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Taxes, Transfers, and Canadian Income Inequality

Marc Frenette, David Green () and Kevin Milligan ()

Canadian Public Policy, 2009, vol. 35, issue 4, 389-411

Abstract: In this paper, we investigate the relationship between the substantial changes in tax and transfer programs and the movements in after-tax income inequality over the 1980s and 1990s. We show that in the 1980s, tax and transfer programs became more redistributive, offsetting substantial increases in market income inequality. In the 1990s, the tax and transfer system stopped undoing the increases in market income inequality, leading after-tax income inequality to rise. Even so, tax and transfer programs were more redistributive in 2000 than in the 1980s. Much of the changes occurred at the provincial level, with social assistance payments first increasing (in the late 1980s) then decreasing (in the late 1990s) and with surtaxes on high-income earners being first imposed and subsequently removed.

Date: 2009
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Handle: RePEc:cpp:issued:v:35:y:2009:i:4:p:389-411