By Fraser Institute ——Bio and Archives--April 8, 2024
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VANCOUVER— Workers in Canada—across all income levels—pay higher personal income tax rates than workers in the United States, finds a new study published today by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank.
“Our high-income tax rates can deter professionals, entrepreneurs and businessowners from working and investing in Canada, which is bad for the Canadian economy and therefore Canadians,” said Jake Fuss, director of fiscal studies at the Fraser Institute and co-author of Canada’s Rising Personal Tax Rates and Falling Tax Competitiveness, 2024.
The study notes that recent personal income tax rate increases at the federal and provincial levels have helped widen the income tax rate gap between the U.S. and Canada.
For example, among all 61 provinces and states, at $50,000 of annual income, the top 10 highest combined (federal plus provincial/state) personal income tax rates are in nine Canadian provinces—with all provinces in the top 15—ranging from a high of 31.53 per cent in Quebec to 22.70 per cent in British Columbia.
The largest combined (federal and provincial) tax increase was in Newfoundland and Labrador, where the combined top marginal income tax rate increased 10.3 percentage points. This raised the province from one of the lowest combined top rates in Canada in 2009, up to the highest rate in the country in 2023.
At $75,000 of income, eight provinces are in the top 10, led by Prince Edward Island (37.20 per cent). Ontario ranks 12th highest (29.65 per cent) and B.C. ranks 25th (28.20 per cent).
At $150,000 of income, all 10 provinces comprise the top 10, from 38 per cent in Alberta up to 47.46 per cent in Quebec. Similar results exist at $300,000 of income, from 47 per cent in Alberta up to 54 per cent in Nova Scotia.
“If policymakers want to attract and retain skilled workers and job-creators, and encourage entrepreneurs, we must lower personal income tax rates and avoid higher rates at all costs,” said Grady Munro, co-author and policy analyst at the Fraser Institute.
Media Contact:
Jake Fuss, Director, Fiscal Studies, Fraser Institute
Grady Munro, Policy Analyst, Fraser Institute
To arrange media interviews or for more information, please contact:
Drue MacPherson, Fraser Institute
604-688-0221 ext. 721
drue.macpherson@fraserinstitute.org
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The Fraser Institute is an independent Canadian public policy research and educational organization with offices in Vancouver, Calgary, Toronto, and Montreal and ties to a global network of 86 think-tanks. Its mission is to measure, study, and communicate the impact of competitive markets and government intervention on the welfare of individuals. To protect the Institute’s independence, it does not accept grants from governments or contracts for research. Visit fraserinstitute.org.
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