An analysis of Canadian Income Tax Numbers

Here is my analysis of the data behind this Financial Post article that suggests that the “1%” are carrying a scandalous amount of the tax burden of this country.  The key number seems to be that the top 1% of Canadians pay 21.2% of all taxes paid in this country.  Scandalous!

So, it looks to me like the writer of this article pulled primarily from this page or one like it.

I used that link as well as this one to generate the tables shown below, and throughout this analysis.

So, looking at my first table, things look a little bit less scandalous.  Yes, the top 1% pays 21.1% of all taxes (my number is a bit different somehow).  But they also make 10.6% of all of the income generated in the country.  Yes, the average 1 Percenter pays 1/3 of his income to taxes.  But the average 99 Percenter pays 14.8% of their income to taxes.  This is almost double the tax rate, but sounds far less scandalous than "Top 1% pays 21.1% of all taxes".

But some interesting things come out of this table.  For both 99 Percenters and 1 Percenters, there is a really large spread between the average and median numbers.  The median in both cases comes in far below the average, meaning that there are a few high numbers near the top that are dragging the averages up.

I combined a couple of links to create this table showing the distributions within the various income categories (mostlyfrom here).  It’s a bit funky near the top, but I wanted to break out the 1%.

Almost 25% of Canadians earn less than $25,000 per year.*  Almost 75% earn less than $50,000.  All of our numbers are pulled up by people earning vast sums of money at the top of the Food Chain.

So.  Yes.  1 Percenters pay more in income tax than the rest of Canadians.  Is it a completely unreasonable amount?  Is this the way it should be?  Those are tougher questions to answer, but the picture is less one sided than the Finacial Post paints.  Interestingly, from this link here (2009 numbers), individuals pay $190 Billion in taxes while Corporations pay $50 Billion.  Perhaps that is the discrepancy that bares more investigation?

*Update - Oops.  I got my numbers wrong from my own chart.  Over 25% of Canadians earn less than $15,000, not $25,000.