Most middle-class Canadians pay more in taxes than ever before. Real relief starts with flattening the tax brackets
For nearly a decade, the Trudeau government claimed to be the champion of “the middle class and those working hard to join it.” Every budget was wrapped in that rhetoric, so much so that it practically became a branding exercise.
In 2016, Trudeau’s Liberals presented a budget titled “Growing the Middle Class.” In 2017, they followed this with “Building a Strong Middle Class,” and in 2019 with “Investing in the Middle Class.” You get the gist.
But despite all the slogans, the reality for middle-class Canadians has only worsened.
Government policies have actually added to their woes — whether through reckless spending, overregulation or stifling taxation.
Between 2015 and 2023, inflation-adjusted employment income grew by just 5.2 per cent in Canada. Over the same period, American workers saw a 9.7 per cent income boost — nearly double Canada’s.
The stagnation is even starker in major cities. Torontonians earn 26 per cent less than Chicagoans, Vancouverites earn 39 per cent less than Seattleites, and Montrealers earn 40 per cent less than Bostonians.
On the eve of a federal election, it’s high time for the middle class to get some proper tax relief.
Want a simple, effective fix? Just collapse the second tax bracket into the first. This would make all taxable income up to $111,733 subject to a flat 15 per cent rate.
This change would cut the marginal tax rate by 5.5 per cent for over 8.5 million middle-class Canadians. In all, it would put $17.9 billion back where it belongs: in taxpayers’ wallets.
The last time Canadians saw broad-based tax relief was over a decade ago under Stephen Harper, when he cut the bottom income tax bracket from 16 per cent to 15 per cent.
But this current government is insisting, until the bitter end, that it has helped the middle class. During his resignation speech, Prime Minister Justin Trudeau touted his record by underlining how he lowered middle-class taxes. Trudeau boasts about cutting taxes, but what he gave with one hand, he clawed back with the other—whether by increasing payroll taxes, raising excise taxes or introducing new ones like the carbon tax.
Today, 81 per cent of middle-class families pay more in taxes than they did before Trudeau took office. For over half of Canadian families, taxes are their single largest expense. And can anyone make the case that services have gotten any better, even with the extra 100,000 bureaucrats Trudeau hired during his tenure?
Canadians are taxed more and making less, and if government spending could turn these trends around, it would have happened by now. Over the past decade, the Liberal government has nearly doubled the federal debt to a whopping $1.4 trillion. We need to look elsewhere for solutions.
By overtaxing the very people who drive our economy, we’ve established a tax regime that discourages work, which isn’t just bad for individuals. It also shrinks the economy as a whole.
For every additional dollar taxed, Canada loses out on $2.86 of economic activity because we find ourselves on the wrong side of the Laffer Curve. The Laffer Curve shows that when tax rates increase past a certain level, they actually reduce government revenue by discouraging work, investment and overall economic activity. Canada has passed this tipping point. Higher taxes are not bringing in more prosperity—they are pushing businesses and talent elsewhere, namely to the United States.
In the U.S., income up to the Canadian equivalent of $66,900 is taxed between 10 and 12 per cent. For joint filers, that lower tax rate applies to households making up to the Canadian equivalent of $133,800.
Lowering the second bracket to 15 per cent wouldn’t just help workers keep more of their money—it would spur job growth, innovation and economic dynamism.
The middle class doesn’t need another boutique tax credit or a temporary GST holiday. It needs real, lasting change. The best way to help is not through short-term gimmicks, but by delivering permanent tax relief for millions of Canadian families.
Jason Dean is associate researcher at the Montreal Economic Institute, a think tank with offices in Montreal, Ottawa and Calgary.
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