Ontario Effective Income Tax Rates
Tax rate discussion
While helpful for all Canadian taxpayers, this discussion will be very helpful to Ontario residents. It really illustrates how complex our tax system has become!
You dont have to convince me.
Ive posted many times on here about how ludicrously complex ourTax System has become.
And it just gets worse every year when govts keep addding new programs, new credits, etc, to try and hide hoe the average taxpayer is getting ruined by govt waste and spending.
Add in the "phantom income" thats produced when you have to gross up your dividends. This is income you NEVER actually received, yet it is used as your "taxable income" for all kinds of govt benefits and clawbacks.
Its a DISGRACE !!
We need a FLAT RATE tax system that the average taxpayer can easily understand and comply with....and that doesn't punish someone for working hard and getting ahead.
As for taxing the rich...thast such a joke.....Ive never seen a "poor" person create a job or create any value or prosperity for any society ever.
As you can tell, this stuff really gets my blood boiling, and it bothers me that NO politician has the balls to call it what it is, and fix the system.
"Ive never seen a "poor" person create a job or create any value or prosperity for any society ever."
The discussion makes some interesting points about how clawback of various credits and benefits affects a "true" marginal rate. But another way of interpreting it is that the marginal rate for the upper bracket is still under 50%, but lower-income people actually have lower marginal rates than commonly thought due to the various credits & benefits.
(Using the OP's methodology, once your income reaches a level where all the benefits have been clawed back, and the income-dependent credits have been reduced to zero, the "effective marginal rate" then drops down again. Ergo there is something wrong with the methodology.)
I think including CPP and EI is overstating the case, and spoils an otherwise interesting argument. You may as well throw in HST as well; and what about gas & liquor taxes?
PS: It also seeemed to me unusual that the "typical" tax payer is +65 years of age (collecting OAS and eligible for the age amount) but also has multiple minor children.
PPS: The "Step Function" of the Ontario Health Premium does induce a high marginal rate every time you cross a threshold, and that is one of the reasons why I dislike it too But is that really statistically meaningful?
PPPS: By selecting your data you could probably prove that the death of a minor child or spouse suddenly propels you into a higher marginal tax bracket.
All that being said, I agree the analysis points up some inequities, not to mention ridiculous complexities, in all our income-tested credits and benfits.
Last edited by OhGreatGuru; 2011-04-03 at 09:24 AM.
@warp: I would give you the benefit of the doubt that you were not thinking straight when you typed this. I encourage you to apologize and retract your statement.
Originally Posted by warp
I agree on CPP but EI is an income-oriented tax that provides most of the payors with zero benefit.
Originally Posted by OhGreatGuru
The last two are consumption taxes and cost nothing if you stop spending.
Yes it is pretty complicated. i am a resident of Alberta and it is a little better there. But in reality in my case with a very high income things are pretty simple. I can ignore all the minor stuff and just look at the max marg rates (reg income-39%, divs about 16%)
Here is the Ontario tax displayed graphically as an effective tax rate starting at $37000 and increasing by .002 The anomaly is not anywhere as graphic when looked at in terms of actual tax paid. This includes most of the ONT surtaxes, health care levies, etc. It is for a single/no dependants taxpayer.
Ontario tax anomaly
Apologize?? and Retract?? Who are you, my Father?
Originally Posted by slacker
Give me a break! I would encourage you to open your eyes, and get your head on staright.
I was thinking TOTALLY clearly when I wrote this.
What is it about this "statement", that offends you, or that is incorrect.
I assume you are saying it is "politically incorrect"...which I am sick of hearing about, to say the least.
Theres a lyric in an old rock song.....when I was younger.
" tax the rich.
feed the poor,
till there are,
no rich no more"
I think it was by AREOSMITH
It is when you DO NOT punish hard work and innovation through high taxes , that a society enriches itself.
How can it EVER be fair when the govt gets more of what you earn than you do? Where is the incentive to work,,,the incentive to acheive?
Before you think Im an ogre, I agree with the premise that the govt, thru taxes, should give a helping hand to the poor, seniors, disabled, or dissadvantaged, or anyone going through a rough patch.
However , what we have created is a society where everyone thinks they are ENTITILED to everything...and constantly with their hands out looking for just that....a handout.
As in, "we" are all entitiled to housing......NO YOU ARE NOT....you are entitiled to work, not be taxed to death, and house yourself.
The amount of sheer waste at all govt levels makes me SICK, because it is MY money they are wasting.
I have alwasys felt this way,,even when I was young and broke....and had many problems through University when I made these points in class, and was laughed at by my "professors", including my economics professors, who I now realize were in dream land, and couldnt punch their way out of a paper bag in the real world....and dont even get me started about "TENURE", or the public service unions....parasites on the public dime.
Remember this...NO society in the HISTORY of the world has ever taxed itself into prosperity.
In fact I would argue that the opposite is true.
Feel pretty strongly about this Warp? Relax there fella, things ain't that bad.