A Study of Effective Marginal Tax Rates in Quebec (Une Analyse Des Taux Marginaux Effectifs D'Imposition AU Quebec)

CIRPEE Working Paper No. 06-27

56 Pages Posted: 14 Aug 2006

See all articles by Jean-Yves Duclos

Jean-Yves Duclos

Laval University; IZA Institute of Labor Economics

Bernard Fortin

Laval University

Andree-Anne Fournier

Analysis Group, Inc.

Date Written: August 2006

Abstract

This article draws up a portrait of effective marginal tax rates (EMTR) on labour income in Quebec. It aims at allowing a better understanding of the impact of tax policy on the behavior of economic agents. Using an accounting microsimulation model that reproduces the system of taxes and transfers in 2002 Quebec, we measure the EMTR that result from the interaction of the mechanisms of taxation and income redistribution. Moreover, we evaluate the distribution of EMTR in the population. The analysis of EMTR shows, inter alia, that family policy, whose assistance is targeted towards low-income families, generates high levels of EMTR ascribable to the generally fast reduction of transfers as income increases. More than a quarter of heads of single-parent households face an EMTR which can reach, and even exceed, 80%. As for the two-parent families, they mostly face EMTR of around 50%. We show the importance of accounting for EMTR heterogeneity, both with respect to types of families and levels of incomes, as well as evaluating the variability of EMTR in the population.

Note: Downloadable document is in French.

Keywords: effective tax rates, taxation, microsimulation, family policy

JEL Classification: D31, D63, H21, H24, I38

Suggested Citation

Duclos, Jean-Yves and Fortin, Bernard and Fournier, Andree-Anne, A Study of Effective Marginal Tax Rates in Quebec (Une Analyse Des Taux Marginaux Effectifs D'Imposition AU Quebec) (August 2006). CIRPEE Working Paper No. 06-27, Available at SSRN: https://ssrn.com/abstract=923633 or http://dx.doi.org/10.2139/ssrn.923633

Jean-Yves Duclos (Contact Author)

Laval University ( email )

Quebec G1K 7P4
Canada
418-656-7096 (Phone)
418-656-9727 (Fax)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Bernard Fortin

Laval University ( email )

Quebec G1K 7P4
Canada

Andree-Anne Fournier

Analysis Group, Inc. ( email )

1080 Beaver Hall Hill
Suite 1810
Montreal, Quebec H2Z 1S8
Canada

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