Should we impose more taxes on the rich?

In their file Rethinking inequality in Quebec – putting Jenny back in her bottleResearchers Camille Lajoie and François Delorme of the Research Chair on Taxation and Public Finance at the University of Sherbrooke have shown that income inequality has worsened over the decades.

From 1982 to 2019, the select group of the richest 10% of Quebec taxpayers saw their share of total annual income increase by 6.1% to 38.4% of total income earned in Quebec.

You read correctly: a handful of the “rich” 10% monopolized nearly 40% of total income!

Moreover, the very select group of the “very, very” wealthy 1% of Quebecers has also become considerably richer by monopolizing 11.9% of total income, thus increasing their share of the pie by 4.9 percentage points since 1982.

As the rich got richer, the remaining 90% of taxpayers saw their share of total annual income shrink to 61.6% of total income.

Other important data on the enrichment of the rich: The median annual income (in 2022 dollars) for the 10% group of “rich” jumped about 48.8%, from $119,963 (in 1982) to $178,476 (in 2019).

The increase was much stronger among the richest 1%. Their average income rose 113.9%, to $554,068.

During this same period from 1982 to 2019, the average annual income (in 2022 dollars) for the remaining 90% of taxpayers rose just 14.3%, to about $31,811.

the solution

What can be done to reduce these income disparities?

This question is even more important because 87% of respondents to the 2021 Quebec Inequality Observatory’s Léger poll believe that reducing income inequality should be a priority for Quebec society.

Should we impose more taxes on a handful of rich and affluent taxpayers by making the personal income tax more progressive?

not sure! According to researchers Lajoie and Delorme, the work of Milligan (2019, 2021) suggests that there is an upper limit to the marginal tax rate. “In fact, beyond that limit, the revenue loss resulting from changes in the behavior of high-income taxpayers exceeds the revenue gain from the higher rate.”

What’s the solution?

“Options for reducing inequality should involve improving income support measures, and thus at the bottom of the income distribution, rather than through increasing taxes on high incomes,” the authors conclude. Rethinking inequality in Quebec

They add that providing more support to the poor in Quebec society, rather than seeking to increase the tax burden on the rich, would make it possible to partially close the wealth gap with Ontario.

Let François Legault and his Finance Minister Eric Girard take it for granted!