The Alberta flat tax
Question: The federal tax is 17% or so for this year on the first $27,000. 40% of this is 6.5%. Whereas the flat tax works out to be 10.5%!
I did write to Ralph Klein but he responded that we will NOT pay more tax than previously. – S.N.
Answer:
Under most flat tax regimes there are some losers. This is because taxes depend on income source, income level and the number of deductions and credits you qualify for. Another problem is how generous the refundable and non-refundable tax credit system was before the flat tax and after its introduction.
So, in addition to the tax rate in Alberta, take a look at the non-refundable tax credits you will qualify for. Alberta has also increased the “tax-free zone” for individuals and households, which could ease your burden if you are a low income earner. Best to do a tax projection for the Year 2001 as early as you can to help you determine your potential after-tax status. Most professional tax software programs contain such a planning feature, so you may wish to consult with a professional. – Evelyn Jacks