RESPs: They're not about the middle class

In the ongoing debate about what makes for a good “middle class” tax cut, here’s an eye-popper of a fact, provided by those who support raising the amounts you can contribute to the Registered Education Savings Plans, and making them tax deductible: 55% of Canadians who contribute to RESPs are in the top income bracket, those earning $123,185 or more. (Taken from a 2003 Human Resource and Skills Development report)

Tax statistics don’t tell us how many tax-filers are in the top bracket, but they tell us how many people have incomes over $100,000. The answer is 5% of taxable Canadians. 7.5% of these are men, and 2.6% are women.

And, because they are well-positioned to make the biggest contributions, those in the top income bracket get the lion’s share of what this program offers.

In 2007 the RESP program cost taxpayers about $200 million in foregone revenues and about another $500 million for government top-ups that automatically go along with the contributions, through the sister program Canada Education Savings Grants.

We’re spending $700 million on a program, more than half of which goes to 5% of taxpayers, who just happen to be the richest 5% of Canadians.

That’s hundreds of millions of dollars lining the pockets of the most affluent instead of hiring nurses, or buying buses for public transit, or opening up child care spaces – the kind of things the rest of us would like to see.

Tax cuts for us all? This era of tax cuts has taken the redistributive role of government and stood it on its head, by giving the most to those who have already have the most – and need the least help.

-- Armine Yalnizyan