Canada middle class definition Archives - Ira SmithTrustee & Receiver Inc.

Canada middle class size: Introduction

Most Canadians think of themselves as being “middle class”; however that seems to be changing. According to an Ekos-Canadian Press poll, Canadians who self-identify as working class poor are on the rise. The increase seems to be at the expense of the Canada middle class size. This same poll suggests people are feeling more pessimistic about their own futures not just over the next year, but over the next five.

Canada middle class size: The old Canada middle class definition

We used to define middle class as the median in household net worth, but this too, has changed. Middle class has now morphed into more of a state of mind than a demographic bracket. We now tend to think of middle class as a lifestyle and a value system – hence the expression “middle class values”.

This belief in middle class being a lifestyle is contributing to an increasing debt load for many Canadians. According to a recent CIBC poll:

Many Canadians seems uninterested in prioritizing needs over wants

Only 50% of those surveyed were willing to cut spending on non-essential items to keep up with bills

Canada middle class size: Canadian average household debt

The sad truth is that regardless of whether you’re middle class as a demographic bracket or a lifestyle, Canadians are now carrying more debt than those of any other G7 nation. Many are spending as much or more than they earn and as a result spreading things so thin that they’re living paycheque to paycheque.

In a recent survey by Canadian Payroll Association, almost 48% of respondents admitted they wouldn’t be able to make ends meet if their paycheques were late even by a week.

Canada middle class size: Is your debt pushing you away from the middle class

Are you getting deeper in debt trying to maintain your middle class lifestyle? If so, you need professional help before your house of cards comes tumbling down. I strongly recommend that you contact a professional trustee as soon as possible. Ira Smith Trustee & Receiver Inc. can help, no matter how dire your situation seems. With immediate action and the right plan, we can solve your financial problems Starting Over, Starting Now. Give us a call today.

canada middle class size

What defines the middle class in Canada?

Canada’s newly elected federal Liberal government wishes to show what defines the middle class in Canada. It has plans to raise income taxes on the wealthy; but what does that really mean and what effect, if any, will it have on Canada’s middle class? Canada’s middle class has really been struggling and this is a plight that we have discussed in several blogs.

The Canadian Centre for Policy Alternatives Report

There is a new report out by the Canadian Centre for Policy Alternatives (CCPA). Canada “has become a low-tax jurisdiction for the affluent compared to the U.S.,” the report says. It found that the average top marginal tax rate in the U.S., when combining federal and state taxes, is 47.9 per cent. In Canada, the average combined federal and provincial rate is 45.7 per cent. “In fact, during Canada’s high growth years between 1940 and 1980, the top marginal income tax rate was well over 70 per cent. … Our federal government used to ask more of Canada’s richest one per cent. There are plenty of reasons to do so again.”

Will the campaign trail have been what defines the middle class in Canada?

Prime Minister Justin Trudeau campaigned to create a new tax bracket for Canada’s highest earners (the top 1% who earn over $200,000 per year). He stated it in every debate and he made it an important part of politics. He differentiated himself and the Liberal party from Stephen Harper and the Conservative party on this issue. It was always front and centre in the Canadian federal election 2015.

He proposed raising the top federal tax rate to 33%. It is presently at 29%. And he promised to lower taxes slightly for middle earners; however he did not define what he meant by lowering taxes slightly. So does he even know what defines the middle class in Canada?

The middle class may still not be better off under the Liberals

The study by the CCPA doesn’t agree with the number that Prime Minister Trudeau is proposing. Instead the CCPA believes that Canada’s 1% should have a federal tax rate of 65%. They estimate that this would amount to an extra $27,700 in taxes, on an average income of $289,000. The CCPA’s argument is that the 65% rate would bring in an additional $15.8 billion to $19.3 billion in revenue annually. With this money Canada could potentially provide free post-secondary education and cover the costs of infrastructure projects. Of course as you can imagine this is a hotly contested subject with no definitive answers.

The reality is that Canada’s middle class is still struggling. It’s difficult to consider the plight of Canada’s 1% when most Canadians are living paycheque to paycheque. Unless Prime Minister Trudeau will direct some of the new tax revenue into programs that directly help Canada’s middle class, I doubt that it is new infrastructure projects and free post-secondary education (even for children of the 1%?) that anyone wants to be the new Canada middle class definition, or to be what defines the middle class in Canada.

Do you have too much debt and are living paycheque to paycheque?

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