British Columbia’s New Democrats are telling voters a ballot cast for their candidates would strike a blow against wealthy people who have disproportionately benefited from the policies of the BC Liberals.
It is a populist message Justin Trudeau’s Liberals employed in 2015, when they promised to cut taxes for the middle class and hike them for the wealthy. Rachel Notley also used it as part of her pledge to overhaul Alberta’s flat tax.
But who are the rich, as defined by the politicians who campaign on a platform of making them pay?
The BC NDP, in its platform released last week, targeted higher taxes for anyone earning more than $150,000 a year to pay in part for a list of campaign promises including $10-a-day daycare and lifting bridge tolls.
The BC Liberal Party introduced a tax bracket for incomes of $150,000 or more for 2014 and 2015, but it had a sunset clause to eliminate it on Jan. 1, 2016. The NDP have called the lifting of the surtax a “tax cut for the wealthy” and said that reversing it would generate $250-million a year.
Jordan Bateman, B.C. director of the Canadian Taxpayers Federation, suspects $150,000 is used because it accounts for the top 2 per cent of high-income earners in B.C. “There’s nothing more popular than a tax on someone else,” Mr. Bateman said. “So for the other 98 per cent of people, ‘soaking the rich’ seems like a great idea.”
It is a common rallying cry during election season, an appeal to the middle class. The federal Liberals campaigned on raising taxes on Canada’s top 1 per cent to fund billions in campaign promises, and last year created a new 33-per-cent tax bracket for those earning more than $202,800.
The Alberta NDP hiked income taxes on dollars earned over $125,000, with further increases at $150,000, $200,000 and $300,000. The top bracket is taxed 15 per cent.
But rich, of course, is subjective – and particularly so in regions such as Metro Vancouver, where the price of a detached home averaged $1.6-million last fall.
“The notion of the dividing line for income, above which a person might be deemed rich, is totally subjective,” said Rhys Kesselman, a professor in the School of Public Policy at Simon Fraser University. “There is no scientific or economic standard to tell us. But we do have a lot of figures on income distribution.”
According to Statistics Canada’s 2011 National Household Survey, those with total incomes of more than $80,400 are in Canada’s top 10 per cent. Those with more than $102,300 are in the top 5 per cent, and those with more than $191,100 – nearly seven times the national median income in 2010 – are in the top 1 per cent.
Meanwhile, B.C.’s median household income was $76,770 in 2014, compared to the national median of $78,870, according to Statistics Canada.
Academics have noted that taxing higher earners could make other jurisdictions more competitive. As well, wealthier people can reduce their taxable income through personal deductions and other provisions such as reduced tax liability on capital gains.
“If governments want to raise more revenue concentrating on high and very high income and wealthy people, we probably do not want to raise rates any more than they are,” Mr. Kesselman said.
“We would probably want to look at the base for taxation, what is deemed to be taxable income. We might want to tax capital gains – rather than only half – two-thirds, or fully.”Report Typo/Error