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Since Albert MLA is preparing to return to Edmonton to the autumn session of the legislative body, tax reform should be at the top of the agenda – in order to stimulate economic growth and prosperity in the province. Earlier this year, the Smith government introduced a new provincial revenue grid that reduced the income tax rate in the province from 10% to 8% for income to 60,000 US dollars. And the Government of Karni has recently reduced the federal rate from 15% to 14% for income to $ 57,375. These tax reduction will provide some tax benefits for albertans throughout the expert of income.
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But they also move more tax burden to earn money with a higher income. In fact, according to our new study, the leading 20% of families receiving income in Alberte and worked 261,609 or more-47.2% of the total income in the province, but pay 65.5% of the income tax on individual conditions (collected by federal and provincial governments) and 57.1% of total taxes (sales taxes, real estate taxes, tax on taxes, income tax taxes. Taxes, etc.).
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The smaller share of the burden
Other income groups have a much smaller share of the tax burden. For example, the average 20% of Albertan families – those who make money from 112 173 to 169,496 US USA – earn 15.3% of the total income in the province, but pay 10.5% of income tax and 13.3% of the total taxes. In the lower 20% of Albertan families – those who make up to 65,091 US USA – earn 4.6% of the total income, but pay 0.4% of the income tax from the individual and 1.6% of the total tax burden.
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In other words, not only family families in Albert pay most of all taxes in the province, but also the only group of income that is disproportionately pays more than their share of general income.
Why? Because governments in Canada are supported by “progressive” tax systems that impose a wider tax burden on Canadians who receive higher incomes. In Albert, the income tax rate in the province increases from 8% to income to $ 60,000 to 15% per income above $ 362,961. Governments also offer various tax benefits and deductions (for example, a manual for a child and a family of Alberta or a GST/HST federal loan), which reduce a tax burden for people with lower income.
Problem with a progressive tax system
Within the framework of the progressive tax system, when your income tax rate increases as you earn more money, you decide whether to switch to a new job, work for more hours, invest your savings or start a business. High and growing tax rates can dissuade people from being more productive and earn more money, because higher taxes reduce remuneration (that is, additional income) that they receive. With the ability throughout the economy, this effect prevents general economic growth and prosperity.
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Which returns us to recent decrease in Smith and Karni taxes. While they offer some tax benefits for the Albertans, they exacerbate this destructive effect and complement the disproportionate share of the tax burden, a carrier family with high income of Albertan. If the Smith government wants to reduce potential damage, it should reduce tax rates for all Albertans.
Jake Fuss and Grady Munro are analysts of fiscal policy at the Fraser Institute.
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