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6 Tax Memo 1 (1955)

handle is hein.journals/taxmmo6 and id is 1 raw text is: TAX No.6 MEMO April, 1955 ARE TAXES TOO HIGH? Address by J. Harvey Perry, Director, Canadian Tax Foundation, to the Canadian Club, Toronto, Monday, April 4th, 1955. Gentlemen, it is indeed my great pleasure to be your speaker today. Every Canadian Club is esteemed as a forum of timely and enlightened dis- cussion, and none deserves that reputation more than the Canadian Club of Toronto. My sense of appreciation for the honour you bestow on me is heightened by the awesome proportions which my subject assumes as the witching hour of the budget approaches. In this atmosphere to utter even a sentence in which the word tax appears is to invite misunderstanding, and a whole address devoted exclusively to the subject may become within a few hours a whole grave-yard of famous last words. However, as your Chairman has told you, I worked among politicians for more than fifteen years in Ottawa, and I think you will find my education in the guarded statement has not been entirely neglected. At the outset, as a means of applying our minds intelligently to the question-Are Taxes Too High? -we need some elementary facts as to just how high taxes are today. I know that in making this suggestion I run contrary to the tenor of some of the most exciting public discussion of tax issues, which frequently has no factual basis and indeed is at its very best when it is carried on in complete contradiction of the facts. However I take it that we are not looking so much for excitement as for that elusive thing-the truth. Taxes are High! Now taxes are high, there's no doubt about that. They're not quite as high as three or four years ago when the defence programme was first introduced, but by any general standards of peacetime they are at unprecedented levels. Expressed in measurement now becoming familiar to business men total taxes at all levels of government are taking about one- quarter of gross national product, and this propor- tion has not been below 20 per cent in the post-war period. This compares with about 16 per cent in 1939 and only 13 per cent in 1929. In round figures the total bill in 1955 will be $6% to $7 billion, of this the federal government will take $4/ to $5 billion, and $2 billion will go to the provinces and municipalities. Taking the federal tax structure by itself we find that there are three taxes which account for about three-quarters of the revenue. These are:- first-the personal income tax, yielding about $1% billion. Today almost everyone earning a living wage is subject to this tax, or to be exact, 3,800,000 out of a working force of 5% million. This contrasts sharply with the pre-war figure of about 300,000. The rates of tax too are greatly increased, being on average about twice the pre-war level. I say on average advisedly, because in some brackets the increase is several times more than double. second-the corporation income tax, yielding over $1 billion. The present rate of tax of 49 per cent on profits over $20,000 is more than three times the pre-war level of 15 per cent, although the reduced rate of 20 per cent on the first $20,000 has removed much of the sting for small corporations. third-the general sales tax, which yields about $750 million, and is now at a 10 per cent rate, com- pared with the pre-war rate of 8 per cent. The exemption of foods and many other commodities makes this a much fairer tax than is generally assumed, and the revenue it yields makes the differ- ence between healthy finances and a budget chronically in deficit, as is the American. TAX FOUNDATION CANADIAN

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