This text is taken from the Courrier de l’économie of September 26, 2022. To subscribe, click here.
More Quebecers see themselves in the middle class than they really are. And that can lead to all sorts of misunderstandings.
When asked, 56% of Quebecers believe they belong to the middle class, while about a third of households (34%) believe they have lower incomes than this group and only 6% say, on the contrary, they probably earn more. This was reported in 2017 by the Chair in Taxation and Public Finance at the University of Sherbrooke following a survey. However, it was rather 42% of the population who met the generally accepted definition of the middle class, against 35% who arrived below and 23% who arrived above.
There is not just one way to define the middle class, explained in 2019 the Quebec Observatory of Inequalities in a portrait of the situation. One of the most common among experts places it between 75% and 150% of the median income after government transfers and weighted according to the type of household.
As an example, a single person had to have between $44,850 and $89,700 in total income before taxes to be considered part of the middle class in the 2017 University of Sherbrooke Chair study. limits ranged from $57,000 to $114,000 for a family of four.
All members of the middle class
Why do so many Quebecers, especially the richest, wrongly perceive themselves as part of the middle class? Hard to say. This seems to be due, in part, to what is called “reference group theory”. This theory holds that we generally compare ourselves to our friends, family and co-workers, who are generally of the same social status as ours and who sometimes make us forget the differences in income in society as a whole. .
The real middle class feels more and more in decline, alarmed the OECD in a report in 2019. “People are angry. They feel they are not getting what is rightfully theirs. This gives rise to populist, isolationist or anti-system currents. Incomes are stagnating, house prices are soaring and debt is mounting, while the lives of the rich and famous are increasingly offered to us as a model and a spectacle.
The middle class has nevertheless been one of the big winners of economic growth in recent years, noted the OECD, but in emerging countries, such as China. And, contrary to the widespread impression, she generally continues to receive the same proportion of public services elsewhere as the taxes she pays, but a large part of these services are provided to her before she enters the labor market (education) and after (health).
Misunderstandings
This weight of the middle class in government tax revenues is often a source of misunderstanding. In the survey by the Chair of the University of Sherbrooke, Quebecers estimated this contribution at more than half (51%) of total income tax, compared to 28% which would come from the richest and 21% from the most poor. However, in reality, it is rather the middle class which contributed 28% to revenues, against 70% for the richest and 2% for taxpayers with more modest incomes.
These proportions probably haven’t changed that much since then, with the top 20% of taxpayers accounting for 51% of all income in Quebec and 71% of income tax revenue in 2017, according to the most recent portrait. of the situation drawn up by the Chair of the University of Sherbrooke.
This situation explains how more than half of the Trudeau government’s so-called middle-class tax cuts in 2016 went to Canadians earning more than $90,600 a year, the Parliamentary Budget Officer in Ottawa has calculated. The federal government had clawed back some of that money by adding a new top tax bracket on annual income over $200,000.
A similar phenomenon is likely to recur with other tax cuts promised to the middle class, but during the Quebec election campaign, those ones. Put forward by the Coalition avenir Québec, the Liberal Party and the Conservative Party, they would apply, in fact, to the first two levels of taxation, that is to say to all individuals who must pay tax and for their share of income up to $91,600.