Number of Canadians in Highest Tax Bracket Barely Changed Since Tax Rate Increase in 2016: Report

The Canada Revenue Agency (CRA) headquarters Connaught Building in Ottawa on Aug. 17, 2020. (The Canadian Press/Sean Kilpatrick)

The number of Canadians whose taxable incomes are in the top 1 percent bracket has remained virtually the same since 2016, when the Liberal government increased the federal income tax rate to 33 percent for the highest earners—or those making $200,000 or more a year.

The Canada Revenue Agency (CRA) said in an Inquiry of Ministry recently tabled in the House of Commons that there have been less than 400,000 tax filers over the past six years reporting annual incomes surpassing $200,000, according to Blacklock’s Reporter.

“With regard to income tax and the Canada Revenue Agency, broken down by year since 2016: (a) what is the total number of people who filed income tax returns, broken down by income tax bracket; and (b) what was the total amount of revenue collected, from personal income tax, broken down by tax bracket and tax return filed?” asked Conservative MP Adam Chambers in the House on Dec. 7.

The CRA answered in the inquiry with a year-by-year breakdown from 2016 to 2020 of the number of Canadians in the highest tax bracket.

In 2016, just over 338,000 individuals reported annual incomes of $200,000 or more, and in 2017 the number rose to around 375,000. Between 2018 and 2020, the number stayed between 385,000 and 395,000.

The CRA said in the inquiry that it is still collecting tax data for 2021.

A parliamentary committee previously heard from the Department of Finance in 2016 that the federal government expected over 400,000 tax filers to report yearly earnings of $200,000 or more.

“Over $200,000, it’s about 0.4 million [Canadians],” said Miodrag Jovanovic, the Finance Department’s then-director of tax policy, while testifying before the Commons finance committee on April 12, 2016.

“In 2016–17 we expect that the revenues coming from the new 33 percent tax rate will be about $2 billion.”

Tax Cuts

While still running for leadership of the Conservative Party, Pierre Poilievre promised to cut federal taxes on both payroll and income if elected prime minister, while the NDP has called on the federal government to increase corporate income taxes.

Green Party Leader Elizabeth May said in the House earlier this year that she believes Canada should implement an even higher federal tax bracket for individuals making over $200,000 a year.

“We certainly would do more to address income inequality were we to create a higher personal income tax bracket for people making, say, over $500,000 a year,” May said on June 6.

A study published by the Fraser Institute in January 2020 found that 86 percent of middle-income families in Canada have paid higher income tax amounts since a Liberal government replaced Harper’s Conservatives in 2015.

Titled “Measuring the Impact of Federal Personal Income Tax Changes on Middle Income Canadian Families since 2015,” the study looked at families with combined yearly incomes between $84,625 and $118,007 and found that about 86 percent of them have paid $800 more in yearly income taxes since 2015.

“The federal government has repeatedly asserted that it lowered personal income taxes for the middle class when in fact it increased the personal income tax burden on most middle-class families,” said the study, published on Jan. 20.

Isaac Teo contributed to this report.