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Market Behaviour Versus Tax Planning Responses to Changes in Marginal Income Tax Rates Among Older Couples

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  • Messacar, Derek

Abstract

This paper investigates the extent to which older Canadian taxfilers, aged 60 to 69, respond to predictable changes in marginal tax rates created by the tax and transfer system by exhibiting sorting behaviour in taxable income. Using administrative tax data for the years from 2001 to 2012, the analysis assesses how individuals respond to changes in marginal tax rates created at the lower bounds of the second, third and fourth federal tax brackets; the lower bounds of the second and third provincial and territorial tax brackets; and the thresholds at which the Old Age Security and Employment Insurance benefits start being clawed back through recovery taxes.

Suggested Citation

  • Messacar, Derek, 2018. "Market Behaviour Versus Tax Planning Responses to Changes in Marginal Income Tax Rates Among Older Couples," Analytical Studies Branch Research Paper Series 2018410e, Statistics Canada, Analytical Studies Branch.
    • Handle: RePEc:stc:stcp3e:2018410e
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    File URL: https://www150.statcan.gc.ca/n1/en/catalogue/11F0019M2018410
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    Keywords

    Tax rate; Pension income; Old age security pensions; Income taxes; Employment insurance benefits; Administrative data;
    All these keywords.

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