When the Taxman Knocks at your Door
Everyone knows how it feels when tax time comes around: stress, anxiety and last minute scrambling to get everything in order. Comments often include: “Hey honey, do you think I could include the pens I bought for the kids as part of business expenses? What about the binders?” At work, the ambiance is similar; managers tend to be buried in work and co-workers get grumpy, especially if they qualify for a higher tax bracket than they did last year! This must be the only time we hear individuals worry about their salary raise…
For many, it’s easy to forget why taxes must be paid; and it looks like the government’s claim on the hard working citizen’s salary is ever increasing. If results cannot be seen, the impression is that tax money is wasted; so let’s take a look at the kinds of services our tax dollars allow us to enjoy.
Where does our Tax Money Go?
According to Statistics Canada, here are a few programs paid for by Federal Taxes (note that this list is in no way exhaustive):
Elderly benefits: These benefits include services like the Canadian Pension Plan which allows individuals to retire when they reach certain age;
Education: Many grants and bursaries are awarded to numerous educational institutions and students every year;
Health Services: No, healthcare in Canada is not “free”. We Canadians pay for it every year with our taxes;
National Defense: Canada is one of the largest countries in the world, with plenty of natural resources and unfortunately, with few inhabitants. National Defense programs ensure that if we are ever threatened, we will be able to protect ourselves;
Social Development: Benefits that support families and individuals with disabilities and allow them the opportunity to contribute in our society.
Using a simple analogy, taxes are like a family budget; they allow the repartition of resources for the benefit of the Canadian population. They act like a security blanket for those individuals who are getting through a rough patch in their life, and ensure they will be able to continue contributing to the team effort. That budget also allows individuals who have been contributing for most of their life to retire, and helps alleviate the monetary burden on future contributors.
So… Are Taxes Friends?
It depends on each individual’s ideology! For those who tend to believe that the government should offer more support and invest in infrastructures that support equality, taxes are friends; for others who would rather collect only what is needed for the vital functioning of the government, taxes are foes.
Regardless of the stance on the question, the best way to ensure that our country benefits the most of taxes is to have the tax spending information freely available for all. This is what Open Data stands for: it’s a call for transparency, citizen advocacy, and fairness in spending. If you would like to know more about Open Data, you can read our post Open Data: Using Government Data for Business and the Public Good.
Now that we have established that taxes are a shared resource that can be spent on diverse programs, let’s take a look at where these taxes come from.
Corporate Federal Tax and Personal Income Tax
Below is our chart, also found on the Public Sector Digest September issue, depicting both corporate federal taxes and personal income tax and how provinces compare to each other. Feel free to explore the tabs, click on tax brackets and provinces!
This kind of chart is a perfect example of the power of data visualization. It allows anyone to understand numbers easily, without extensive data tables and complicated formulas. Based on this, here are a few observations that can be made about federal taxes in Canada:
Federal Corporate Tax
It should be logical that each province, based on their revenue, is expected to contribute equally to the Canadian budget. However, the data shows that not every province pulls its weight when it comes to corporate taxes. Some contribute more than their share, and others less. This gives rise to an even more interesting question: to what extent are these differences influenced by tax breaks and other incentives? Could we use this data to ensure fairness in taxation across the country?
Personal Income Tax
Across all provinces and territories, more than 50% of the Canadian population earns less than $45,000 dollars. This means that at least one in two Canadians is part of the lowest income tax bracket. When we look at higher brackets, the numbers show a high variability, representing very diverse economic activity throughout the country. To gain a better understanding of the composition of each economic level, we decided to dig deeper in the data and see whether these numbers would change if we represented them based on gender.
Personal Income Tax by Gender
Take a quick look at the table below the map. It shows that in 2016, men earned much more on average than women. This is because fewer men had a salary below $45,000 per year, and the percentage of men to that of women in all other tax brackets was higher. We call this a “wage gap”. In 2015, for every dollar men earned, women earned 87 cents. Our neighbours in the States have been reporting similar proportions, with women earning 84 cents for every dollar men earned. Even more interesting is how this breakdown occurs at the provincial level. Click on the different provinces and see what happens!
The data shows that there is a tendency for men, in all provinces, to move more fluidly from one tax bracket to the other – while women’s income remains stagnant, with approximately three quarters lingering in the first tax bracket in all locations. At this point, an important question arises: what gives rise to this pattern?
O Canada, Can we Strive for a Better Future?
For better or worse, the visualized data from Statistics Canada allows us to take a better look at the shape of our country, and at the kinds of questions we should ask our leaders. It allows us to stay informed and monitor changes in our economy. In this way, it is now more important than ever to ensure that we all have access to Open Data; this data which enables us to see how policies (tax related or otherwise) affect our country, and to seek collectively to understand how we can contribute to make our country better. Because it’s not the unique responsibility of a leader to change Canada; it’s on us, Canadians, to drive this change.
If you would like to know more about Open Data and how it can influence communities, you can also read Going Social: Young Minds Change The World With Data,Ethical Use of Open Data For Small Businesses in Niagara, or Open Data Means…Nothing?
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This post was written by Valérie Plante-Brisebois