« Convergence in Canada | Main | Who pays corporate taxes? »


Feed You can follow this conversation by subscribing to the comment feed for this post.

well noted. please check today's blog 'two canadian columnists i like'.

economics is very exciting!


A few years ago I looked up the total amount of income paid by Canadians by income decile, before and after Michael Wilson.

Briefly, before Wilson Canadians paid an effectively flat tax overall, with three small exceptions. The richest and poorest deciles paid a little bit more: the richest because they are slightly effected by the supposed progressivity of taxes, the poorest because the sin taxes become salient. (these are tuths over whole groups, and obviously there is a good deal of variance within each group.)

Third, the ninth decile of income earners pre-GST paid substantially less as a percentage of their income in taxes than did anyone else.

This latter effect disappeared after the GST came into effect.

My supposition is that this has two causes: first, the abolition of the 13% Manufacturers' Excise Tax had a progressive effect, because of the negative marginal propensity to consume goods as income increases; second, the ninth decile over-represents both producers and consumers of non-material goods. Think accountants and lawyers, farriers, nanny services, private schools (The Principal of UCC got $300,000 a year at the time, and fees were $16,000) and so on.

Surely it is ridiculous on its face to suggest that a tax on both the services of and the souce of income of accountants and lawyers is regressive!

Oh, yeah, I'm one of those Blue Democrats.


The comments to this entry are closed.

Search this site

  • Google

Blog powered by Typepad