Fifteen-plus years of BC mortgage experience, distilled into practical writing on buying, renewing, refinancing, and building wealth through real estate.
Taxing B.C.'s Top Earners Harder Will Leave the Whole Province Poorer
A surgeon, tech founder or developer in British Columbia who earns past roughly $265,000 already hands over 53.5 cents of every extra dollar. That figure combines the 20.5% provincial top rate with the 33% federal top rate. In Alberta, the same dollar is taxed at 47%, and the 48% top rate only starts above roughly $370,000. Any plan to push B.C.'s top rate higher starts from a position that is already among the steepest in North America.
The case for taxing the top, stated fairly
The argument for higher top rates is not foolish. High earners have the most room to pay. B.C. is running large deficits. The costs of hospitals, roads, transit and schools keep rising as the population grows and ages. Many people at the top are not going anywhere. They chose the Okanagan or the Lower Mainland for the lake, the mountains and their families, and a few more points of tax will not change that. Studies of how often high earners actually move tend to show less movement than the scary headlines suggest.
That much holds up. For a salaried executive with kids in school and a job tied to Vancouver, a higher rate mostly means a smaller cheque. The province collects close to what it expected.
Where it breaks
The flaw is assuming that high earners respond by either paying or leaving. Most do neither. They change how and when they earn.
Many top earners in B.C. are incorporated: physicians, consultants, business owners, contractors. They decide how much income to take personally and how much to leave in the company. Corporate income is taxed at much lower rates while it stays inside the business. Every increase in the personal top rate makes leaving money in the company more attractive. The province does not lose that person. It loses the timing of their tax, and often a share of it.
Even that shelter has limits. Once passive income inside a corporation passes the federal threshold, the small business deduction shrinks by $5 for every dollar over. So owners start structuring around two sets of rules. They spend more on advice and less on expansion.
The housing piece most people miss
I see this mechanism in mortgage work all the time. A business owner who pays themselves less to avoid a 53.5% rate shows less income on paper. Lenders insured through CMHC typically average self-employed income over 24 consecutive months. Some will gross it up by 15%, but that rarely closes the gap created by deliberately low draws. The owner who could easily carry a rental property may struggle to qualify for one.
Rental supply depends on these people more than we admit. When lenders assess a rental, they usually credit only 50% to 80% of gross rent toward qualifying. That leaves the borrower's personal income to carry the rest. Secondary suites and small multiplexes, the housing B.C. says it wants, are often financed by exactly the high earners whose after-tax income a rate hike shrinks. When the government takes the larger share of each new dollar, adding a suite or buying a fourplex looks like more risk for less reward.
A better way to judge the policy
The useful question is not whether top earners can afford more. Many can. The question is how much of their income can change form, timing or location. Where income is fixed and salaried, higher rates largely collect what they promise. Where income is flexible and incorporated, the extra revenue tends to fall short of projections, and the side effects show up in investment and housing.
There is also a budget risk. A province that leans harder on a small group of earners ties its revenue to their good years and bad ones.
What this means for you
If you are incorporated or investing in B.C., treat your income structure and your borrowing plans as one decision. How you pay yourself this year shapes what you can finance in two. That conversation belongs with your accountant and your broker together, before the next tax change lands rather than after.
A surgeon, tech founder or developer in British Columbia who earns past roughly $265,000 already hands over 53.5 cents of every extra dollar. That figure combines the 20.5% provincial top rate with the 33% federal top rate. In Alberta, the same dollar is taxed at 47%, and the 48% top rate only starts above roughly $370,000. Any plan to push B.C.'s top rate higher starts from a position that is already among the steepest in North America.
The case for taxing the top, stated fairly
The argument for higher top rates is not foolish. High earners have the most room to pay. B.C. is running large deficits. The costs of hospitals, roads, transit and schools keep rising as the population grows and ages. Many people at the top are not going anywhere. They chose the Okanagan or the Lower Mainland for the lake, the mountains and their families, and a few more points of tax will not change that. Studies of how often high earners actually move tend to show less movement than the scary headlines suggest.
That much holds up. For a salaried executive with kids in school and a job tied to Vancouver, a higher rate mostly means a smaller cheque. The province collects close to what it expected.
Where it breaks
The flaw is assuming that high earners respond by either paying or leaving. Most do neither. They change how and when they earn.
Many top earners in B.C. are incorporated: physicians, consultants, business owners, contractors. They decide how much income to take personally and how much to leave in the company. Corporate income is taxed at much lower rates while it stays inside the business. Every increase in the personal top rate makes leaving money in the company more attractive. The province does not lose that person. It loses the timing of their tax, and often a share of it.
Even that shelter has limits. Once passive income inside a corporation passes the federal threshold, the small business deduction shrinks by $5 for every dollar over. So owners start structuring around two sets of rules. They spend more on advice and less on expansion.
The housing piece most people miss
I see this mechanism in mortgage work all the time. A business owner who pays themselves less to avoid a 53.5% rate shows less income on paper. Lenders insured through CMHC typically average self-employed income over 24 consecutive months. Some will gross it up by 15%, but that rarely closes the gap created by deliberately low draws. The owner who could easily carry a rental property may struggle to qualify for one.
Rental supply depends on these people more than we admit. When lenders assess a rental, they usually credit only 50% to 80% of gross rent toward qualifying. That leaves the borrower's personal income to carry the rest. Secondary suites and small multiplexes, the housing B.C. says it wants, are often financed by exactly the high earners whose after-tax income a rate hike shrinks. When the government takes the larger share of each new dollar, adding a suite or buying a fourplex looks like more risk for less reward.
A better way to judge the policy
The useful question is not whether top earners can afford more. Many can. The question is how much of their income can change form, timing or location. Where income is fixed and salaried, higher rates largely collect what they promise. Where income is flexible and incorporated, the extra revenue tends to fall short of projections, and the side effects show up in investment and housing.
There is also a budget risk. A province that leans harder on a small group of earners ties its revenue to their good years and bad ones.
What this means for you
If you are incorporated or investing in B.C., treat your income structure and your borrowing plans as one decision. How you pay yourself this year shapes what you can finance in two. That conversation belongs with your accountant and your broker together, before the next tax change lands rather than after.
Sources
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