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Ontario's Tax on the Rich: Grasping at Straw Men

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  • Alexandre Laurin

    (C.D. Howe Institute)

Abstract

Ontario’s new “tax on the rich,” which was introduced in the 2012 Budget, affects 25,000 high-income earners and their families. These families matter a lot for the province’s fortunes: about one of every five income tax dollars in Ontario already comes out of their pockets. Ontario’s personal income tax system already redistributes more income than most other provinces. The province’s top 1 percent of earners shoulder more than one-quarter of all income taxes, while the bottom 75 percent shoulder about 12 percent. The new tax on high-income earners will likely create more economic costs than benefits: taxpayers’ behavioural responses will reduce revenue over the long run by more than the province can expect to collect from the tax hike.

Suggested Citation

  • Alexandre Laurin, 2012. "Ontario's Tax on the Rich: Grasping at Straw Men," e-briefs 135, C.D. Howe Institute.
  • Handle: RePEc:cdh:ebrief:135
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    File URL: https://www.cdhowe.org/public-policy-research/ontario%E2%80%99s-tax-rich-grasping-straw-men
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    Keywords

    Fiscal and Tax Competitiveness; Ontario (Canada); tax increase; personal tax rate;

    JEL classification:

    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies

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