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Redistributive of Effects of Income Taxation in Canada.A research paper about the quality of the redistributive effects of Income Taxation with the help of the country Canada
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Redistributive Effects of
Income Taxation in Canada
By Philipp Muedder (i419605)
Agenda•Problem Statement
• History of Income Tax
• Federal Government Revenues
• Provincial Income Tax
• Canada Income Tax System
• Measure of Progressivity
• Conclusion
Problem Statement
‘How does the current personal income tax system support the progressivity and
therefore the redistributive effects of personal income tax within Canada?’
History of the Income Tax
Prior to World War 1
No income taxes on personal as well as corporate
Trying to attract immigrants
During and after the War
High expenses led to the Income War Tax Act in 1917
Tax remained even though it was meant to be temporary
History of the Income Tax
Federal Government Revenue
Income taxes make up about 70% of total Government Revenue
Government highly dependent on Taxes
• All provinces have separate income taxes on top of the federal income tax rate
• Quebec is the exception
Provincial Taxation
The Canadian Bracket System• Example shows the Ontario tax rate
• Is a system that uses progressivity
• Rich people pay more and poor people less taxes
In line with the Ability – to – pay principle
Measures of Progressivity
The Lorenz Curve
Graphical Tool
Straight line shows perfect equality
Inequality is shown by line below the diagonal one
Measure of Progressivity
Gini Coefficient
Numerical approach
Takes minimal value of 0
Maximum value of 1
Canada among the top 3
On right track with redistribution
‘How does the current personal income tax system support the progressivity and therefore the redistributive effects of personal
income tax within Canada?’
Conclusion
Conclusion
Closing the Gap of Income Inequality
Gini Coefficient suggest Canada is on the right path
Tax brackets are adjusted annually for progressivity
Thank you for listening
Any Question?