Never confuse a dipper with facts. So this from the CD Howe Institute will probably just go over their heads.
A C.D. Howe Institute report pokes a big hole in the pleasant notion that raising taxes on rich people is the easiest, most effective and most equitable way to fill up a depleting tax treasury.
As much as it may leave Occupy protesters and NDP leaders feeling good about themselves, it’s bad for revenue, the report says. In fact, a new wealth tax in Ontario, to take effect in July, will not raise anywhere near the revenue projected, and will cost the country dearly within a few years.
Alexandre Laurin, author of the report, notes that the ease with which high-income earners can adopt strategies to reduce their taxable income means the new levy will probably be applied to a smaller pool than anticipated by New Democratic Party leader Andrea Horwath when she strongarmed Dalton McGuinty’s minority government into adopting it, in return for allowing the Liberals’ budget to pass.
The government hoped the new tax — an extra 2% on incomes over $500,000, which translates into a 3.1% increase when an additional surtax is applied — would raise $470 million. Laurin estimates the number will be closer to $450 million initially, falling to zero by 2019 as wealthy taxpayers adjust, and a net loss of $200 million by 2027.
Ottawa will also be affected by the expected tax-reduction strategies, producing a combined revenue loss of about $800 million a year a decade from now, according to the report.