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Canadian Middle Class Incomes Are Now Among the Highest in the World

May 25, 2014

The Government of Canada is focused on creating jobs and economic growth for all Canadians. In fact, Canada has the best job creation record in the G-7 group of major economies, creating more than one million net new jobs since the global recession of 2009. Of these jobs, more than 90 per cent are full-time, and more than 75 per cent are in the private sector.

These results are garnering international attention. Last month, The New York Times reported that Canada’s middle class is now one of the most affluent in the world, pulling ahead of the US and Europe. Canadian middle class incomes, once significantly behind the US in 2000, are now ahead.

The Times highlighted data from the Luxemburg Income Study (LIS). Based on a number of surveys done over the last 35 years, Canadian middle class after-tax incomes have increased more rapidly than in other countries since 2000, a result of wage increases, interest and stock dividends and federal tax reductions. The LIS data demonstrates that the Government’s economic plan is working.

The Government has invested heavily in local infrastructure and controlled spending (the federal budget is on track to balance in six months), while growing transfers that support heath care, education and retirement. As a result, Canada is one of the few countries in the world with a triple-A credit rating and leads the G-7 in job creation, income growth and low federal debt.

The Government understands that keeping taxes low contributes to economic prosperity. That is why the Government, despite the global recession of 2009, continued to deliver Canadian families with tax relief. Since 2006, the Government has reduced the GST from seven to five per cent, created the Tax Free Savings Account, reduced the lowest personal income tax rate and increased the basic personal exemption, introduced income splitting for seniors and new tax credits and deductions. As a result, the overall federal taxation is at its lowest level in fifty years. A typical Canadian family is now paying $3,200 less in federal tax every year compared to a decade ago.

As the LIS data demonstrates, the after-tax incomes of Canadian middle-class families have increased significantly over the last decade, a result of wage increases and tax reductions. As a consequence, the incomes of the Canadian middle class are now among the highest in the world, ahead of Sweden, Norway, Finland, the Netherlands, Germany, France, Britain and even the US.

As the data demonstrates, Canada continues to lead at the international level. However, the economy still faces significant risks from factors that we cannot control. This is why the Government remains committed to staying focused on its economic plan.

Canadian families work hard to make ends meet and make every dollar count. The Government of Canada is committed to working hard for Canadian families, by putting in place policies that foster economic growth and job creation.

If you have any questions you can reach me by phone at (866) 878-5556 or by email at michael.chong@parl.gc.ca.


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