Experts say the Trudeau government should have little trouble meeting its self-imposed Jan. 1 deadline to rejig tax brackets as a way to ease the load on middle-income earners.
On the campaign trail, the party worked hard to sell the plan to voters by stating the economy would grow if middle-class Canadians had more cash in their pockets.
The change, however, has raised questions whether the tax increase would produce as much additional revenue as the Liberals expect, or if it would address income inequality.
It would also make Canada’s highest income bracket one of the most heavily taxed in the industrialized world.
The Liberal plan calls for a new 33 per cent rate on Canadians who earn more than $200,000 per year. The existing top bracket of 29 per cent would continue to apply to those earning between $138,586 and $200,000, and 26 per cent for those between $89,401 and $138,586.
The party also promises to cut the rate to 20.5 per cent from 22 per cent for those with a taxable annual income between $44,700 and $89,401. The maximum annual benefit, it says, would be $670 per person for those with earnings at the top of that middle bracket.
Liberal estimates say the change would lift $3 billion worth of tax burden per year off the backs of middle-income earners. That would be counterbalanced by heaping another $3 billion in taxes on those in the highest income bracket.
Looking at the big picture, the overall economic impact remains less than clear.
Experts say the government would likely rake in less revenue by jacking up taxes on the rich, particularly from financially savvy Canadians whose incomes barely qualify for the top bracket.
Rhys Kesselman of Simon Fraser University said earners near that margin would likely become a little more aggressive on tax planning and with their investment arrangements.
“It is more elastic in both tax planning and tax advising, and legal tax avoidance,” Kesselman said of the highest bracket.
Others believe the Liberal plan would only have a limited effect on the economy.
Barely half a million people earn more than $200,000 or more. Even squeezing senior citizens won’t get the revenue PM Trulander expects.
Canadians have voted to be economically screwed over.