The rich are perhaps not always those we believe in Quebec. And they may also pay more taxes than you think.
Despite what some say, Québec solidaire is probably not very wrong when it says that about 5% of Quebecers have a net worth of a million dollars or more. What the party does not say, however, is that Quebec already taxes accumulated wealth proportionately more than the average for developed countries.
The same goes for annual income, since individual earnings of $88,400 were enough in 2019 for their holder to belong to the richest 10%. The fifth-richest Quebecer accounts for more than 70% of government income tax revenue.
Québec solidaire’s idea of an annual tax on the assets of the “ultra-rich” has drawn criticism. Targeting individuals whose net assets (assets minus debts) exceed one million dollars, it would affect much more than only 5% of the population, it is thought, because it would underestimate the price of houses or even the actuarial value of defined benefit pension plans in the public sector and some large private companies.
In its calculations, Québec solidaire used a Financial Security Survey carried out on an ad hoc basis by Statistics Canada with households, the most recent edition of which dates back to 2019. As its measurement targets individuals, QS has divided the assets equally between the adult members of each household.
The “ultra-rich”
However, 4.8% of households in Quebec had net assets of at least two million in 2019, reported Statistics Canada in To have to last week. The median age of their major income earner was 61.
When we look at the richest 20% of Quebec households, we find ourselves with a median net worth of 1.31 million, compared to $545,000 for the second richest quintile, and only $2,600 for the 20 % the poorest.
The agency’s figures take into account financial assets, including the actuarial present value of employer-sponsored pension plans, non-financial assets, such as real estate and vehicles, and equity in a company. It subtracts all debts (mortgages, lines of credit, credit cards, student loans, etc.) from the total to arrive at household net worth.
Generally reliable, these figures on accumulated wealth must however be considered with increasing caution as one rises in the select spheres of wealth, warns Statistics Canada. In 2020, the Parliamentary Budget Officer in Ottawa had also estimated that the net worth attributed to the richest 5% should be increased by a third, doubled for the richest 1% and quadrupled for those who belong at 0.1%.
Taxes already heavier than elsewhere
Considering it abnormal that Quebec has no inheritance tax, unlike so many other countries, Quebec solidaire also promises to establish a 35% tax on the share of inheritances whose net value will exceed one million.
However, this is to forget that Quebec and Canada have another way of taxing the assets of a taxpayer upon his death. In the eyes of the tax authorities, the deceased person liquidates all his assets and must pay capital gains tax before he can pass on his estate, explained last year to the To have to Professor and holder of the Chair in Taxation and Public Finance at the University of Sherbrooke, Luc Godbout.
In fact, if we take into account all taxes on wealth, including property tax, which is another form of tax on personal assets, Quebec is one of the places where taxes on wealth are the highest among developed economies, with total revenue equivalent to 3.6% of its gross domestic product (GDP), compared to 3% in the United States, 4% in France, 1% in Sweden and an average of 1.9% in OECD countries.
The income of the 1% and others
A similar situation arises with respect to income. In this case, several political parties promise to raise the taxes of the richest (Liberal Party and QS) or to lower the rates applying to the first income brackets (Coalition avenir Québec, Conservative Party and QS).
Once again, Quebec already stood out as one of the developed economies with the highest personal income tax. Its revenues amount to the equivalent of 14.1% of GDP, compared to 10.5% in the United States, 9.6% in France, 12.4% in Sweden and an average of 8.3% in OECD countries.
In 2017, the bulk of these income tax revenues came from the pockets of the richest 20% of Quebecers, who, with 51% of all income, accounted for 71% of government revenues, reported at the beginning of the year the Chair in Taxation and Public Finance at the University of Sherbrooke. If we add the contribution of the second richest quintile, we arrive at more than 91% of total income tax revenue.
It was enough to earn just over $41,500 that year to belong to the group of 40% of Quebecers with the best incomes, and just under $65,000 to be in the fifth richest. It must be said that, still two years later, the median annual income of Quebecers was $28,600, and that the club of the richest 10% started at $88,400 and the famous 1% at $234,700.
Back to Citizens
All of this tax revenue is returned to citizens in public services and infrastructure, but also hard cash for those who need it most. Quebec particularly stands out when it comes to people with low incomes and households with children, shows the Chair in its report.
In some cases, such as among low-income families with children, it is even the place where the “net tax burden” is the lowest of all OECD economies, with remittances larger than the tax to be paid. However, this situation is quickly reversed as soon as individuals’ incomes increase and there are no children in the picture.
With Clemence Pavic