Personal Taxes

86% of middle-class households face a better federal personal earnings tax burden

Contrary to rhetoric from Ottawa, the vast majority of Canada’s middle-class families are paying higher federal income taxes due to federal tax changes, according to new research released today by the Fraser Institute, an independent, nonpartisan Canadian public policy think tank.

“The federal government has repeatedly claimed that it has lowered personal income taxes for the middle class, when in fact it has increased the personal income tax burden for most middle-class families,” said Jake Fuss, senior economist at the Fraser Institute and co-author of Measuring the Impact of federal income tax changes on Canadian middle-income families since 2015.

In 2015, the government cut the second-lowest personal income tax rate (from 22 percent to 20.5 percent) — but also eliminated income splitting for couples with young children and eliminated a slew of tax credits that more than offset the savings from the tax rate reduction.

As a result of the study, the study finds that 86 percent of middle-class families experienced an increase in their federal income tax burden — $800 per year (on average).

The study compared federal income taxes for families with children in 2015 to 2019 using a Statistics Canada tax and transfer model that includes information for more than 1 million Canadians in over 300,000 households with approximately 600 variables for each person.

“By promoting an income tax change and downplaying others, Ottawa paints an incomplete picture of the overall impact of their tax changes, which have imposed a higher personal income tax bill on the vast majority of middle-class families,” Fuss said.

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