The Canadian Income Taxation: Statistical Analysis and Parametric Estimates

69 Pages Posted: 20 May 2019 Last revised: 6 Dec 2020

See all articles by Musab Kurnaz

Musab Kurnaz

University of North Carolina at Charlotte - The Belk College of Business Administration - Department of Economics

Terry Yip

McMaster University

Date Written: Dec 05, 2020

Abstract

Using the administrative tax return database, we document the Canadian income and tax statistics in 2000 and in 2016 and compare them with those of the US. Also, we estimate parametric tax specifications used in applied macroeconomic and public finance studies. Although these specifications are, in general, good fits for average tax rates, their estimates yield large residuals for high-income earners. We introduce a new parametric tax specification, which fits the data well and captures the rates of high-income earners better than existing tax functions. The new specification can provide better quantitative analysis, since most of the tax budget is financed by high-income earners.

Keywords: Income Taxation, Parametric Tax Functions, Heterogeneous Households

JEL Classification: E62, H24, H31

Suggested Citation

Kurnaz, Musab and Yip, Terry, The Canadian Income Taxation: Statistical Analysis and Parametric Estimates (Dec 05, 2020). Available at SSRN: https://ssrn.com/abstract=3386443 or http://dx.doi.org/10.2139/ssrn.3386443

Musab Kurnaz

University of North Carolina at Charlotte - The Belk College of Business Administration - Department of Economics ( email )

Charlotte, NC 28223
United States

HOME PAGE: http://https://sites.google.com/view/musabkurnaz

Terry Yip (Contact Author)

McMaster University ( email )

1280 Main Street West
Hamilton, Ontario L8S 4M4
Canada

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