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Dr. Don Coulter and His Tax Burden

I recently received an email from a reader who took issue with an article I wrote in early June. In was about a letter to the Globe and Mail editor by a "Don Coulter", in favour of the Ontario mortgage tax deduction.

I didn't know who this Don Coulter was. My emailer has corrected me:

You express the sentiment that Dr. Coulter, or Don as he usually goes by, cannot understand the apparently 'clear' argument laid out by Lawrence Smith, and in fact, cannot even listen to reason. As a former student of Don's, let me assure you that he has a more firm grasp of economic principles than you could ever dream to have. In fact, he went to grad school at the department of economics at U of T (the same institution that Lawrence Smith once taught at) before going on to receive a doctorate in economics from none other than the London School of Economics.

I'll be answering my correspondent's email when I have a bit more time. Meanwhile, her note drew my interest back to Dr. Coulter's letter to the editor. It seemed to deserve some more scrutiny now that I had been informed of Dr. Coutler's eminence. In particular, I noticed this particular line:

I pay more than 46 per cent of my earnings in income taxes

That kinda sounded like a lot to me. Dr. Coulter may also know more about taxation than I could ever dream to, but I do have access to the internet. Revenue Canada's website tells us the income tax rates for Canada and for the provinces. The Globe and Mail identifies letter-writer Coulter as living in Toronto, so we can use the Ontario rates.

I wanted to calculate how high an income someone must be earning in order to be paying "46 per cent of (his) earnings in income taxes". The problem is, it's impossible. The top 2002 marginal rate for income tax in Ontario (combined federal and provincial) is 40.16%. Of course, since there are tax brackets with lower rates, 40.16% is the top end limit. For example, someone earning $300,000 per year only owes 36.9% of this in income tax, without other deductions.

Now, you might think perhaps Dr. Coulter made a mistake. Maybe he meant to say that he pays 46% per cent of his earnings in taxes, i.e., all types of taxes. But if you read the whole letter this is obviously not the case. He goes on to list the many other types of taxes that he has to pay -- leaving him with just a "pittance".

What to make of this inconsistency with the facts? Perhaps Dr. Coulter needs a new accountant. Or maybe he's not just a home-owning letter writer, but also someone with a political agenda. Either way, his letter to the editor seems to spread a falsehood about how much tax people pay. As far as I can tell, no Canadian pays nearly as much tax as he implies. (But, if he's so hard done by, I'll be happy to set the record straight.)



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