The Fraser Institute estimates that the Tax Freedom Day for Canadians falls on June 19th this year. The Freedom day has advanced from June 25th last year due to the upcoming cut to the GST and tax-cuts in some provinces.
Last year, I did an estimation of my Tax Freedom Day and thought that the Fraser Institute seemed to overestimate our tax burden. I was wrong because I failed to account for my share of taxes on corporate profits and employer’s EI premiums and CPP contributions.
Let’s say that I have $100,000 invested in Canadian equities or mutual funds and my share of the earnings of the underlying companies is $6,000. That’s the profits that are left over after corporate income taxes are paid. Assuming a corporate tax rate of 30%, the companies I am invested in have paid about $2,500 in taxes.
Also, note that some payroll taxes are paid directly by your employer. Employers have to pay 1.4 times the employee’s EI premiums and match the CPP contributions. If you pay the maximum every year, it would add up to another hidden tax of $2,930.
Add it all up and the Fraser Institute has probably gotten it right. This whole exercise has made me depressed that I want to cry into my overtaxed beer.
Bookmark: del.icio.us Digg StumbleUpon
4 responses so far ↓
1 Rick // Jun 17, 2006 at 2:08 pm
when is tax freedom day in the US? say a state like florida or Cali?
2 David // Jun 17, 2006 at 9:19 pm
Hmmmm….. the UK Tax Freedom Day was June 3, and is described as an “attractive low-tax economy.” I expect that is looking from an EU perspective.
There is much discussion about the accuracy and validity of the Fraser Institute’s numbers (see recent Globe & Mail article), but in any instance, if making any comparison to the USA, one should factor health insurance costs into the mix.
DAvid
3 Canadian Capitalist // Jun 17, 2006 at 10:56 pm
David: You are right that there is some controversy about Tax Freedom Day. I thought that their day was way off base but it turns out that I missed some hidden taxes that in the final analysis comes from our pockets.
4 armaniclothing // Aug 21, 2007 at 10:38 pm
[...] spectacular site now debrief this snippet http://www.canadiancapitalist.com/2006/06/17/tax-freedom-day-2 and give comments [...]
Leave a Comment