Fairness for the Middle Class

For 10 years, Stephen Harper has been ignoring the people who
do most of the heavy lifting in our economy. Those who work
longer and longer hours for an ever shrinking piece of the pie,
and less and less financial security.
We need middle class Canadians to have money in their pockets
to save, invest, and grow the economy – to bring back fairness
and to strengthen the heart of the Canadian economy.
CANADA
CHILD BENEFIT
THE
A Liberal government will create the Canada Child Benefit (CCB): one fair, tax-free monthly
child benefit that puts more money back in the pockets of the middle class and those working
hard to join it.
This is a plan for fairness. Stephen Harper’s unfair system gives money to those who need it
least. We will give middle class Canadian families more money to help with the high costs of
raising kids. We will also provide more help to lower income Canadians.
THE PLAN
1 We will cancel income splitting and other tax breaks and benefits for the wealthy;
2 We will build on the Canada Child Tax Benefit (CCTB) and the National Child Benefit
Supplement (NCBS); and
3
We will invest more, providing help to the middle class and those working hard to
join it.
WHAT IT MEANS
Typical
two-parent
family
earning
$90,000
with
2 children
Benefit of
$5,875
All families, with children, that have annual incomes below $150,000 will receive more in
monthly child benefit payments than under Mr. Harper’s system. That is 9 out of every 10
Canadian families. We will cancel tax breaks and benefits for the wealthy to give more Canadian families money to raise their kids.
With the Liberal plan, a typical two-parent family, with two kids, earning $90,000 per year will
get $490 tax-free every month. With Mr. Harper, the same family only receives around $275
after-tax. Over the course of a year, the Canada Child Benefit will provide $5,875 to this
middle class family. That is $2,500 more help, tax-free.
3
Typical
one-parent
family
earning
$30,000
with
1 child
Benefit of
$6,400
With the Liberal plan, a typical one-parent family, with 1 child, earning $30,000 per year will
get $533 tax-free every month. With Mr. Harper, the same family only receives around $440
after-tax. Over the course of a year, the Canada Child Benefit will provide $6,400 to this
single parent family. That is $1,128 more help, tax-free. If this single parent had two kids, the
benefit would double.
The table below provides additional examples of the targeted help a Liberal government will
provide to the middle class and those working hard to join it:
FAMILY WITH
1 Child
FAMILY WITH
2 Children
FAMILY WITH
3 Children
Household
Income
Our
Plan
Harper’s
Plan
Our
Plan
Harper’s
Plan
Our
Plan
Harper’s
Plan
$15,000
$6,400
$5,825
$11,800
$10,175
$18,200
$15,725
$45,000
$5,380
$3,350
$9,850
$5,900
$15,800
$10,050
$90,000
$3,245
$2,125
$5,875
$3,300
$10,600
$6,560
$140,000
$1,695
$1,500
$3,125
$2,050
$6,600
$4,500
$200,000
$0
$1,425
$0
$1,950
$1,800
$3,400
* family with one child under six, family with 2 children who are 4 and 8 years old, family with 3 chidren who are 4, 5 and 12 years old. Harper’s plan figures
include the taxable UCCB. Figure is illustrative as varying provincial tax rates would also be applied, and the tax burden of Harper’s plan would vary based on
distributions of income between couple parents.
HOW IT WORKS
The Canada Child Benefit starts at $6,400 per year, tax-free, per child under the age of 6. It
starts at $5,400 per year, tax-free, per child 6 to 17 years old. The benefit level is tied to family
income and slowly phases out, in order to focus help on the middle class and those working
hard to join it.
The Canada Child Benefit also provides meaningful support to low-income families.
Compared to the current system, the base benefit is of a higher dollar value. Further, the
benefit phases out at a higher income level and more slowly than under the current system,
meaning more support for the families that need it most.
The Canada Child Benefit requires no new administrative costs to deliver. It replaces and
builds on the structure and success of the Canada Child Tax Benefit and National Child Bene-
4
fit Supplement, which were established in consultation with the provinces and territories. A
Liberal government is committed to working with the provinces and territories as we implement the new Canada Child Benefit. The benefit will be indexed to inflation year to year.
The charts below demonstrate how much one-child families – with a child under 6 or a child
aged 6 to 17 – will receive annually when compared to the current system of benefits.
Annual Child Benefits
ONE CHILD UNDER SIX
$7,000
Annual Child Benefits
$6,000
$5,000
Canada Child Benefit
$4,000
$3,000
Harper’s Plan
$2,000
$250,000
$250,000
...
Household Income
$1,000,000
$240,000
$230,000
$240,000
$220,000
$210,000
$200,000
$190,000
$180,000
$170,000
$160,000
$150,000
$140,000
$130,000
$120,000
$110,000
$90,000
$100,000
$80,000
$70,000
$60,000
$50,000
$40,000
$30,000
$20,000
$0
$0
$10,000
$1,000
Annual Child Benefits
ONE CHILD SIX OR OLDER
$5,000
$4,000
$3,000
Canada Child Benefit
$2,000
Harper’s Plan
$230,000
$220,000
$210,000
$200,000
$190,000
$180,000
...
$1,000,000
Household Income
$170,000
$160,000
$150,000
$140,000
$130,000
$120,000
$110,000
$90,000
$100,000
$80,000
$70,000
$60,000
$50,000
$40,000
$30,000
$20,000
$0
$0
$1,000
$10,000
Annual Child Benefits
$6,000
5
FISCAL IMPACT
The Canada Child Benefit builds on the existing, income-tested Canada Child Tax Benefit and
the National Child Benefit Supplement. It replaces the Universal Child Care Benefit (UCCB),
which provides significant benefits to Canada’s wealthiest families. A Liberal government will
instead target those benefits to the middle class and those working hard to join it.
The Canada Child Benefit represents an incremental annual cost of $4 billion to the child
benefit system. Half of this cost is offset by the Liberal commitment to cancel Mr. Harper’s $2
billion tax break that disproportionately benefits wealthy families. The remaining $2 billion
cost represents a fiscal commitment that is part of the Liberal election platform. Our platform
will be fully costed, and our commitment to balanced budgets will once again be demonstrated through the fiscal plan that will be released with our full platform.
TECHNICAL DETAILS
As an income-tested benefit, the Canada Child Benefit gradually phases out to ensure that it
is targeted to the middle class and those working hard to join it.
Household Income
Phase-out rate*
$0 - $30,000
0%
$30,001 – $65,000
Family with one child
6.8%
Family with two children
13.0%
Family with three (or more) children
16.0%
$65,001 +
Family with one child
3.1%
Family with two children
5.5%
Family with three (or more) children
8.0%
* per $100 of income
Consistent with the current child benefit system, family income will be calculated every July,
based on the previous year’s income.
6
22
$2B
21
$22B
New Investment
Canada Child
Benefit
20
• tax free
• income tested
• targeted at middle class
and lower-income Canadians
$2B
19
Cancel Income Splitting*
• favours the wealthy
17
Universal Child
Care Benefit
16
• taxable
• favours the wealthy
15
13
12
10
9
8
7
6
5
4
3
2
1
Canada Child Tax
Benefit and
National Child
Benefit Supplement
• not taxable
• income tested
Single, simple Canada Child Benefit
11
Current, complicated system of benefits and tax breaks
Cost (Billions of Dollars)
14
$18B – Existing Child Benefit System
18
0
* no impact on pension income splitting.
7
MIDDLE
CLASS TAX CUT
THE
A Liberal government will give a tax cut to middle class Canadians by asking the wealthiest
Canadians to give a little more.
THE PLAN
1 We will cut the middle class income tax bracket from 22 percent to 20.5 percent – a
7 percent reduction; and
2
We will introduce a new tax bracket of 33 percent for annual incomes over
$200,000.
WHAT IT MEANS
This tax relief
is worth up to
$670/year
per person
Canadians with taxable income between $44,700 and $89,401 per year will see their income
tax rate fall. This tax relief is worth up to $670 per year, per person – or $1,340 per year for a
two-income household. This middle class tax cut will make our system fairer by asking wealthier Canadians to pay a little more.
HOW IT WORKS
Unlike Mr. Harper’s complicated tax schemes, the middle class tax cut is a broad-based cut to
the personal income tax rate. All taxable income between $44,701 and $89,401 will be taxed
at a lower rate.
The current bracket of 29 percent will be maintained for income in between $138,586 and
$200,000. However, annual income greater than $200,000 will be taxed at a new rate of 33
percent. This will create a new, high-income bracket that will impact the wealthiest tax-filers,
less than one percent of Canadians.
8
Personal Income Tax Structure
New System
Current System
$0
$44,701
$89,401
$200,000
$138,586
15%
22%
26%
29%
($0–$44,701)
($44,701–$89,401)
($89,401–$138,586)
(Over $138,586)
15%
20.5%
26%
29%
33%
($0–$44,701)
($44,701–$89,401)
($89,401–$138,586)
($138,586–$200,000)
(Over $200,000)
Lower tax rate
on middle class
incomes
New,
high-income
tax bracket
FISCAL IMPACT
The two tax changes will be revenue neutral to the federal government.
Reducing the middle income tax bracket will provide Canadians with $3.0 billion in annual tax
relief. Creating a fifth tax bracket for annual incomes greater than $200,000 will generate
increased revenues of $3.0 billion for the federal government.
9