Of what value are the uber-rich to Canadian social programs and charities?
A Review of Canadian Charitable Contributions by the Wealthy (June 1, 2023)
A look at the funding of the Church in Canada begs a consideration of the generosity of the higher-income population. Every church dreams of ‘landing the big one.’ That super-rich person who might actually tithe. Think of it as a church’s lottery dream. In this vein, let’s take a moment to examine the contributory nature of the super-rich in Canada. Say, those people in the top 1% of earners.
The one-percent; there is a modern pejorative if ever there was one. They have borne the disdain of the common folk regarding everything bad that has happened in the twenty-first century to date. Much of the demonstrative furor came out of the United States; with these high-earners being broadly excoriated by the Occupy Wall Street Movement of 2011. And there is good reason for concern. It is estimated that, on a worldwide basis, the one-percent own around 50% of all wealth1.
However, I’m not going to get into world-wide analysis here. I merely wish to take a look at what this term means in Canada where income inequality is not as severe as it is in the United States. More specifically, I will look at the roles these people play in the finances and social welfare of the country, which I will view through the lenses of taxes and charitable donations.
First, who are the one-percent in Canada? In 2019, these were the people who had a total annual income of $250,300 per year or greater2. The average total annual income of a one-percenter was $513,700, and there were 287,490 people in this category. As a comparison, the median total annual income of an individual taxpayer in 2019 was $37,200.
This is who they are. Now, what are their contributions to the funding of government services? One-percenters earned 10.1% of all personal income reported in 2019 in Canada. On average, each one-percenter paid $190,400 of federal, provincial and territorial income taxes; representing 37% of their income. The total amount of their tax payments represent 21.2% of all income taxes collected from individuals in Canada that year.
In comparison, the bottom half (50%) of taxpayers in Canada represent all of those who had an annual total income of $37,200 or less. In 2019, these folks contributed around 4.8% of the total amount of income tax collected3.
Are the one-percenters getting richer as the poor get poorer, as the saying goes? Yes and no. They did indeed get richer during the three year span of 2016 to 2019 when their average earnings increased by 18.5%. However, the people in the lower half of income levels increased their earnings by 11.5%.
In summary, the one-percenters paid a percentage of all income taxes (21.2%) that was double that of their percentage of total reported income in the country (10.1%). This is to be expected in a country which levies income taxes progressively, meaning higher tax rates for larger income brackets. It also says that the super-wealthy pay more than their share for government services, even before considering that they do not consume such services at a greater level than those in other income groups because they do not receive many social benefits, which are a significant part of government expenditures.
Now let’s take a look at the philanthropic side. There does not appear to be much publicly available data on the donation practices of the one-percenters specifically. However, a TD Economics report using 2013 statistics concluded that those earning $140,000 or more a year, roughly representing the top 2% of earners at that time, contributed more than 30% of all charitable donations made in Canada that year.
On the surface, this seems great. However, Statistics Canada data indicate that people who were in the top quintile of earners (i.e., the highest 20%) in 2013 made the least amount of charitable donations when viewed as a percentage of their total income. The percentage of their income given to charities was lower than half of one-percent, which was significantly lower than the rates for the people in the four lower quintiles.
Let’s look at this another way. Using figures noted above for the one-percenters, we can calculate that they earned around $147.7 billion in 2019. If these wealthy folks gave 10% of these earnings as charitable donations, that would have amounted to $14.8 billion from them alone. Actual total charitable donations for the entire country that year was only $9.1 billion4.
The super-wealthy are not generous using this metric, especially considering the moral expectation that the more wealthy you are, the higher the portion of annual income you should give away. (Just like income taxes.) After all, the richer you are, the lower your basic living costs would be as a percentage of your income. Whereas the least wealthy give from their living income, the rich give from their luxury income. Since the average one-percenter earned 13.8 times the median income in Canada in 2019, I think they should contribute many times the rate contributed by people of lower means. Such as the 10% imagined above, as a bare minimum.
In conclusion, the one-percenters contribute in a big way to total tax dollars, and thus to the provision of government services. However, they give an unreasonably small percentage of their income to charity. My take-away is that the one-percenters contribute socially only when they are forced to (i.e., through taxes).
And they are not taking this lightly. Continual government lobbying by the wealthy to lower their taxes, and their use of complex organizational arrangements to avoid taxes have resulted in a tax system that reputedly favours the rich. The best evidence of this comes from public reporting on a 2018 poll of 1,700 Canada Revenue Agency (CRA) tax officials5 which stated that 90% of the respondents agreed with the statement "It is easier for corporations and wealthy individuals to evade and/or avoid tax responsibilities than it is for average Canadians." Over 80% agreed with the statement "Tax credits, tax exemptions, and tax loopholes disproportionately benefit corporations and wealthy Canadians compared to average Canadians." And, 45% agreed that the Canada Revenue Agency has been "compromised by political interference." Remember, these are the opinions of the employees of the CRA, who arguably have the best view of anyone on these matters.
The Bible’s accounts of Jesus’ admonishment of merchants and rich people does not mean every single wealthy person is woefully sinful. However, statistics such as above make it very clear that, on the whole, the state of affairs today in moral philanthropy is likely very similar to those of Biblical times.
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1. CNBC, https://www.cnbc.com/2017/11/14/richest-1-percent-now-own-half-the-worlds-wealth.html
2. Statistics Canada, High income tax filers in Canada,
https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=1110005501&pickMembers%5B0%5D=1.1&pickMembers%5B1%5D=3.3&cubeTimeFrame.startYear=2016&cubeTimeFrame.endYear=2020&referencePeriods=20160101%2C20200101
3. Fraser Institute, Measuring the Distribution of Taxes in Canada: Do the Rich Pay Their “Fair Share”?,
page 5, https://www.fraserinstitute.org/sites/default/files/measuring-the-distribution-of-taxes-in-canada.pdf
4. Statistics Canada, https://www150.statcan.gc.ca/n1/daily-quotidien/170222/dq170222d-eng.htm
5. CBC, Most CRA auditors polled say Canada's tax system is skewed to protect the wealthy,
https://www.cbc.ca/news/politics/cra-tax-avoidance-evasion-1.4787781