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

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  • Michael J. Daly
  • Jack Jung

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.

Suggested Citation

  • Michael J. Daly & Jack Jung, 1987. "The Taxation of Corporate Investment Income in Canada: An Analysis of Marginal Effective Tax Rates," Canadian Journal of Economics, Canadian Economics Association, vol. 20(3), pages 555-587, August.
    • Handle: RePEc:cje:issued:v:20:y:1987:i:3:p:555-87
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    References listed on IDEAS

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    1. David F. Bradford & Don Fullerton, 1981. "Pitfalls in the Construction and Use of Effective Tax Rates," NBER Working Papers 0688, National Bureau of Economic Research, Inc.
    2. Robin Boadway & Neil Bruce & Jack Mintz, 1984. "Taxation, Inflation, and the Effective Marginal Tax Rate on Capital in Canada," Canadian Journal of Economics, Canadian Economics Association, vol. 17(1), pages 62-79, February.
    3. Grady, Patrick, 1986. "The Recent Corporate Income Tax Reform Proposals in Canada and the United States," MPRA Paper 18749, University Library of Munich, Germany.
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    Cited by:

    1. Kenneth McKenzie & Jack Mintz, 1992. "Tax Effects on the Cost of Capital," NBER Chapters, in: Canada-U.S. Tax Comparisons, pages 189-216, National Bureau of Economic Research, Inc.
    2. Lemelin, André & Savard, Luc, 2022. "What do CGE models have to say about fiscal reform?," Economic Analysis and Policy, Elsevier, vol. 74(C), pages 758-774.
    3. Bob Hamilton & Jack Mintz & John Whalley, 1991. "Decomposing the Welfare Costs of Capital Tax Distortions: The Importance of Risk Assumptions," NBER Working Papers 3628, National Bureau of Economic Research, Inc.
    4. William Crowder & Mark Wohar, 2004. "A cointegrated structural VAR model of the Canadian economy," Applied Economics, Taylor & Francis Journals, vol. 36(3), pages 195-213.
    5. Benjaming Dachis & Adam Found & Peter Tomlinson, 2013. "What Gets Measured Gets Managed: The Economic Burden of Business Property Taxes," e-briefs 166, C.D. Howe Institute.
    6. Marion Steele, 1993. "Conversions, Condominiums and Capital Gains: The Transformation of the Ontario Rental Housing Market," Urban Studies, Urban Studies Journal Limited, vol. 30(1), pages 103-126, February.

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