Province may target top earners, Kinew hints

WINNIPEG — Premier Wab Kinew’s suggestion that the provincial budget on March 24 may squeeze the “top one per cent” — the richest Manitobans — was met with both positive and negative responses Friday.

Kinew, who dropped the hint in a local radio interview without providing more details, wasn’t made available Friday to clarify who or how, “We’re going to have some help in the budget on the education property tax front, and we might be asking the top one per cent to help us out with that.”

The NDP government is staring down a $1.6-billion deficit while vowing to balance the province’s books in its first term. If the plan is to lean on some of Manitoba’s top earners, how big are those incomes, and will that drive those people away?

To get into Manitoba’s top one per cent of income earners in 2023 required an income of $235,100 or about $244,000 in inflation-adjusted terms, University of Manitoba economics professor Jesse Hajer said Friday.

“It’s important to remember that there is a wide range of incomes in the top one per cent,” Hajer said. Statistics Canada reports that to get into the top one per cent nationally in 2023 required an income of $293,800 ($314,990 today).

The opposition Tories warn that hiking taxes on high incomes will drive away the skilled professionals Manitoba needs.

“This is the opposite direction for what Manitoba needs right now,” said finance critic Lauren Stone. “We have a shortage of doctors. We have a shortage of nurses, a shortage of engineers and veterinarians.”

The median annual income for a physician in general practice in Manitoba was $240,395 in 2024-25, according to Canada’s Job Bank. For nurses it’s $90,000. It’s close to $110,000 for electrical engineers and $105,000 for veterinarians.

“Manitoba needs to become more tax competitive with other provinces,” said Stone, the MLA for Midland. In its first budget in 2024, the Kinew government reduced the basic personal amount tax credit for people earning more than $200,000.

“These are all skilled professionals that Manitoba desperately needs,” Stone said. “If this is the direction that the NDP is going, then that is very, very problematic and disappointing for Manitoba.”

Are the top one per cent likely to uproot themselves and leave the province to avoid a bigger tax bill?

Probably not, according to a Manitoba think tank and an exhaustive study of millionaire mobility in the U.S.

“The top one per cent of earners are the very wealthy in Manitoba who have done quite well during and after (the COVID-19 pandemic) as investments have risen with the high rates of inflation,” said Molly McCracken, Manitoba director of the Canadian Centre for Policy Alternatives.

“There are many studies that show there is no flight of wealthy people if there’s an increase in taxes.”

The biggest and most notable of them, which appeared in the American Sociological Review, looked at 45 million U.S. tax filings with more than $1 million in income over 13 years. It found that the vast majority of wealthy households stay put.

Business ties, family connections and cultural amenities appear to matter more to those people than paying lower taxes, Millionaire Migration and Taxation of the Elite: Evidence from Administrative Data indicated.

“Quality of life, housing affordability, local amenities, public service quality, etc., generally play a more important role than tax rates,” Hajer said.

If Manitoba wants to raise revenue from its top one per cent, there are several possibilities it could consider, said Hajer, who has conducted research for the Canadian Centre for Policy Alternatives.

The province could create a new income tax bracket for high-income earners. Manitoba is one of only two provinces with only three personal income tax brackets, the labour studies researcher said. Other provinces have more brackets with higher tax rates on higher levels of income.

Manitoba’s current top income tax bracket is lower than in most other provinces, said Hajer.

The province could introduce or allow a progressive property tax to bolster its bottom line. B.C., for example, charges a higher tax rate on higher-value homes and increased that rate in the province’s recent budget.

“Manitoba could do something similar,” Hajer said.

The provincial government could look at further reducing tax credits for high-income earners, he said.

“Asking the well-off to contribute more right now makes sense to me,” he said. “The province is in a challenging situation.”

The Progressive Conservatives, who were in government from 2016 to 2023, cut $1.6 billion in taxes, which resulted in a large deficit and deep civil service cuts, he said.

The tax cuts benefited the highest-income households the most, while the middle class and working people bore the brunt of health, education and other public-service cuts, he said.

After two years of high inflation (7.9 per cent in 2022 and 3.5 per cent in 2023), the bottom 40 per cent of income earners were worse off, while the highest 20 per cent ended up better off as a result of increases in their investment income and rising home values, Hajer said.

“Inequality is at very high levels,” he said.

» Winnipeg Free Press