The Toronto Sun Acknowledges that the Fraser Institute’s ‘Tax Freedom Day’ May Be ‘Incorrect and Misleading’

Even the Toronto Sun is having trouble rewriting Fraser Institute press releases these days.

As the Fraser Institute gets ready to celebrate its annual “Tax Freedom Day,” the right-wing, ultra-libertarian Hayekian think tank is discovering that it is getting harder and harder to spread its anti-tax message through the media without facing critical questions about Tax Freedom Day’s methodology.

Tax Freedom Day is a national day of observance that was made up to promote a report released by the Fraser Institute each year looking into how much the “average Canadian family” pays in tax. Tax Freedom Day specifically refers to the date when the “average Canadian family” has supposedly earned enough money to pay off its tax bill for the entire year.

“This Sunday, June 8, Canadians will celebrate Tax Freedom Day, the day in the year when they start working for themselves and not government,” the Fraser Institute’s latest press release proclaims. “Tax Freedom Day measures the total annual tax burden imposed on Canadian families by federal, provincial and municipal governments.”

According to the Fraser Institute, the “average Canadian family” brought home a smooth $158,533 last year while forking over $68,266 in taxes — or, a staggering 43.1% of their entire household income.

While the report itself cites numbers from official sources like Statistics Canada and the Canada Revenue Agency, that data is run through the mysterious “Fraser Institute Canadian Tax Simulator,” which crunches official numbers and spits out questionable results that then go on to be repeated uncritically by the media.

Fraser Institute’s ‘Tax Freedom Day’ wildly exaggerates the tax bill of the ‘average Canadian family’.

The right-wing think tank’s misleading report overstates a typical family’s tax bill by tens of thousands of dollars.https://t.co/Az3i7kUHuN #cdnpoli #canlab

— PressProgress (@pressprogress) June 21, 2022

In the past, Tax Freedom Day has been an easy go-to story for business-friendly media outlets and under-resourced newsrooms that have often rewritten Fraser Institute press releases without asking critical questions or including multiple perspectives.

Over the last decade, as the Fraser Institute’s methodology has come under increased scrutiny, fewer and fewer media outlets have covered the right-wing think tank’s anti-tax report, with some notable exceptions, such as Postmedia’s ideologically-aligned Sun tabloids.

However, even longtime Sun columnist Lorrie Goldstein now acknowledges that there might be a few problems with the Fraser Institute’s numbers, with his annual column including a caveat:

“…it should be noted that calculating the total tax levels Canadians pay has long been a controversial issue and critics of how the Fraser Institute calculates Tax Freedom Day say its numbers are incorrect and misleading.

These criticisms include that the use of average family incomes instead of median incomes inflates the amount of money average Canadians pay in taxes; that it includes taxes paid by businesses as if they were being paid by families and that it fails to calculate the benefits families receive from paying taxes such as hospitals, schools and other public infrastructure they could not otherwise afford.

A more accurate calculation of Tax Freedom Day, they say, would be weeks or months earlier than the Fraser Institute claims.”

The passage appears in both his 2024 and 2025 Tax Freedom Day write-ups.

Marc Lee, senior economist with the Canadian Centre for Policy Alternatives, calls the Fraser Institute’s Tax Freedom Day a “deeply flawed and highly misleading gimmick.”

“The numbers are pretty exaggerated,” Lee told PressProgress. “Anything that even remotely looks like a tax is counted as a tax, but not all of the income side is counted.”

Many Canadians who see headlines about Tax Freedom Day likely assume these stories are talking about income tax. While the Fraser Institute does include federal and provincial income taxes in its calculation, it also tacks on corporate taxes, import duties, natural resource royalties and other taxes paid directly by businesses onto the tax bill of the “average family.”

The Fraser Institute’s report acknowledges these taxes are not actually paid by families, but argues that “although businesses pay these taxes directly, the cost of business taxation is ultimately passed onto ordinary Canadians.” It also suggests the question of “whether natural resource royalties are actually a tax” is simply an “unresolved debate.”

Lee says the Fraser Institute’s methodology shows the think tank is “picking and choosing in ways that make it seem like the amount of taxes Canadians pay is larger than they actually do.”

“If you’re including corporate income taxes on the tax side, you should also keep corporate income on the income side, which they don’t do,” Lee points out.

The Fraser Institute celebrates one of the first Tax Freedom Days in the 1980s (Photo: Fraser Institute)

Even the Fraser Institute’s numbers on what the “average Canadian family” earns appear significantly out of step with reality, placing their “average family” in a higher tax bracket than most.

Although the report projects that the “average Canadian family” will earn $158,533 in 2025, according to 2023 data from Statistics Canada, the median before-tax household income was $84,400, or $44,200 for unattached individuals not in an economic family.

Meanwhile, Statistics Canada indicates the median household income tax was $9,600, nowhere near the $68,266 number generated by the Fraser Institute tax simulator for an “average” family.

It is unclear how the Fraser Institute determined the income of the “average Canadian family.” One of the footnotes in their own report discloses that “the average family income displayed throughout the report is not the true average of all families in a particular jurisdiction.”

Jake Fuss, the Fraser Institute’s director of Fiscal Studies, would not directly explain how the think tank calculates how much the “average Canadian family” is paid or why it did not include data on median incomes, but instead clarified that their calculations “exclude those with incomes that are significantly above or below average” in order to “adjust for outliers.”

“Our calculations include sources of income beyond just wages and salaries because we also include government transfers, interest and other sources of income,” Fuss told PressProgress. “The data are gathered using Statistics Canada and CRA sources.”

Leaving aside the numerous methodological issues, Lee says the bigger issue with the Fraser Institute’s Tax Freedom Day is more of a conceptual problem.

“The whole framework, the ideology behind it is very pernicious,” Lee said. “This idea that you are working for the government up to a certain date and that income of yours just goes into this black hole never to be seen again, it’s just deeply flawed.”

“Things like public education or public health care, these increase the amount of freedom people have,” Lee added. “The idea that taxes are inherently working against ‘freedom’, it’s just bogus.”

“Maybe we should do another calculation that says, ‘Well, after you stop working for the government, then here’s how many days you’re working for your local bank, here’s how many days you’re working for your cable company, here’s how many days you’re working for your landlord’,” Lee suggested.

“The whole thing is a shemozzle.”