Budget 2000 - Five-Year Tax Reduction Plan - 4
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Archived - Examples of Tax Reductions for Typical Individuals and Families by 2004

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Single Parent With One Child and an Income of $30,000: Tax Reduction by 2004


Tax reduction/
benefits increase
Federal
tax/benefits

(dollars)

Pre-2000 budget
Tax 1,882
Canada Child Tax Benefit (CCTB) 1,415
Goods and services tax (GST) credit 499
Total net federal tax (tax minus CCTB and GST credit) -32

Five-Year Tax Reduction Plan

Reduction in tax 274
Increase in CCTB 663
Increase in GST credit 49
Total net federal tax reduction 986

Post-Plan net federal tax (tax minus CCTB and GST credit)

-1,018

First full-year impact (2001)

Reduction in tax 72
Increase in CCTB 281
Increase in GST credit 20
Total net federal tax reduction 373

Single Individual With an Income of $35,000: Tax Reduction by 2004


Tax reduction/
benefits
increase
Federal
tax/benefits

(dollars)
Pre-2000 budget
Total net federal tax 4,875
Five-Year Tax Reduction Plan
Total net federal tax reduction 635
Total net federal tax reduction (per cent) 13.0
Post-Plan budget net federal tax 4,240
First full-year impact (2001)
Total net federal tax reduction 214
Total net federal tax reduction (per cent) 4.4

One-Earner Family of Four and an Income of $40,000: Tax Reduction by 2004


Tax reduction/
benefits increase
Federal
tax/benefits

(dollars)

Pre-2000 budget
Tax 5,100
Canada Child Tax Benefit (CCTB) 1,733
Goods and services tax (GST) credit 0
Total net federal tax (tax minus CCTB) 3,367
Five-Year Tax Reduction Plan
Reduction in tax 911
Increase in CCTB 637
Increase in GST credit 76
Total net federal tax reduction 1,623
Total net federal tax reduction (per cent) 48.2
Post-Plan budget net federal tax (tax minus CCTB and GST credit) 1,744
First full-year impact (2001)
Reduction in tax 347
Increase in CCTB 235
Increase in GST credit 0
Total net federal tax reduction 582
Total net federal tax reduction (per cent) 17.3

Two-Earner Family of Four and an Income of $60,000: Tax Reduction by 2004


Tax reduction/
benefits increase
Federal
tax/benefits

(dollars)
Pre-2000 budget
Tax 6,656
Canada Child Tax Benefit (CCTB) 845
Goods and services tax (GST) credit 0
Total net federal tax (tax minus CCTB) 5,811
Five-Year Tax Reduction Plan
Reduction in tax 812
Increase in CCTB 734
Increase in GST credit 0
Total net federal tax reduction 1,546
Total net federal tax reduction 
(per cent)
26.6
Post-Plan budget net federal tax (tax minus CCTB and GST credit) 4,265
First full-year impact (2001)
Reduction in tax 273
Increase in CCTB 228
Increase in GST credit 0
Total net federal tax reduction 501
Total net federal tax reduction 
(per cent)
8.6

Typical One-Earner Family of Four
Impacts of Proposed Five-Year Tax Reduction Plan by 2004


Proposed tax reduction measures by 20041
Total income Federal tax pre-2000 budget Increase personal and spousal amounts Increase 2nd and 3rd brackets Reduce the middle rate Eliminate surtax Enhance Canada Child Tax Benefit Other indexation Total relief2 Total relief as a % of federal tax3 Federal
tax
post-Plan

$ $ $ $ $ $ $ $ $ $/% $
15,000 -4,398 -173 0 0 0 -869 -55 -1,097 -1,097 -5,495
20,000 -3,601 -274 0 0 0 -869 -55 -1,198 -1,198 -4,799
25,000 -2,000 -274 0 0 0 -1,268 -55 -1,597 -1,597 -3,597
30,000 -37 -274 -37 0 0 -1,268 -172 -1,751 -1,751 -1,788
35,000 1,710 -274 -487 0 0 -594 -172 -1,526 -89.3 183
40,000 3,367 -274 -487 -150 0 -637 -76 -1,623 -48.2 1,744
50,000 6,467 -274 -487 -450 0 -723 0 -1,934 -29.9 4,534
60,000 9,592 -274 -512 -750 0 -809 0 -2,344 -24.4 7,248
75,000 14,783 -288 -852 -1,103 -2 -920 0 -3,165 -21.4 11,619
100,000 22,396 -288 -852 -1,103 -364 0 0 -2,607 -11.6 19,789
125,000 30,008 -288 -852 -1,103 -727 0 0 -2,970 -9.9 27,039

1 In calculating the amount of the tax reduction by 2004, the following assumptions were made: annual inflation factor of 1.8 per cent on average is used over the five-year period; personal amount: $8,000; spousal/equivalent-to-spouse amount: $6,800; middle tax bracket threshold: $35,000; upper tax bracket threshold: $70,000; middle tax rate: 23 per cent; 5-per-cent surtax: eliminated; the Canada Child Tax Benefit base benefit increased by $70 in 2000 (including indexation) then indexed; the rate at which benefits decline with increases in income lowered to 2.07 per cent for a one-child family and 4.14 per cent for a family with two or more children; the threshold at which the base benefit starts to be reduced: $35,000; the National Child Benefit supplement increased by $200 per child by July 2001 (including indexation).

2 Negative values indicate a reduction in net tax paid to the federal government.
3 Where individuals and families receive more in federal refundable credits (CCTB, GST credit) than they pay in federal income tax, the federal income tax reductions are indicated in bold and represent the increase in the net benefits they receive from the tax and transfer system. Percentages are not meaningful so the dollar amounts are repeated.

Typical Two-Earner Family of Four
Impacts of Proposed Five-Year Tax Reduction Plan by 2004


Proposed tax reduction measures by 20041
Total income Federal tax pre-2000 budget Increase personal and spousal amounts Increase 2nd and 3rd brackets Reduce the middle rate Eliminate surtax Enhance Canada Child Tax Benefit Other indexation Total relief2 Total relief as a % of federal tax3 Federal
tax
post-Plan

$ $ $ $ $ $ $ $ $ $/% $
15,000 -4,571 0 0 0 0 -869 -55 -924 -924 -5,495
20,000 -4,503 -68 0 0 0 -869 -55 -992 -992 -5,495
25,000 -3,650 -287 0 0 0 -850 -55 -1,192 -1,192 -4,842
30,000 -2,366 -287 0 0 0 -1,230 -55 -1,572 -1,572 -3,938
35,000 -576 -148 0 0 0 -1,291 -172 -1,611 -1,611 -2,186
40,000 820 -295 0 0 0 -777 -172 -1,244 -1,244 -424
50,000 3,179 -295 -37 0 0 -648 0 -980 -30.8 2,199
60,000 5,811 -295 -487 -30 0 -734 0 -1,546 -26.6 4,265
75,000 9,822 -295 -487 -300 0 -863 0 -1,945 -19.8 7,877
100,000 15,794 -295 -863 -750 0 0 0 -1,909 -12.1 13,885
125,000 22,904 -303 -1,339 -1,358 -60 0 0 -3,059 -13.4 19,845

1 In calculating the amount of the tax reduction by 2004, the following assumptions were made: annual inflation factor of 1.8 per cent on average is used over the five-year period; personal amount: $8,000; spousal/equivalent-to-spouse amount: $6,800; middle tax bracket threshold: $35,000; upper tax bracket threshold: $70,000; middle tax rate: 23 per cent; 5-per-cent surtax: eliminated; the Canada Child Tax Benefit base benefit increased by $70 in 2000 (including indexation) then indexed; the rate at which benefits decline with increases in income lowered to 2.07 per cent for a one-child family and 4.14 per cent for a family with two or more children; the threshold at which the base benefit starts to be reduced: $35,000; the National Child Benefit supplement increased by $200 per child by July 2001 (including indexation).
2 Negative values indicate a reduction in net tax paid to the federal government.
3 Where individuals and families receive more in federal refundable credits (CCTB, GST credit) than they pay in federal income tax, the federal income tax reductions are indicated in bold and represent the increase in the net benefits they receive from the tax and transfer system. Percentages are not meaningful so the dollar amounts are repeated.

Typical Single Individual
Impacts of Proposed Five-Year Tax Reduction Plan by 2004


Proposed tax reduction measures by 20041
Total income Federal tax pre-
2000 budget
Increase personal
and
spousal amounts
Increase
2nd and 3rd brackets
Reduce
the middle rate
Eliminate surtax Enhance Canada
Child Tax Benefit
Other indexation Total relief2 Total relief
as a % of federal tax3
Federal tax post-Plan

$ $ $ $ $ $ $ $ $ $/% $
10,000 137 -148 0 0 0 0 -6 -154 -154 -18
15,000 899 -148 0 0 0 0 -27 -175 -19.5 724
20,000 1,695 -148 0 0 0 0 -27 -175 -10.3 1,520
25,000 2,492 -148 0 0 0 0 -27 -175 -7.0 2,317
30,000 3,529 -148 -37 0 0 0 -144 -329 -9.3 3,200
35,000 4,875 -148 -487 0 0 0 0 -635 -13.0 4,241
40,000 6,129 -148 -487 -150 0 0 0 -785 -12.8 5,345
50,000 8,729 -148 -487 -450 0 0 0 -1,085 -12.4 7,645
60,000 11,354 -148 -512 -750 0 0 0 -1,409 -12.4 9,945
75,000 15,864 -155 -852 -1,103 -60 0 0 -2,169 -13.7 13,695
100,000 23,477 -155 -852 -1,103 -422 0 0 -2,532 -10.8 20,945
125,000 31,089 -155 -852 -1,103 -785 0 0 -2,894 -9.3 28,195

1 In calculating the amount of the tax reduction by 2004, the following assumptions were made: annual inflation factor of 1.8 per cent on average is used over the five-year period; personal amount: $8,000; spousal/equivalent-to-spouse amount: $6,800; middle tax bracket threshold: $35,000; upper tax bracket threshold: $70,000; middle tax rate: 23 per cent; 5-per-cent surtax: eliminated.
2 Negative values indicate a reduction in net tax paid to the federal government.
3 Where individuals and families receive more in federal refundable credits (GST credit) than they pay in federal income tax, the federal income tax reductions are indicated in bold and represent the increase in the net benefits they receive from the tax and transfer system. Percentages are not meaningful so the dollar amounts are repeated.

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