This week, I reported about a new Statistics Canada report that suggests the average paycheck for a salaried Canadian worker in the month of August was $907. It noted that it’s a 3.6 percent rise from a year ago and the trend shows the earnings are rising at a fast pace.
What do I say about it? So what?
I have a few questions about that $900 paycheck, which I certainly question because there are a lot of people in this city that are earning half of that in two weeks. My questions: how much tax is taken off of it? Is it actually keeping up with the rate of inflation? How much is the $907 really worth (this question is more directed to Bank of Canada head Mark Carney)?
The other day, my fiancee got her paycheck and she noticed that it was quite big, but the amount of taxes taken off was quite astronomical. In the spring, I also reported on a Fraser Institute report that concluded that the average family that earns $70,000 per year pays 42 percent in taxes (federal, provincial and local). That’s just mind-numbing. I can definitely see that number rise to 60 percent in a decade or so.
Great! We have bigger paychecks, but all that means is that the government steals a bigger chunk of your pie. Henry Hazlitt eloquently explained in “Economics in One Lesson” that taxation deters productivity. He’s right. Why would I work an extra hour when the government is going to take 42 percent of that hour’s pay away?
Is it time for tax reform? How about Milton Friedman’s proposal of a negative income tax? I’ll leave you with a video of the Chicago economist discussing his idea.