The general problem with statistics is that you an use them to prove or disprove anything. For example the average person has 1.2 arms. This is statistically true. There is a statistically significant number of people who have had amputations or who have not been born with 2 full arms that if you add up the amount of arms that every person has, and divide by the amount of people surveyed then you get 1.2 arms... statistically true, but not representative of our real experiences.
I would strongly question how the Fraser institute came up with their numbers, they are somewhat famous for funding research that strongly lobbies on fiscally conservative, sometimes socially conservative issues.
The highest income tax bracket (approx over $120,000 / yr) is 41.06%, which means that if you have no income tax credits (no dependants, no housing expenses to claim, no political donations, no charitable donations, moving costs and all the other stuff you can deduct) you will be paying no more than 41.06% of that income to taxes.
Of course that does not cover all of our taxes that we pay, if you are a home owner then you will pay property tax (which is why property costs are deuctable). You will pay GST & PST on consumable goods (but these will not be on all the goods you pay, and you will not use all of your income towards goods), and you will pay CPP and EI if you are employed, and CPP if you are self employed 9.9% of income up to a maximum contribution of 3,500.
Generally it's hard to believe that once deductions are taken into consideration, RRSP's etc.. that there is even a statistically significant number of people who pay more than half of their income to taxes...
Ah, but that's not the question, the question is, how many people are paying more money to taxes than they are to the basic living essentials of clothes, food and housing.
I would love to see the data behind this one, because it's all in the accounting.
If you are in the lower tax brackets then it is likely that the majority of your expenses are food, clothing and housing with pretty much the rest probably being taxes and bills. But the tax although a break is always appreciated, is probably not over half of the expenses.
Lets say someone is making $30,000/year taxable income (no deductions - which is rare) this tax bracket is about 24% for income tax ($7,200), they pay 9.9% to CPP ($2970) and half that to EI ($1485) lets say they spend $10,000/year on rent ($800+/mnth) there is not tax on rent, their rent in inclusive. The rest of the money goes on food (GST), clothes (GST / PST) and other consumable goods we'll assume that at least half of these expenses have both GST & PST and that the person lives on Ontario (the highest PST in the country) then they are paying tax on the remaining $8345 approx $834.50.... Total spent on taxes is income tax (7,200) + CPP (2970) + EI (1485) + GST / PST (834.50) = 12489.50; Total spent on clothes, food, housing (10,000) + consumable goods ($8345) = $18,345.
If you take someone of a higher income bracket you need to drop the contribution to CPP because it's a maximum contribution up to 3,500. You also need to consider that they will likely have deductions for property expenses, even though they will also be paying property tax, most likely they will have RRSP's and a disposable income to spend on consumable goods, political and charitable donations beyond the basic food, clothing, housing question.
To further muddy the waters, self employed or anyone who is in a business position will go to lenghts to claim clothing, food, and housing (as much as possible) as business expenses which reduce the taxable income, and also reduce how much people are claiming to spend on these out of personal income. So if you successfully dump a rather well off person's taxes against their personal claims on clothing, food, shelter at least some of which they have listed off as business expenses, then the taxes may be higher than the total of food, clothing, shelter but this does not mean they are spending the majority of their income on taxes.
Like the statistic that the average person has 1.2 arms being statistically true, I'm sure that the statement made by the Fasier institute is statistically true, but this doesn't mean that it is pragmatic, or applicable in a useful common context.
What we should be asking, is are there better ways to tax? Personally I really like the idea of looking at green taxes, I think it's much better to tax on actions (or inactions) rather than total income (of course there needs to be a balance). But instead of jacking up the income tax next time, how about we look at carbon taxing, at least that way if I want to I have a way of avoiding the tax and doing a societal good, or paying the tax and continuing to contribute to a social ill.
I would strongly question how the Fraser institute came up with their numbers, they are somewhat famous for funding research that strongly lobbies on fiscally conservative, sometimes socially conservative issues.
The highest income tax bracket (approx over $120,000 / yr) is 41.06%, which means that if you have no income tax credits (no dependants, no housing expenses to claim, no political donations, no charitable donations, moving costs and all the other stuff you can deduct) you will be paying no more than 41.06% of that income to taxes.
Of course that does not cover all of our taxes that we pay, if you are a home owner then you will pay property tax (which is why property costs are deuctable). You will pay GST & PST on consumable goods (but these will not be on all the goods you pay, and you will not use all of your income towards goods), and you will pay CPP and EI if you are employed, and CPP if you are self employed 9.9% of income up to a maximum contribution of 3,500.
Generally it's hard to believe that once deductions are taken into consideration, RRSP's etc.. that there is even a statistically significant number of people who pay more than half of their income to taxes...
Ah, but that's not the question, the question is, how many people are paying more money to taxes than they are to the basic living essentials of clothes, food and housing.
I would love to see the data behind this one, because it's all in the accounting.
If you are in the lower tax brackets then it is likely that the majority of your expenses are food, clothing and housing with pretty much the rest probably being taxes and bills. But the tax although a break is always appreciated, is probably not over half of the expenses.
Lets say someone is making $30,000/year taxable income (no deductions - which is rare) this tax bracket is about 24% for income tax ($7,200), they pay 9.9% to CPP ($2970) and half that to EI ($1485) lets say they spend $10,000/year on rent ($800+/mnth) there is not tax on rent, their rent in inclusive. The rest of the money goes on food (GST), clothes (GST / PST) and other consumable goods we'll assume that at least half of these expenses have both GST & PST and that the person lives on Ontario (the highest PST in the country) then they are paying tax on the remaining $8345 approx $834.50.... Total spent on taxes is income tax (7,200) + CPP (2970) + EI (1485) + GST / PST (834.50) = 12489.50; Total spent on clothes, food, housing (10,000) + consumable goods ($8345) = $18,345.
If you take someone of a higher income bracket you need to drop the contribution to CPP because it's a maximum contribution up to 3,500. You also need to consider that they will likely have deductions for property expenses, even though they will also be paying property tax, most likely they will have RRSP's and a disposable income to spend on consumable goods, political and charitable donations beyond the basic food, clothing, housing question.
To further muddy the waters, self employed or anyone who is in a business position will go to lenghts to claim clothing, food, and housing (as much as possible) as business expenses which reduce the taxable income, and also reduce how much people are claiming to spend on these out of personal income. So if you successfully dump a rather well off person's taxes against their personal claims on clothing, food, shelter at least some of which they have listed off as business expenses, then the taxes may be higher than the total of food, clothing, shelter but this does not mean they are spending the majority of their income on taxes.
Like the statistic that the average person has 1.2 arms being statistically true, I'm sure that the statement made by the Fasier institute is statistically true, but this doesn't mean that it is pragmatic, or applicable in a useful common context.
What we should be asking, is are there better ways to tax? Personally I really like the idea of looking at green taxes, I think it's much better to tax on actions (or inactions) rather than total income (of course there needs to be a balance). But instead of jacking up the income tax next time, how about we look at carbon taxing, at least that way if I want to I have a way of avoiding the tax and doing a societal good, or paying the tax and continuing to contribute to a social ill.
