Fraser Institute report reveals division, and tax rates paid by those earning $100K+
The Atlantic provinces appear less competitive to higher earners according to a new analysis from the Fraser Institute.
Looking at the effective tax rate of those earning $100,000 or more, the non-profit found that Atlantic Canada and Quebec tend to have higher tax rates, while western Canada and Ontario’s are lower.
The analysis considered three income levels above $100K and four types of household: single individuals, couples with no children, couples with one child, and couples with two children.
It found that not only do the Atlantic provinces tend to have higher rates, but they also have fewer high earning tax filers.
Effective tax rates were found to be highest in Quebec for couples with no children (28%), couples with one child (26.5%), and couples with two children (27%).
Single people pay the highest rate in Prince Edward Island (33.9%) with Quebec a close second (33.7%).
“There is clearly an east-west divide in Canada, with Quebec and Atlantic Canada having the highest income tax rates on high-income earners, and the lowest share of high-income tax filers,” said Alex Whalen, policy analyst at the Fraser Institute and co-author of High Tax Rates on Top Earners in Atlantic Canada and Quebec.
Fewer high earners
The report found that of the 10 Canadian provinces, PEI has the lowest percentage of tax filers who earn $100,000 or more a year in income.
Other Atlantic provinces follow the trend: New Brunswick has the 9th lowest share, then Nova Scotia (8th), Quebec (7th) and Newfoundland and Labrador (6th), while Ontario and western Canadian provinces all have higher shares.
“Given that high income earners are often entrepreneurs, job creators, or other high performers, policymakers in Quebec and eastern Canada should consider personal income tax reform in order to make their tax regimes competitive with the rest of the country,” urged Whalen.
