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What Has Happened to Quebecers’ Marginal Effective Tax Rates?

Author

Listed:
  • Alexandre Laurin

    (C.D. Howe Institute)

  • Finn Poschmann

    (C.D. Howe Institute)

Abstract

More than a decade after Quebec and the federal government implemented significant personal income tax rate reductions, what has happened to Quebecers’ take-home pay? This paper answers the question by looking at marginal effective tax rates (METRs) on personal income, which measure the impact of federal and provincial income taxes combined with the impact of reductions and clawbacks of income-tested tax credits and benefits. Income-tested credits and benefits mostly target financial support to low-to-middle income families with children and to low-income seniors. However, clawbacks and rate reductions apply to those credits and benefits as incomes rise above set thresholds, raising METRs for those income groups and family types. Overall, METRs are lower than a decade ago, but for many low-to-middle income Quebec families with children, they are higher. The province’s residents generally face the highest tax rates in the country, with an average METR in 2011 exceeding the national average by four percentage points.

Suggested Citation

  • Alexandre Laurin & Finn Poschmann, 2011. "What Has Happened to Quebecers’ Marginal Effective Tax Rates?," e-briefs 115, C.D. Howe Institute.
  • Handle: RePEc:cdh:ebrief:115e
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    File URL: https://www.cdhowe.org/public-policy-research/what-has-happened-quebecers%E2%80%99-marginal-effective-tax-rates
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    Keywords

    Fiscal and Tax Competitiveness; Province of Quebec; marginal effective tax rates (METRs);

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • E64 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Incomes Policy; Price Policy

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