A study recently released by the Fraser Institute provides a closer look at how income taxes are distributed across Canadian households today. Many misconceptions about how taxes are distributed exist, and the numbers presented in this study may surprise you.
According to this report, the top 20% of income-earning families in Canada, or those earning more than $246,700, pay 64.3% of all personal income taxes collected by the provincial and federal governments. In comparison, the bottom 60% of income-earning families, or those earning $123,580 or less, pay 15.1% of total income taxes. The middle 20% of earners, which includes families that make between $123,581 and $246,700, make up 20.6% of total income tax revenue.
The main takeaway from this study is that the tax system in Canada is already weighted towards top earners when it comes to income tax contribution. This is an intentional structure and is consistent with a progressive tax system, where tax rates increase along with income levels.
Instead of influencing opinion, the purpose of this study was to provide a clearer view of how tax burdens are distributed. While there are many discussions occurring about increases to top tax rates, especially at the federal level, this breakdown may offer useful context for those who want to understand how their tax contributions compare across the different brackets.
At BlueRock Wealth Management, we are here to help you navigate the evolving tax landscape and make sure your wealth strategy is aligned with both the current environment and your goals. If you would like to take a look at your tax planning strategy, connect with us today.