Saver's Choice: Comparing the Marginal Effective Tax Burdens on RRSPs and TFSAs

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

No 91, e-briefs from C.D. Howe Institute

Abstract: Canada’s graduated personal income tax leads most taxpayers to expect higher tax rates when they are working than when they are living on lower incomes from their retirement savings. Yet for many people, marginal effective tax rates on income from retirement savings are higher than those they face during working life. Comparing marginal effective tax rates across income levels suggests that many Canadians with savings in tax-deferred vehicles, like Registered Retirement Savings Plans, should put more future saving in tax-prepaid savings plans, particularly Tax Free Savings Accounts.

Keywords: Pension Papers; Registered Retirement Savings Plans (RRSPs); Tax Free Savings Accounts (TFSAs); marginal effective tax rates (METRs) (search for similar items in EconPapers)
JEL-codes: E21 G23 H21 (search for similar items in EconPapers)
Pages: 9 pages
Date: 2010-01
New Economics Papers: this item is included in nep-acc and nep-age
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Citations: View citations in EconPapers (4)

Published on the C.D. Howe Institute website, January 2010

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