I just did my taxes this weekend, and I’m wracked with guilt.
Personally, I’ve never found completing my taxes particularly onerous. It takes me a few hours — no big deal. I’m paid well (and well above the average). I’ve never had to hire an accountant, as I’m not doing anything fancy. I’m only availing myself of a few basic deductions — RRSPs, the child care deduction, and charitable deductions.
But when I’m done, I like to do the following exercise: first, I go back and look at my total income (not my “net” or “taxable” income, but rather my gross income). Then I look at what I actually have to pay in total federal and provincial income taxes (not what was deducted from my paycheque, but rather what I will actually have to pay after all my deductions and my tax refund). Then, using these two figures, I calculate the total effective income tax rate I pay.
And what do you think that is? Go ahead, take a guess… 20%? 25%? 30%? More? Alright, I’ll tell you — 13.38%! And all I can think is “What a #?!@#*?&@#!! steal!” Here I am making roughly two and a half times the median income, and I’m getting all these public services, and I’m only paying 13.38%! In fact, if I isolate only my provincial income taxes, the total effective income tax rate comes to a paltry 3.46%. Ridiculous. What are these tax cutting maniacs complaining about?
Now granted, we pay other taxes too: payroll, sales, property, MSP, etc. When these get included, the tax regime ends up a whole lot less progressive, and the total bill increases. But, as the CCPA’s Marc Lee found in a major 2007 study entitled Eroding Tax Fairness, even when these all these taxes are included, most people are paying closer to 35% of their income in total taxes, and no income group is paying more than 40% (indeed, the very wealthy pay a lower overall rate than the poor and middle class). So why are so many people under the mistaken impression that they are paying over 50% of their income in taxes? Well, because they are told this so relentlessly in the mainstream media. But they aren’t.
I encourage people to do the same exercise I did when they complete their taxes. The results will surprise you. And when you stand back and look at what we pay in taxes, set against the public goods and services we provide to one another in exchange, one is hard-pressed not to conclude that it’s a pretty great deal. In fact, maybe it’s time to increase our taxes.
Linda // Apr 7, 2010 at 7:53 am
this is a great antidote to all the ranting about personal tax rates out there – thanks! i will give this a try as well
Brenton // Apr 7, 2010 at 10:03 am
Bravo, Seth, for standing up and saying what many of us are thinking. Where is the constituency that is demanding lower and lower taxes, given that we in BC pay the lowest taxes in the country? Lowest taxes equal lowest quality/amount of public services.
Iglika Ivanova // Apr 12, 2010 at 10:27 am
I haven’t done my taxes for this year, but I came across last year’s notice of assessment and guess what – the personal income tax I paid was 12.8% of my gross income. Wow, that’s pretty low.
And all without maxing RRSP contributions or having any extra deductions for moving, medical expenses, dependents/kids. And to think that I was so convinced that Seth’s low rate was due to child-related deductions…
Kim Poirier // Apr 12, 2010 at 7:58 pm
Thanks for your courage in saying that, Seth. From the people at the bottom.
Frey // Apr 13, 2010 at 11:21 am
Just listening to Seth on CKNW this morning. I left a message on their phone-in line that I don’t mind paying taxes for public services like infrastructure etc, and that while taxes are being reduced, these services are being shifted over to the private sector (i.e P3s), where we end up paying more for them. I prefer that government administer these public services where there is transparency.
Sarah Leavitt // Apr 13, 2010 at 11:43 am
Seth was on the Bill Good Show on CKNW today discussing this post with Mike Smyth. You can listen to the interview by going to the CKNW audio vault at http://www.cknw.com/other/audiovault.html and choosing April 13, 2010, 11:00 AM.
Wendi Galczik // Apr 13, 2010 at 3:12 pm
Having just retired, I can tell you that with a small Pension and early CCP, I paid nearly 20%, which still doesn’t sound like much, but was expecting a much bigger return…now I have to look for a part-time job in one of the highest unemplyment areas of BC..does the upper middle class pay enough…don’t know, but in an income -based world, I feel that our other coverage/expenses don’t change, e.g. prescription costs, and our income is halved…don’t quite know what the answer is, but notice that alot of the working poor here are well past their senior years…choice? Hard to believe…
Scott Andrews // Apr 14, 2010 at 10:30 am
Eroding tax fairness is right. We have been shifting towards a very regressive systems despite Canwest Global’s claim that we are “so outrageously socialist”.
Great piece – thanks for spreading the word.
Iglika Ivanova // Apr 17, 2010 at 9:04 pm
Just thought I’d update this with my 2009 tax info – my taxes came to 14.16% this time around. It turns out that last year’s low was due to tuition tax credits which I had banked up from my student days. But no more. These days RRSPs and charitable donations play a fair part in reducing my taxes owing.
The Progressive Economics Forum » It’s Not Just About Size: What Makes Up Our Tax Bill Matters // Apr 20, 2010 at 1:16 pm
[...] other words, income tax took up only 13.5% of the average family income, pretty close to what Seth reported he paid this [...]