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The high cost of raising revenue through Canada’s personal income tax

The personal income tax (PIT) is the single largest source of revenue for Canadian governments, but it also has a major impact on the level and growth of personal income. The PIT influences a wide range of important economic decisions that individuals make, such as hours of work, location of employment, retirement dates, acquisition of education and training, occupation choice, risk-taking, entrepreneurship and savings. All of these decisions affect the amount and types of income generated in the economy.When governments raise the PIT rates, there are both direct and indirect costs imposed on the private sector. The direct cost is

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