Finances of the Nation: Is the CWB Enhancement Achieving Its Dual Objective of Supporting Income and Incentivizing Work? The Effect for Couples in Ontario and Quebec

Abstract

For almost 60 years, the Canadian Tax Foundation published an annual monograph, Finances of the Nation, and its predecessor, The National Finances. In a change of format,
the 2014 Canadian Tax Journal introduced a new “Finances of the Nation” feature, which
presents annual surveys of provincial and territorial budgets and topical articles on taxation
and public expenditures in Canada. In this article, Luc Godbout and Suzie St-Cerny focus on the effects of enhancing the Canada workers benefit (CWB) in 2021. More specifically, they seek to determine whether, for couples in Ontario and Quebec, the enhancement served to render work more rewarding (by lowering effective marginal tax rates) and to provide better income support for low-income workers (by increasing disposable income). The authors show that, while the objective
of income support was achieved, the results for the objective of work incentivization were mixed,
depending largely on a couple’s family income level and working income split. The authors
suggest how the CWB might be reformed to better fulfill its role in incentivizing work.
The underlying data for the Finances of the Nation monographs and for the articles in
this journal will be published online in the near future

Keywords: Canada Workers Benefit, Effective Marginal Tax Rate, Lower-Income Workers, Effective Income Tax Rate, Work, Incentives