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Saver's Choice: Comparing the Marginal Effective Tax Burdens on RRSPs and TFSAs

Author

Listed:
  • Alexandre Laurin

    (C.D. Howe Institute)

  • Finn Poschmann

    (C.D. Howe Institute)

Abstract

Canada’s graduated personal income tax leads most taxpayers to expect higher tax rates when they are working than when they are living on lower incomes from their retirement savings. Yet for many people, marginal effective tax rates on income from retirement savings are higher than those they face during working life. Comparing marginal effective tax rates across income levels suggests that many Canadians with savings in tax-deferred vehicles, like Registered Retirement Savings Plans, should put more future saving in tax-prepaid savings plans, particularly Tax Free Savings Accounts.

Suggested Citation

  • Alexandre Laurin & Finn Poschmann, 2010. "Saver's Choice: Comparing the Marginal Effective Tax Burdens on RRSPs and TFSAs," e-briefs 91, C.D. Howe Institute.
    • Handle: RePEc:cdh:ebrief:91
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    File URL: https://www.cdhowe.org/savers-choice-comparing-the-marginal-effective-tax-burdens-on-rrsps-and-tfsas-2/11852
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    Citations

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    Cited by:

    1. Marianne Laurin & Derek Messacar & Pierre-Carl Michaud, 2021. "Financial Literacy and the Timing of Tax-Preferred Savings Account Withdrawals," CIRANO Working Papers 2021s-36, CIRANO.
    2. Jeremy Kronick & Alexandre Laurin, 2016. "The Bigger Picture: How the Fourth Pillar Impacts Retirement Preparedness," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 457, September.
    3. Kevin D. Moore & William Robson & Alexandre Laurin, 2010. "Canada’s Looming Retirement Challenge: Will Future Retirees Be Able to Maintain Their Living Standards upon Retirement?," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 317, December.

    More about this item

    Keywords

    Pension Papers; Registered Retirement Savings Plans (RRSPs); Tax Free Savings Accounts (TFSAs); marginal effective tax rates (METRs);
    All these keywords.

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation

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