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Effective Tax and Subsidy Rates on Human Capital in Canada

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Abstract

Effective tax and subsidy rates (ETRs and ESRs) on human capital investment via postsecondary education are estimated for Canada in the years 2000 and 2006. The flattening of the federal personal income tax structure in 2001 substantially reduced the tax disincentive for investment in human capital. Effective subsidy rates also declined as public spending did not keep pace with rising tuition fees. The change on the tax side was strong enough to dominate the subsidy reduction according to our main results, but disaggregation shows that this result did not hold in all cases. Results are shown for College, Master’s, and PhD programs, in addition to Bachelor’s degrees. They are also broken down by gender, and are shown for the 25th and 75th percentiles as well as the median. Provincial detail and 1997 results are provided in the case of Bachelor’s graduates.

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  • John B. Burbidge & Kirk A. Collins & James B. Davies & Lonnie Magee, 2011. "Effective Tax and Subsidy Rates on Human Capital in Canada," University of Western Ontario, Centre for Human Capital and Productivity (CHCP) Working Papers 20114, University of Western Ontario, Centre for Human Capital and Productivity (CHCP).
  • Handle: RePEc:uwo:hcuwoc:20114
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    1. George Psacharopoulos & Harry Anthony Patrinos, 2004. "Returns to investment in education: a further update," Education Economics, Taylor & Francis Journals, vol. 12(2), pages 111-134.
    2. A.L Robb & L. Magee & J.B. Burbidge, 2003. "WAGES in CANADA: SCF, SLID, LFS and the Skill Premium," Social and Economic Dimensions of an Aging Population Research Papers 106, McMaster University.
    3. Papke, Leslie E., 1991. "Interstate business tax differentials and new firm location : Evidence from panel data," Journal of Public Economics, Elsevier, vol. 45(1), pages 47-68, June.
    4. Paul Beaudry & David A. Green, 2000. "Cohort patterns in Canadian earnings: assessing the role of skill premia in inequality trends," Canadian Journal of Economics, Canadian Economics Association, vol. 33(4), pages 907-936, November.
    5. Mervyn A. King & Don Fullerton, 1984. "Introduction to "The Taxation of Income from Capital: A Comparative Study of the United States, the United Kingdom, Sweden, and Germany"," NBER Chapters,in: The Taxation of Income from Capital: A Comparative Study of the United States, the United Kingdom, Sweden, and Germany, pages 1-6 National Bureau of Economic Research, Inc.
    6. Peter Birch Sørensen (ed.), 2004. "Measuring the Tax Burden on Capital and Labor," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262195038, January.
    7. A. L. Robb & L. Magee & J. B. Burbidge, 1992. "Kernel Smoothed Consumption-Age Quantiles," Canadian Journal of Economics, Canadian Economics Association, vol. 25(3), pages 669-680, August.
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    Cited by:

    1. Sylvain Dessy & Safa Ragued, 2013. "Whither the Progressive Tax?," Cahiers de recherche 1340, CIRPEE.

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