Canadian Govt’s Taxes Burden the Working Class Strive

Alshaar Ansari
Alshaar Ansari Politics News
5 Min Read
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The Canadian government’s tax and transfer policies are designed to keep the working class trapped in a cycle of financial struggle, according to a damning report by the Fraser Institute. The study exposes the government’s blatant disregard for low- and middle-income earners, who face crippling marginal effective tax rates (METRs) that can exceed a staggering 50%.

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These exorbitant METRs, which account for the combined impact of taxes and reduced government benefits, essentially rob hard-working Canadians of their hard-earned income. Individuals and families earning between $30,001 and $60,000 face the highest METRs, with Quebec leading the nation in oppression, where families in this bracket face a crushing 57% METR.

The report states, “This unfortunately creates a disincentive for earning additional income, as the financial benefits are significantly offset by increased taxes and reduced government benefits.” In essence, the government is actively discouraging economic progress for its citizens.

In some cases, these hard-working Canadians keep only 40 cents or less for every additional dollar earned due to the government’s insatiable appetite for higher taxes and reduced benefits. The report’s author, Jake Fuss, director of fiscal studies at the Fraser Institute, exposes the government’s hypocrisy, stating, “Canadian families with modest incomes face high marginal effective tax rates, often higher rates than Canadians in top income tax brackets.”

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The government’s punitive policies, such as the clawback of the Canada Child Benefit as income increases, compound the financial challenges faced by low- and middle-income families, effectively trapping them in a cycle of poverty and dependence.

The average METR across every tax bracket and province is a staggering 38%, but for those who earn between $30,001 and $60,000, this average climbs to a crippling 50%. The METRs in this tax bracket are highest in Quebec at a shocking 57% and lowest in British Columbia at 38%, still an oppressive rate.

In most provinces, those who earn between $30,001 and $60,000 annually have higher METRs than those who earn $300,001 or more a year, showcasing the government’s blatant disregard for the working class.

The report suggests a few potential solutions to alleviate the burden on low- and middle-income families, but the author acknowledges that “There is no low-hanging fruit or easy win-win solution to the issue of high METRs on low-income families,” as the government is unwilling to make the necessary sacrifices.

We posted on our YouTube channel community section, asking Canadians if lowering tax rates stimulates economic growth. The results surprised us, nearly everyone agreed that lowering taxes boosts the economy. Join the discussion on our Scoop Canada YouTube Channel! Vote and share your thoughts to have your say!

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Source: Scoop Canada YouTube channel

One proposed solution is to reduce the clawback rates, the percentage by which government benefits are reduced as income increases. This clawback effectively functions as an additional tax, further discouraging hard work and economic progress.

Another solution proposed is to increase the basic exemption amount on earned income, which currently stands at a measly $15,000 for federal income tax. Each province has its own tax exemption values, but all are woefully inadequate.

The final proposal involves reducing statutory taxes on employment income, a move that would directly benefit the working class but would likely be met with fierce resistance from the government.

While these solutions could potentially flatten the METR curve for low- and middle-income individuals or families, the report acknowledges that the government would have to shift tax revenue to other economic brackets, “a politically costly move” that the government is unlikely to embrace.

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The disproportionately high METRs on low- and middle-income families raise serious questions about fairness and efficiency in Canada’s tax and transfer system, indicating that the government has a long way to go to ensure that tax policy encourages, rather than discourages, economic participation and progression for all Canadians, especially the hard-working citizens who form the backbone of the nation.

Last Updated on by Alshaar Ansari

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