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What's My METR? Marginal Effective Tax Rates Are Down - But Not for Everyone: The Ontario Case

Author

Listed:
  • Alexandre Laurin

    (C.D. Howe Institute)

  • Finn Poschmann

    (C.D. Howe Institute)

Abstract

The marginal effective tax rate (METR) on personal income, explain the authors, measures the impact, on take-home pay, of federal and provincial income taxes combined with the impact of reductions and clawbacks of income-tested tax credits and benefits as individual or family income rises. These income-tested credits and benefits mostly target financial support to low- and middle-income families with children, or to low-income seniors. As their income rises past prescribed thresholds, clawbacks and reductions begin, raising the METR on each dollar of incremental income above the threshold. Policymakers interested in keeping down METRs overall, say the authors, should consider reinvigorating the personal income tax relief imperative, rather than implementing or expanding targeted benefits that make general tax relief more difficult to achieve.

Suggested Citation

  • Alexandre Laurin & Finn Poschmann, 2011. "What's My METR? Marginal Effective Tax Rates Are Down - But Not for Everyone: The Ontario Case," e-briefs 114, C.D. Howe Institute.
    • Handle: RePEc:cdh:ebrief:114
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    File URL: https://www.cdhowe.org/public-policy-research/what%E2%80%99s-my-metr-marginal-effective-tax-rates-are-down-%E2%80%93-not-everyone-ontario-case
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    Cited by:

    1. Robert Brown & Adam Lavecchi & Philip Oreopoulos, 2015. "Evaluating Student Performance in Pathways to Education," e-briefs 203, C.D. Howe Institute.
    2. Alexandre Laurin & Finn Poschmann, 2011. "What Has Happened to Quebecers’ Marginal Effective Tax Rates?," e-briefs 115, C.D. Howe Institute.
    3. Alexandre Laurin & Jonathan Rhys Kesselman, 2011. "Income Splitting for Two-Parent Families: Who Gains, Who Doesn't, and at What Cost?," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 335, October.
    4. Ben Dachis, 2013. "Cars, Congestion and Costs: A New Approach to Evaluating Government Infrastructure Investment," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 385, July.

    More about this item

    Keywords

    Fiscal and Tax Competitiveness; marginal effective tax rate (METR); Province of Ontario;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • E64 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Incomes Policy; Price Policy

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