The cost of Ontario’s public sector pay increases

Ever wonder what a pay increase to an Ontario public sector worker (i.e. teacher, firefighter, white-collared bureaucrat) costs a taxpayer? It was recently explained in this manner with a modest sum of $100…

If a public sector employee receives a raise of $100, paying the average of nearly 50% in combined taxes in Ontario, that person would have made a gain of $50 in personal income.

But net gains in taxes come entirely from the private sector, so in order to not fall further behind, the government would have to recover from the private sector the $50 it did not claw back in taxes from the public worker.

Since one in five workers in Ontario is a provincial government employee, that leaves four private sector workers to pay enough in taxes to replenish the public coffers.

While the Ontario public sector worker would have made a net gain of $50 in personal income after taxes, the private sector workers in Ontario must each pay $12.50 in extra taxes to cover that raise, a net loss to them.

Now, this equation only takes into account the Ontario bureaucracy and public sector workers. Consider further that in Canada almost 40 % of the population is part of the public sector comprised of all levels of government.

(ed. – SOURCE: http://www.torontosun.com/2014/06/16/the-public-pays-for-public-sector-wages )

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