An Analysis of Effective Marginal Tax Rates in Quebec
AbstractThis article draws up a portrait of effective marginal tax rates (EMTRs) on labour income in Quebec. It aims at allowing a better understanding of the impact of tax policy on the behavior of economic agents. Using an accounting microsimulation model that reproduces the system of taxes and transfers in 2002 Quebec, we measure the EMTRs that result from the interaction of the mechanisms of income taxation and redistribution. Moreover, we evaluate the distribution of EMTRs in the population. The analysis of EMTRs shows, inter alia, that family policy, whose assistance is targeted towards low-income families, generates high levels of EMTRs ascribable to the generally fast reduction of transfers as income increases. More than a quarter of heads of single-parent households face an EMTR which can reach, and even exceed, 80%. As for the two-parent families, they mostly face EMTRs of around 50%. We show the importance of accounting for EMTR heterogeneity, both with respect to types of families and levels of incomes, as well as evaluating the variability of EMTRs in the population.
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Bibliographic InfoPaper provided by CIRPEE in its series Cahiers de recherche with number 0746.
Date of creation: 2007
Date of revision:
Effective tax rates; taxation; microsimulation; family policy;
Other versions of this item:
- Jean-Yves Duclos & Bernard Fortin & Andrée-Anne Fournier, 2009. "An Analysis of Effective Marginal Tax Rates in Quebec," Canadian Public Policy, University of Toronto Press, vol. 35(3), pages 344-371, September.
- D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
- D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
- H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
- H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
- I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
This paper has been announced in the following NEP Reports:
- NEP-ACC-2008-02-16 (Accounting & Auditing)
- NEP-ALL-2008-02-16 (All new papers)
- NEP-CMP-2008-02-16 (Computational Economics)
- NEP-PBE-2008-02-16 (Public Economics)
- NEP-PUB-2008-02-16 (Public Finance)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Fortin, B. & Lacroix, G., 1991.
"Labour Supply, Tax Evasion and the Marginal Cost of Public Funds: An Empirical Investigation,"
Cahiers de recherche
9114, Université Laval - Département d'économique.
- Fortin, Bernard & Lacroix, Guy, 1994. "Labour supply, tax evasion and the marginal cost of public funds an empirical investigation," Journal of Public Economics, Elsevier, vol. 55(3), pages 407-431, November.
- Browning, Edgar K, 1976. "The Marginal Cost of Public Funds," Journal of Political Economy, University of Chicago Press, vol. 84(2), pages 283-98, April.
- Dahlby, Bev, 1998. "Progressive taxation and the social marginal cost of public funds," Journal of Public Economics, Elsevier, vol. 67(1), pages 105-122, January.
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