Ontario Conservative Leader Doug Ford recently vowed to scrap what he called “massive — I repeat, massive — tax hikes” in the latest budget.
Ford claimed that the tax change will impact 1.8 million people and that “a family of five will be paying $1,000 more in new taxes”.
The existing Ontario tax code levies a surtax on people with high incomes. This includes a 20% surtax when tax paid reaches $4,638 and a 56% surtax when it reaches $5,936.
Under the new rules, these surtaxes will be replaced with new income tax brackets. The consequence of this change is two-fold:
First, the tax code will become somewhat more simple, as surtaxes are replaced by the more familiar marginal rates based on income bracket.
Second, people with high-incomes (who used to pay the surtax) will now pay slightly more tax. Someone with an income of around $95,000 per year will pay an extra $104, and someone with an income of $130,000 would pay an extra $200.
Only people in the top 10% of income recipients (or above) will pay higher taxes under the revamped rules.
Ford’s Claims vs. Facts:
Doug Ford has promised to cancel the tax changes, arguing that nobody should have to pay higher taxes.
However, Ford’s framing of the issue is at odds with reality. Ford portrays the tax change as impacting everyone. The reality, as we have seen, is that it will only impact the rich.
For example, Ford made his case to the media on the matter by arguing “a family of five will be paying $1,000 more in new taxes.”
This is false, unless each member of the family has an income of above $130,000.
Ford’s “ordinary” family of five burdened by the new tax rules would have to rake in a household income of $650,000 per year. This is obviously not a typical family.
While Ford’s claim that the tax rules will increase taxes is true, his suggestion that middle-class and low-income people will have pay higher taxes is false.
In fact, those groups will not benefit at all from Ford’s plan to cancel the tax changes. The chief beneficiaries of that policy will be top income recipients, like Ford himself.