The Fraser Institute has jumped into the plutonium-powered DeLorean and has gone Back to the Future with their latest report on Canadian taxes.
The Fraser Institute claims that the average Canadian family’s tax bill has soared by 1,787% since 1961.
While that’s a clear exaggeration that ignores inflation, what is astounding is that their numbers don’t even remotely hold up.
The Fraser Institute argues that the average family now pays 42.7% of its income in taxes.
According to the OECD, Canadian government total tax and non-tax receipts in 2011 added up to just 38.4% of GDP.
The Fraser Institute further misleads us by implying that taxes have been continually ratcheting upwards. In fact, government revenue peaked in 1998 -- at 44.9% of GDP.
But it’s the comparison to 1961 that takes the biscuit.
The Fraser Institute would apparently like to return to the halcyon days of Victorian Canada when there was no income tax and no sales tax and every penny of family income went to meet the bare necessities of food and rent.
But if you and I were to jump into the DeLorean piloted by Dr. Emmett Brown and travel back to 1961 Canada, here’s what we would find:
- No Medicare
- No Canada Pension Plan
- Meagre Old Age Security benefits that gave us high levels of poverty for seniors
- A post-secondary education system that was open only to the rich and the very, very, talented
- And, significantly for my gender, the pay gap between men and women was wider than the James Bay.
On top of that, back in the Fraser Institute’s version of the good old days, the essentials of food, clothing, and shelter consumed 56.5% of the family budget compared to 36.9% today with most of the difference going to taxes.
Somehow the Fraser Institute have turned falling food and clothing prices (over time) into a bad thing.
The fundamental point is that we are much richer as a society than we were back in 1961. Not only do we have more to spend on consumer goods today, we also choose to spend a bigger slice of the pie on social programs, education, and public services.
That’s a good thing.
The Fraser Institute can stay in 1961 if they want... but I’m happier to be living in 2013.
