Tuesday, April 20, 2010

On the Fraser Institute's latest garbage

Yesterday the Fraser Institute, with much fanfare from the media, published a report claiming that taxes for the average Canadian have increased by 1,624%. Sounds bad, eh? Well, this is the Fraser Institute we're talking about, so perhaps it's worth looking closer at their figures. Actually, since I'm lazy, let's just look at what others have already pointed out. Devin Johnson has this to say:

First of all, the Fraser Institute's numbers do not account for inflation. According to the Bank of Canada inflation calculator, the price of a basket of goods increased by 624.84% between 1961 and 2009. Using the Fraser Institute's own numbers, this means that we should expect, all else being equal, that the tax bill of the average Canadian family would increase from $1,675 in 1961 to $12,141.08 in 2009. In fact, according to the Fraser Institute, the average Canadian family paid $28,878 in total taxes in 2009. In inflation-adjusted terms, this represents an increase of 237.85% (or, about 5% per year). When accounting for inflation, the Fraser Institute's figure of 1624% is off by about a factor of seven.

Nevertheless, a 237.85% increase in Canadians' real, inflation-adjusted tax bills is still a shocking increase, right? Well, not really. Once again, according to the Fraser Institute's own numbers, the average Canadian family's income roe by 1383.5% between 1961 and 2009. If Canadian families paid the same proportion of their income as taxes in 2009 as they did in 1961, we should expect the average tax bill to be $23,173.63 in 2009. In fact, according to the Fraser Institute, it was $28,878. This means that the actual average tax bill in 2009 was about 24.6% higher than expected. This is still an increase, but not nearly as shocking as the 1624% figure bandied about by the Fraser Institute. This figure is also consistent with the Fraser Institute's finding that tax liabilities rose as a proportion of total income from 33.5% in 1961 to 41.7% in 2009.

Hmm. Not so shocking, is it? Devin goes on to point out quite a few other things as well; meanwhile Curtis at Endless Spin Cycle points out what we're getting for the taxes we're paying:
- Today we're paying for universal health care
- Today we're paying for a school system that's expected to do far more than teach the 3 R's
- Today more people than ever are attending university and college - not just because they have the opportunity to do so, but because it's a necessity for most jobs today
- Today we're building massive bridges and freeways in our cities, not just slapping down some pavement on an old gravel road and calling that our highway system
Hmm. Taxes don't seem so bad, eh?

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