What's My METR? Marginal Effective Tax Rates Are Down - But Not for Everyone: The Ontario Case

Alexandre Laurin and Finn Poschmann
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Alexandre Laurin: C.D. Howe Institute
Finn Poschmann: C.D. Howe Institute

No 114, e-briefs from C.D. Howe Institute

Abstract: The marginal effective tax rate (METR) on personal income, explain the authors, measures the impact, on take-home pay, of federal and provincial income taxes combined with the impact of reductions and clawbacks of income-tested tax credits and benefits as individual or family income rises. These income-tested credits and benefits mostly target financial support to low- and middle-income families with children, or to low-income seniors. As their income rises past prescribed thresholds, clawbacks and reductions begin, raising the METR on each dollar of incremental income above the threshold. 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.

Keywords: Fiscal and Tax Competitiveness; marginal effective tax rate (METR); Province of Ontario (search for similar items in EconPapers)
JEL-codes: E52 E61 E64 (search for similar items in EconPapers)
Pages: 8 pages
Date: 2011-04
New Economics Papers: this item is included in nep-pbe
References: View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Published on the C.D. Howe Institute website, April 2011

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Persistent link: https://EconPapers.repec.org/RePEc:cdh:ebrief:114

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