But this idea is just plain wrong. Moreover, in order to finance what amounts to a huge tax cut for Canada's wealthiest income earners, the flat tax would put many of the public programs Canadians cherish at serious risk. Progressive taxation recognizes that the market, left to its own devices, does a poor job of distributing incomes. Given the fact that the market is producing more and more inequality, we need a progressive tax system to mitigate the growing gap between society's haves and have-nots more than ever before. While dreams of flat taxes have conservatives frolicking with joy, something has been missed in the discussion so far.
Research suggests that, when all taxes are considered, Canada already has a virtual flat tax.
When sales, property, and payroll taxes are added to income taxes, Canadians at all income levels pay about the same share of their income in total taxes. Any progressivity in the tax system stems from the structure of federal income taxes. Policy changes that move us toward a flat income tax would actually make the overall tax system regressive in nature, and would increase inequality. When all is said and done, the flat tax has one overall effect - it transfers more wealth and power to the already wealthy and powerful. All Rights Reserved.