The Taxation of Corporate Investment Income in Canada: An Analysis of Marginal Effective Tax Rates

Michael J. Daly and Jack Jung

Canadian Journal of Economics, 1987, vol. 20, issue 3, 555-87

Abstract: This paper reports estimates of marginal effective tax rates on corporate investment income in Canada, taking into account sales taxes as well as corporation, personal, and business property taxes. Marginal effective tax rates are found to vary widely dependin g upon the type of asset acquired, the industry in which the asset is used, the manner in which the investment is financed, and the tax st atus of the investor supplying the funds. An examination of the sensi tivity of these estimates to various tax arbitrage assumptions reveal s the pattern of marginal effective tax rates to be similar irrespect ive of the arbitrage assumption used.

Date: 1987
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