Taxation is the main way your government generates revenue. The reason we have universal free public education, and health care (among other benefits) is because everyone pays taxes. Unquestionably, tax revenue allows the government to make a more equitable, safe, orderly society.
Historically, though, “tax” has been a bad word. Realistically, no one likes giving up such a huge chunk of their income to the government that spends it on things that may not directly benefit the individual tax payer. It takes a big person to surrender his taxes lovingly for the greater good.
With this idea in mind, I present the following scenario for British Columbians:
IF WE WERE TO INCREASE THE AMOUNT OF TAX ON THE HIGHEST TWO BRACKETS BY 1% EACH: (*see table below)
A person earning $150,000 would now pay a total of $451 more per year in tax, or o.3% of total income
A person earning $200,000 would now pay a total of $951 more per year in tax, or 0.5% of total income
A person earning $1,000,000 would now pay a total of $8,951 more per year in tax, or 0.9% of total income
According to Statistics Canada there were 65,600 people in BC earning above $150,000/a in 2011.
Even if the annual income of all these people averaged out to $200,000 per year (It’s almost certainly higher than that.), a 1% increase on the last two tax brackets would generate $62,385,600 in revenue.
To put this in perspective, the province could hire over 700 more full time public school teachers per year if the highest two tax brackets were increased by 1%.
This represents the tax on individuals’ income only. It’s well known that our corporate tax rate in BC is one of the lowest in the country.
The scenario I have presented here is very simplistic, but it illustrates how a modest increase in the nominal tax rate can make a huge difference. The reality in BC is that the nominal tax rate across the board was lowered by 25% by the BC Liberals almost immediately when they got into power.
No one but the wealthy benefited noticeably from this, and since then, public service has taken a terrible hit. Hospitals are filthy – rife with C. difficile and other superbugs. And school districts are forced to cut way back on services.
For an eyebrow-raising review of how tax revenue in BC has decreased under the BC Liberal government, read “BC’s Regressive Tax Shift” published by the Canadian Centre for Policy Alternatives.
We have become programmed to think of taxation only in terms of deficit and surplus, but we should really be thinking about the living conditions in the province. When the NDP left office in 2001, BC was far better off than it is now, according to virtually every social measure (School achievement, child poverty rate, homelessness, mental health) and the provincial budget was in surplus!
*Calculating BC Provincial Personal Income Tax
Here’s how your provincial income tax is calculated if you make $200 000
5.06% on the first $37,606 of taxable income, (up to $37,606 total) = 1902.86
7.7% on the next $37,607, + (up to $75,213 total) = 2895.74
10.5% on the next $11,141, + (up to $86,354 total) = 1169.81
12.29% on the next $18,504, + (up to $104,858 total) = 2274.14
14.7% on the next $45,142, + (up to $150,000 total) = 6635.87
16.8% on the amount over $150,000 = 8400.00
Total BC provincial income tax for a person earning $200 000/a = $ 23,278.42