Canada’s income tax rates have become uncompetitive, and the economy will pay the price

According to the Fraser Institute’s analysis, Canadian workers across the income spectrum — and across the country — pay significantly higher personal income taxes than our U.S. counterparts.Peter J. Thompson/National Post files

Canada’s top marginal tax rates are punitively high, have put Canada in an uncompetitive position and discourage individuals from engaging in productive economic activity, ultimately hindering economic growth and prosperity. These are the observations of the Fraser Institute, based on a study of Canada’s top tax rates and how they compare to other jurisdictions. The findings were published in a new report released this week, just in time for the upcoming federal, pre-election budget, set to be delivered on March 19.

The report, entitled Canada’s Rising Personal Tax Rates and Falling Tax Competitiveness, calls on both the federal and provincial governments to consider “reversing the trend toward higher marginal tax rates on upper-income earners” and begin lowering personal tax rates. The marginal tax rate is the rate of tax you pay on the next dollar you earn.

According to the Institute’s analysis, Canadian workers across the income spectrum — and across the country — pay significantly higher personal income taxes than our U.S. counterparts. In fact, at incomes of $50,000, $150,000 and $300,000, among all 61 provinces and states in Canada and the U.S., the ten highest combined personal marginal income tax rates are in the ten Canadian provinces.

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