Saver's Choice: Comparing the Marginal Effective Tax Burdens on RRSPs and TFSAs
AbstractCanada’s graduated personal income tax leads most taxpayers to expect higher tax rates when they are working than when they are living on lower incomes from their retirement savings. Yet for many people, marginal effective tax rates on income from retirement savings are higher than those they face during working life. Comparing marginal effective tax rates across income levels suggests that many Canadians with savings in tax-deferred vehicles, like Registered Retirement Savings Plans, should put more future saving in tax-prepaid savings plans, particularly Tax Free Savings Accounts.
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Bibliographic InfoPaper provided by C.D. Howe Institute in its series e-briefs with number 91.
Length: 9 pages
Date of creation: Jan 2010
Date of revision:
Publication status: Published on the C.D. Howe Institute website, January 2010
Pension Papers; Registered Retirement Savings Plans (RRSPs); Tax Free Savings Accounts (TFSAs); marginal effective tax rates (METRs);
Find related papers by JEL classification:
- E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
- G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
- H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
This paper has been announced in the following NEP Reports:
- NEP-ACC-2010-03-06 (Accounting & Auditing)
- NEP-AGE-2010-03-06 (Economics of Ageing)
- NEP-ALL-2010-03-06 (All new papers)
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