporations and richest citizens now pay some of the lowest taxes in the world.

The fact is that most Canadians pay close to an appropriate amount of tax. The problem, and it's a billions-of-dollars-a-year problem, is that the wealthy now pay too little.

  • In 1972, income tax for the wealthiest Canadians was close to 70%. By 2012, their income tax rate had been cut to below 50%
  • In 1972, the corporate tax rate was 52%. By 2012, it had been cut to 25%.

Add all that forgone revenue together and our governments would have an extra $50 billion. Every year. $50 billion a year we could have be using to ease tuition hikes, pay down our debt, lower the costs of prescriptions and dentistry, pioneer research in wind solar and tidal power … The list of possibilities goes on.

And what have we gotten in return for giving up on possibilities like these? The promise has been that by going down the road of tax cuts, corporations and the wealthy will drive our economy forward by reinvesting their tax savings in new technologies, new factories, and new hires.

Yet, 30 years of practical experience shows us that something quite different happens: the wealthy simply scoop those tax cuts out of our economy, hoarde it away from the rest of us. They spend it on exploitable and compliant labour.  They hire lobbyists and finance political campaigns focussed on driving our wages down. And they park the rest of it on their balance sheets, pump their share prices up, and reward themselves generous raises.

All we get from the bargain are crumbling schools, hospitals, and infrastructure. And that sinking feeling we’re never going to have it quite as good as we once did.

How do we get back on the road towards Tax Fairness?

It’s simple, really. We need to encourage our politicians to increase taxes on corporations and the rich and ease the burden on low-income Canadians. We need to show our politicians that they don’t need to promise tax cuts in order to win.

And we all need to stand up to the fear-mongering and threats that are so often evoked by tax-cutters: that companies will either bolt from Canada or outright fail.

The Robin Hood Tax is an inspiring example of how citizens can work together through their governments to set themselves back on the road towards tax fairness and safer levels of income inequality.

 

 

Mixed news from federal government on tax fairness

The House of Commons Standing Committee on Finance (FINA) report on tax avoidance and tax evasion provided mixed news for Canadians concerned about tax fairness. Many of the recommendations in the report, The Canada Revenue Agency, Tax Avoidance and Tax Evasion: Recommended Actions, have the potential to improve how the Canada Revenue Agency (CRA) responds to tax evasion. On the other hand, comments from the Minister of National Revenue and CRA officials have led to concerns that the way the government will implement the recommendations will render them meaningless.

Birthday message to Google

Dear Google,

Happy 18th Birthday! You've become an intrinsic part of our lives - from finding recipes, settling arguments, getting places - and even fact-checking tax fairness issues.

But here's the thing. It is time to grow up and start paying your taxes(link is external). Don't be that entitled kid who raids the refrigerator, empties the gas tank, tears up the roads and expects everyone else to pay the bills.

The wealthy can afford higher taxes

If anyone doubts that the wealthy can afford to pay their share in income tax, consider these numbers. According to this year’s Canada’s Private School Guide, it costs up to $72,000 per year to send one child to a private school. The median income in Canada is $31,900.

A wealthy family with two kids that chooses to send their kids to private schools is paying up to $144,000 a year. That’s 4.5 times as much as most Canadians earn.

Panama papers reveal depths of worldwide tax avoidance crisis

The recent leak of files from a Panama law firm that helped wealthy individuals shows why cracking down on tax havens needs to be a priority. As the International Consortium of Investigative Journalists (ICIJI) discovered in its investigation, over the last 40 years, the Panama-based law firm Mossack Fonseca has helped set up over 210,000 companies in 21 jurisdictions to help the wealthy avoid paying their share in taxes.

And that’s just one law firm.

Sweetheart deal for wealthy tax avoiders

The average person who fails to declare all of their income will face financial penalties, the possibility of criminal prosecution and stiff fines. But if you have money, it’s another story.

Last fall, Canadians were outraged to hear that multinational accounting firm KPMG had been helping some very wealthy Canadians avoid paying their fair share in taxes by using a tax haven, the Isle of Man. But it gets much, much worse.

Congratulations on your new HQ, Google, now please pay your taxes

On January 14, Google, along side Prime Minister Trudeau, announced that it was setting up the Google Development shop in Kitchener-Waterloo, Ontario. This decision will create 350 high-tech jobs in the area. 

Canadians for Tax Fairness welcomes the news but remains concerned about Google’s record in paying corporate taxes in countries in which they operate.

Small business tax rates used as a loophole

Very few people feel that well-off accountants, lawyers, or dentists should pay a lower rate of tax than the rest of us. But as a recent Toronto Sun column points out, the combination of personal services corporations and lower tax rates for small businesses are allowing many well-heeled professionals to avoid paying their share.

As the article points out, the combined federal and provincial tax rate for small businesses in Ontario is 11 per cent. For high-income individuals its 46 per cent.

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