The Impact of High Taxes – Part I
Shrinking Population of Wage Earners source: Statistics Canada
The first impact of successive years of high tax increases is that people move
to avoid property taxes or high rents. Owen Sound has experienced annual tax
increases at twice the rate of inflation over the last twenty years. We can see
this when we look at the change in those filing income taxes between 2012 and
2020 as shown in graph above. During this period, this group grew by 5.51% in
Collingwood and 4.94% in Brockville that has a population nearly identical to
that of Owen Sound. During this same period the population of people filing
income tax on wages went down by 2.13% in Owen Sound. Why is this?
There’s no question about it, we are losing our wage earners. Where are they going? In all likelihood, wage earners are just moving across municipal boundaries to reduce one of the growing strains on their family finances – high Taxes and the high rents that result from high taxes. After all, they can continue to enjoy everything that Owen Sound has to offer, while living in Georgian Bluffs or just East of 28th avenue in Meaford. Below is how I reached this conclusion.
Owen Sound is a small, safe and welcoming community with an abundance of parks
and recreations opportunities. Why would anyone want to leave? Yet, the facts,
as presented by Statistics Canada, tell us that people are not only moving to
other communities but are leaving the workforce. When 100 people leave the
workforce, whether retiring in place or moving for a better job somewhere else,
they leave 100 holes in the workforce that need to be filled (assuming their
employer didn't close the company). So, if those jobs are filled, whether from
the ranks of the unemployed or from people moving to Owen Sound to take those
jobs, they would file income taxes on their wages. The net result would be that
there would be no change in the number of people filing income tax on wages.
One explanation for the reduction in the number of people filing income tax on wages is that those 100 people kept their Owen Sound jobs and just moved slightly outside of the city limits. Perhaps, you could be looking for a change in lifestyle and decide to move to the countryside. However, a more likely driving force was your landlord raising your rent in response to their new property tax bill. If you can save $200 a month on rent by moving just across the city limits, why would you not do it. Your children could stay in their same school, and you don't need to change jobs.
These people are indeed driven by the high taxes to relocate just across city boundaries and not just retiring in Owen Sound . Unless employers are downsizing their workforces, they will fill the positions left by retirees which will result in the number of people filing income taxes on wages to remain the same. The only other explanation would be that Owen Sound's workforce is shrinking. What would cause a business to reduce staffing? Reductions in revenue due to reduced demand for their products or increases in expenses such as excessively high taxes.
This hypothesis is
supported by the next graph that shows the relative changes in population over
the past 20 years for Owen Sound, Meaford and Georgian Bluffs.
Shrinking Population over a 20 year Period source: Statistics Canada
We see that Meaford grew the most at 10.63% followed by Georgian Bluffs which grew by 9.61%. Then we have Owen Sound, which grew less than one percent during this 20 year period from 2011 to 2021. Although this looks like Owen Sound is actually growing, albeit slowly, it really isn’t..
Owen Sound Population in Comparison to Our Neighbours source: Statistics Canada