Matthew Lau: Federal Government’s “Eat the Rich” Plan Backfires

A few years ago, the federal Liberals told Canadians that they would help the middle class by raising taxes on the rich. According to the early evidence, the plan has flopped. This was entirely predictable. Indeed, in 2015, the C.D. Howe Institute (formerly chaired by the current federal finance minister) called the policy a “losing proposition.” However, the federal finance minister and federal government forged ahead anyway.

The data so far suggests that the federal government’s tax hike on top earners was so economically damaging that it actually reduced federal tax revenues. The Globe and Mail recently reported that the “Liberal government’s tax on Canada’s top 1 per cent failed to produce the promised billions in new revenue in its first year, as high-income earners actually paid $4.6-billion less in federal taxes.”