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What's My METR? Marginal Effective Tax Rates Are Down - But Not for Everyone: The Ontario Case

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Author Info

  • Alexandre Laurin

    (C.D. Howe Institute)

  • Finn Poschmann

    (C.D. Howe Institute)

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    Abstract

    The marginal effective tax rate (METR) on personal income, explain the authors, measures the impact, on take-home pay, of federal and provincial income taxes combined with the impact of reductions and clawbacks of income-tested tax credits and benefits as individual or family income rises. These income-tested credits and benefits mostly target financial support to low- and middle-income families with children, or to low-income seniors. As their income rises past prescribed thresholds, clawbacks and reductions begin, raising the METR on each dollar of incremental income above the threshold. Policymakers interested in keeping down METRs overall, say the authors, should consider reinvigorating the personal income tax relief imperative, rather than implementing or expanding targeted benefits that make general tax relief more difficult to achieve.

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    File URL: http://www.cdhowe.org/pdf/ebrief_114.pdf
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    Bibliographic Info

    Paper provided by C.D. Howe Institute in its series e-briefs with number 114.

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    Length: 8 pages
    Date of creation: Apr 2011
    Date of revision:
    Publication status: Published on the C.D. Howe Institute website, April 2011
    Handle: RePEc:cdh:ebrief:114

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    Related research

    Keywords: Fiscal and Tax Competitiveness; marginal effective tax rate (METR); Province of Ontario;

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