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Originally Posted by pierremoncton
This is off-topic to this thread, but here's the answer: The combined federal-provincial marginal tax rate starting at $250k in 54.75% (the provincial portion is 25.75%). Quebec also has a 25.75% marginal tax rate (which actually starts much lower at $102k), but I believe their taxes are combined differently, so the combined marginal tax rate may in fact be lower (correct me if I'm wrong).
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I agree that this discussion is way off topic for this thread, but I will make one final response to this issue:
AFAIK, the top marginal rate for peak income earner in NB will now be higher than any other jurisdiction in North America, even Quebec. Initially Premier Gallant was going to consider an "abatement" for the highest income earners to keep this from happening (mostly because of the bad optics of this), but it would appear that he has decided against this course. This is unfortunate, because the optics are indeed bad and I have no doubt that our competing jurisdictions will make note of this fact with glee when trying to lure enterprises with high income earning employees to their cities.
I can see it now. Let's say Microsoft was looking for a new high tech development centre to service their operations in Canada. Let's say (for arguments sake) that the final two competitors to serve as the host city for this centre were Moncton and Halifax (highly unlikely I know).
I'm sure Halifax would extoll all their considerable advantages, such as the cluster of universities in the city which could serve as research partners for Microsoft, or the quality of Halifax's hospitals in terms of serving the health care needs of the company's employees . Any economic development officer worth their salt employed by the city of Halifax would also look at the wage profile of the workers to be employed by Microsoft in their new enterprise. Let's say that 10% of the employees would make more than $250k per year. You can bet your bottom booty that Halifax would waste no time pointing out that Moncton resides in "the highest tax jurisdiction in North America". This might be enough to push Microsoft over the edge in terms of making their choice as to a new location. This is not hyperbole, analysts look at these things all the time!
Quote:
Originally Posted by pierremoncton
I have no problem with this tax increase. I hope other provinces follow suit. There's growing inequality and this is a step towards closing the gap. At $250k, you're already past the top 1% and doing perfectly well.
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To be clear, I am not necessarily anti tax myself. We need to be able to pay for the services we provide as a society. What I
am against is NB becoming an outlier within the continental tax system.
Another thing to keep in mind is that many high income individuals are self employed and are responsible for their own health care and retirement expenses. Amongst the professional class, they also often have compressed income earning years, frequently not starting until their mid 30's. In addition, professionals often have a decade or more of university expenses to pay for at the outset of their careers, as well as start up costs for their businesses. The ability to earn a good income to pay for all this is frequently better in other places rather than the Maritimes. It's therefore tough to attract these people now. If you throw a high tax rate on top of all these other variables, it can suddenly become even more difficult to attract the best quality talent to the region and make them stay.
Quote:
Originally Posted by pierremoncton
This started on the subject of Freshii, and I can assure you that no one in their right mind would expect to make that much off a fringe restaurant chain. It's much more likely that the owner pays $0 in income taxes, so the point about investors heading for the hills is moot in my opinion.
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I can't disagree with you there, but let's say that it is a new franchise which really takes off. Goji might be an example. they are franchising nationwide now. Let's say they become really successful. The provincial tax rate might have a bearing on what happens down the road. Now, I'm sure that Goji's must be incorporated and a lot of the income is therefore sheltered
but the new tax regime proposed by the government might influence when and how money is withdrawn from the corporation for personal income and expenses. In order to minimize these taxes, at some point the owners might choose to live elsewhere more appealing. These are valid concerns. NB risks bleeding high income earners from the province and once these people are lost from the system we will all be the poorer for it. You could tax 25,000 high income earners at 18% but if you increase the rate to 25% and 15,000 of these individuals move elsewhere then you will end up with less money flowing to your coffers than if you had stayed with the lower tax rate. These things do happen!!
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Originally Posted by pierremoncton
I can't say that I feel very comforted by the provincial budget either, but ping-pong between red & blue never allows any change in policies to take effect. Plant seeds, rip out the shoots, plant something else, rip out, repeat... How about we wait a bit...
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Again I agree with you. There is pettiness on both sides, but it seems to have been a particular hallmark of Brian Gallant so far. We need more stability in government as a province, but I am fearful that we are in a new regime of one term governments that will be very tough to break. Our last few premiers have been intellectual pygmies. It's time we had another McKenna or Hatfield.
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I would like to see a new restaurant like Kelsey's or Milestones perhaps.
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