/Posthaste: Canada’s wealthiest 10% earn 34% of income, but pay 54% of taxes — and here’s the kicker, many are just middle-class

Posthaste: Canada’s wealthiest 10% earn 34% of income, but pay 54% of taxes — and here’s the kicker, many are just middle-class

Good Morning!

The top 10% of Canada’s earners make 34% of the country’s income, but are paying 54% of income taxes, says a new essay that questions the premise that the “rich” don’t pay enough tax.

“Despite common misperceptions and misleading rhetoric, our top 10 per cent of income-earners pay more than half of Canada’s income taxes — and this group includes people that few would consider wealthy,” said Philip Cross, a former chief economic analyst at Statistics Canada, in the essay released by the Fraser Institute.

The federal government and 7 of Canada’s 10 provinces in recent years have raised tax rates for upper-income earners. Cross says in 2017, the latest year of comparable data, the top 10 per cent of income-earners earned about a third of total income but paid more than half of the country’s total income taxes.

Cross says that gap has always been there, but it has grown wider over the past three decades. Between 1982 to 2017, the share of income earned by the top 10% rose 13.2% while their share of income taxes rose 22.4%.

And here’s the kicker. Being in the top 10% of earners in Canada doesn’t mean you are wealthy. In fact, in 2017, any Canadian making $96,000 (or more) was in that group, Cross says.

“Many Canadians, including those advocating for higher taxes, might be surprised to learn what our top 10 per cent of income-earners looks like — many of them consider themselves middle class,” Cross said.

* * *

If you had any doubts about the struggle of the oil and gas industry over the past few years, a new study by Dallas law firm Haynes and Boone offers some grim statistics.

The number of oil and gas company bankruptcies in the U.S. and Canada rose 50% in 2019 from the year before and Haynes and Boone expects that trend will continue, Reuters reports.

Forty-two U.S. and Canadian oil and natural gas exploration and production companies went bankrupt in 2019, up from 28 in 2018.

The rate of bankruptcies has been increasing since the oil crash of 2015. Between then and 2019, a total of 208 producers have filed for bankruptcy, showing the industry has yet to recover.

“This increase in year-over-year filings indicates that the reverberations of the 2015 oil price crash will continue to be felt in the industry through at least the first half of 2020,” Haynes and Boone said in the report.

Here’s what you need to know this morning:

  • Barack Obama speaks on ‘Future Skills’ at Economic Club of Canada at Metro Toronto Convention Centre
  • European Central Bank releases interest rate decision
  • Statistics Canada to release its latest crowdsourced cannabis price data
  • Industry Minister Navdeep Bains will host a teleconference on his presence at the World Economic Forum in Davos, Switzerland.
  • Tom Olsen of the Canadian Energy Centre speaks to the Canadian Association of Petroleum Landmen in Calgary
  • Extradition hearing for Huawei executive Meng Wanzhou in Vancouver continues
  • Leading residential, commercial and industrial builders from B.C.’s largest economic sector share their 2020 B.C. real estate forecasts at the Urban Development Institute forum in Vancouver
  • Notable earnings: Procter & Gamble, Intel, American Airlines, Southwest Airlines, E*Trade

Bank of Canada Governor Stephen Poloz said yesterday that the door is open for a rate cut, and many observers took him at his word. The Canadian dollar dropped almost half a cent to 76.10 US cents, (it has fallen to 75.96 this morning) and market odds of a cut by mid-year climbed to 50%. But not everybody was sold. Capital Economics thinks the Bank’s outlook is too pessimistic. Senior Canada economist Stephen Brown expects growth to rebound in the first quarter to 2.2%, a big jump on the Bank’s revised forecast of 1.3%. He also sees 1.7% growth for the year, higher than the Bank’s 1.6%.“Given the potential for the data to surprise policymakers to the upside in the coming months, we feel more confident that the Bank will keep policy on hold throughout 2020, in contrast to view of many other forecasters that the Bank will soon cut interest rates,” wrote Brown.

— Please send your news, comments and stories to [email protected]. — Pamela Heaven @pamheaven

With files from The Canadian Press, Thomson Reuters and Bloomberg

Original Source