If every Canadian changed nothing about their income from 2015 to 2016, Trudeau’s tax increase on high incomes would have brought in significant extra tax revenues. But things won’t stay the same. Some people find ways to adapt. I’m among these people.
For some time I’ve found my yearly vacation to be less than I wanted. This year is the first time I’ve done something about it. I’m a little past the midway point of an unpaid vacation. I wouldn’t say that the new higher tax bracket is the only reason I’ve taken extra time off, but it doesn’t hurt to know how much income tax I’m avoiding.
I certainly don’t expect anyone to feel sorry for me. And I don’t even have strong feelings about whether the new tax bracket is the right thing to do or not. But if my choice is any kind of example, we can expect some high earners to find ways to avoid the higher taxes. Some will use corporations and other tax manoeuvres, and others like me will just work less. No doubt many will change nothing at all.
In the end, the new higher tax bracket will bring in less money than one would expect naively based on 2015 tax filings. How much less is anyone’s guess.