The marginal effective tax rate on personal income has declined for most Canadians over the past decade, but has risen for many low-to-middle-income families with young children, which reduces their gains from earning more income, according to a report from the C.D. Howe Institute. In “What’s My METR? Marginal Effective Tax Rates Are Down – But Not for Everyone: The Ontario Case,” authors Alexandre Laurin and Finn Poschmann say Ontario is a case in point, with marginal effective tax rates over 50 percent for many low-to-middle-income families with children, and the share has risen in 2011 compared to 2000. Policymakers interested in keeping down METRs overall, say the authors, should consider reinvigorating the personal income tax relief imperative, rather than implementing or expanding targeted benefits that make general tax relief more difficult to achieve.
