Canada’s competitiveness problem with the personal income tax

In 1917, Canada’s political leaders were worried about what the introduction of a personal income tax would mean for the nation’s international competitiveness and its continued ability to attract investment and people. As Canada recognizes the 100th anniversary of the introduction of the personal income tax, it is crucial to understand just how uncompetitive Canada has become with respect to the personal income tax.Both economic theory and empirical research suggest that high income tax rates distort incentives and impede economic growth. Some Canadians might believe—erroneously—that their income tax burden is relatively light because the top federal tax rate is quite

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