May 06, 2015

Economists warn Trudeau taxing rich won't work

Brian LilleyArchive

Economists are warning that trying to raise $3 billion by taxing Canada's wealthiest citizens in order to give a tax cut to those in the middle may not work.

Speaking to The Globe and Mail, Michel Kelly-Gagnon warned that Trudeau's proposed 33% tax rate on those earning $200,000 a year or more could actually hurt Canada's competitiveness by driving the combined federal-provincial tax rate above 50% in several provinces. 

“What’s worrisome is the combined effects … It could affect the brand,” Kelly-Gagnon said.

If Trudeau wins October's election and brings in his proposed tax hike, the top rate for high income earners in Quebec would hit 58.75%, in Nova Scotia the top combined rate would be 54%.

Other provinces would hover around 50%.

That is a threshold economists often warn should not be crossed.

The higher the tax rates simply encourage people to find ways to avoid paying such high taxes, or they move.

Philip Cross, the former chief economic analyst at Statistics Canada, told The Globe that Trudeau's proposal won't bring in the $3 billion expected. 

“Not a chance,” he said. “These are the people who are best positioned to take advantage of loopholes in the system. The idea of soaking the rich to pay for benefits for other people never works out.”


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commented 2015-05-12 18:57:03 -0400
Let me get this straight one economist states that this won’t work, and there is a flood to the gate to agree. Hmmm! At this point I am open to change, as the current proposals are not benefiting enough people. Income splitting only affects a very small portion of the Canadian families. Where reducing the tax burden on the middle class has a significant number of Canadians affected. Additional monies in their pockets means additional money to spend. Money spent provides tax dollars to the government revenues. Similar to the proposed child benefits more monies will be spent on goods and services. So more money in more peoples hands is bad how? Increasing the tax rate on individuals making over $200K to 33% does not seem overly detrimental as is a marginal tax hike and only for those over $200K. Granted if I made that amount I would find every way to reduce that % but it is not out of bounds. Based on this who is being really hurt here?
commented 2015-05-07 12:33:09 -0400
Chris, you just described the economic policy of Communism.
commented 2015-05-07 09:27:48 -0400
Trudeau’s plan is not adequately articulated. It should read, kill the rich and seize their assets. Next, nationalize all industry and redistribute the wealth to the party faithful. Don’t worry about making decisions, the government will do all that for you. Then our society will be fair and everyone will be equal.
commented 2015-05-06 13:34:32 -0400
The “Rich” will do what they have always done, move their assets and themselves off shore to avoid this. The rest of us will pay dearly, including as noted in a previous comment, the potential exodus of Medical Professionals to jurisdictions less onerous and in need of their services. Socialists always fail to see the big picture, and will deceive just to get power. It has always been so.
commented 2015-05-06 13:15:28 -0400
Missing from the discussion is the highly mobile and valuable profession of medical practitioners that would fall into this class, reducing services across Canada. Some how I don’t see that helping the middle class.
commented 2015-05-06 11:52:20 -0400
You can say that again! Trudeau just picked up Ignatieffs old budget from the trashcan of history and through this garbage he is peddling to the voters!
commented 2015-05-06 11:51:20 -0400
Canada is a socialist country, so of course, we have socialist programs like health care and welfare. But taxing the very rich will drive investment away and hurt our trade advantages.

Globally, one percent of the populatiin now owns 50% of the wealth and that is also problematic in that it fuels unrest and will court more war and revolution as it creeps ever higher.

What would be ideal would be if the world’s billionaires collectively made it fashionable to donate more to the poor in their own communities. No one needs an investment portfolio in the billions just sitting there amassing more and more wealth while the world’s homeless and starving grow. But to be successful, such a fashion would have to be voluntary and therein lies the problem.

Power and greed and no concern for need is the ethic that drives the human beast.
commented 2015-05-06 09:09:55 -0400
Vlad, for the most part I agree with you, but even though I am dead set against Notley and her crew of children, I am not so sure I would go so far as to label her as another Adolph. Certainly there will be no social program she won’t hug and love. Economically we are toast now that the NDP has the reigns.
commented 2015-05-06 08:58:50 -0400
It’s not that Baked troodo is wrong, this move actually enhances troodo’s supporters – troodo’s supporters are already set up offshore, run tax deferral schemes and pay little in the way of taxes. But anyone trying to accumulate wealth will be stopped, again, by these socialist/communist pigs like PIG TROODO. It’s how the PIGS do it in Europe and this is what Baked troodo wants to do here after years of Harper tearing this communist crap down.

See what happens in Alberta – they just elected adolf hitler – not of the national socialist party (nazi party), but of the party that is a member of socialist international.
commented 2015-05-06 08:51:06 -0400
Socialism has never worked as a government anywhere. The eventual outcome is a destroyed economy.

Why is it that those who support socialist governments cannot see that. Alberta just stepped over the socialist cliff. Depressing.
commented 2015-05-06 08:25:31 -0400
Socialist plans always hinge on productive people putting their own heads in the noose. That’s why it has never worked.