This is very taxing

Until recently, New Brunswick had a four-bracket personal income tax system. Various tax rates would come into play depending on how much you earned. Anyone who earned $34,836 or less would be taxed at a rate of 10.12%. Anyone who earned up to $69,673 would pay 10.12% on the first $34,836 and then 15.48% on the rest. A third tax bracket came into play for people earning more than $69,673 but less than $113,273 (16.80% on anything beyond $69,673). Finally, anyone who earned more than $113,273 would be subject to a tax of 17.95% for any amount beyond that.

During 2008, government asked for presentations and submissions on a tax reform plan. They were presenting two options: first, a single rate of 10% for all, no matter how much money you made; second, a rate of 9% for the first $37,893, and 12% for any amount beyond that. The government wound up choosing the second option.

According to law professor Kathleen A. Lahey, who prepared a gender-based analysis of this plan, this could result in the provincial government taking in as much as $325.6 million less per year, a 26% drop. Government would either have to make up the difference through consumption taxes, cut drastically, or a combination of both. And this was figured out before the current economic crisis came to be.

If this alone wasn’t enough, the plan is also regressive toward women as a group since the disappearance of the two highest tax brackets, where women are significantly underrepresented, will result in an increase of the income gap between men and women.

Government figures show that a person earning $15,000 in one year will see his tax payable go from $65 down to $7. This is a $58 reduction, or 89.2%. Someone earning $140,000 will see his or her tax payable go from $19,912 to $18,730. This amounts to $1,182 in savings, or 5.9%. Percentage-wise, everything looks fair. However, many, including myself, would argue that the person earning $15,000 probably needs those fifty-eight extra dollars a whole lot more than the richer person needs $1,182. Somehow, this got lost in the debate.

I would think anyone who sees this information should have grave concerns. Unfortunately, this is now yesterday’s news and no one seems to want to revisit it.