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June 24, 2005

What’s really behind “Tax Freedom Day”

According to the Fraser Institute, an independent public policy organization in Canada, Sunday June 26, 2005 is "Tax Freedom Day", the day when Canadians allegedly have earned the amount of their income that will go to taxes. For the remainder of the calendar year, Canadians are working to put money in their own pockets.

According to the Institute, the tax rate remains unchanged from last year but the day falls one day later due to the leap year in 2004. The Fraser Institute's news release reads:

"Since 2001, Tax Freedom Day for the average Canadian family has steadily advanced. Tax Freedom Day fell on June 19 in 2001, June 23 in 2002, June 24 in 2003, and June 25 in 2004. This year, Tax Freedom Day falls on the same day as it did in 2000, the latest Tax Freedom Day in Canadian history."

Yet, in a news release issued by the Canadian Centre for Policy Alternatives, entitled Don’t believe the hype: What’s really behind the Fraser Institute’s "Tax Freedom Day" a study by the CCPA's Neil Brooks claims that the Institute's reported date understates the income of Canadians, overstates their taxes, and misuses the concept of averages.

Brooks states:

"The concept of Tax Freedom Day is a gimmick designed to suggest that Canadians derive no benefit from the taxes they pay when nothing could be further from the truth. With their taxes, Canadian citizens buy their most valued goods and services: high-quality public schools, world-class universities, excellent medical services, public parks and libraries, safe streets, and livable cities."

While reinforcing the notion that the goods and services we receive through our taxes do not enlarge our freedoms or enrich our lives, the author does indicate that the methods used by the Fraser Institute to calculate Tax Freedom Day are flawed.

For more information on the Brooks study, see the CCPA news release on the CCPA web site. Brooks' study appears to be a more indepth analysis of an editorial previously prepared by the CCPA's Marc Lee in 2002 entitlted The tax freedom daze.

Refer to the Fraser Institute web site for its news release Canadians Celebrate Tax Freedom Day on June 26th.

Posted by Taxes.ca Editorial Team [permalink]

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