{"id":15,"date":"2011-07-04T05:55:54","date_gmt":"2011-07-04T05:55:54","guid":{"rendered":"http:\/\/nayrb.org\/~blog\/?p=15"},"modified":"2016-02-28T00:03:42","modified_gmt":"2016-02-28T00:03:42","slug":"marginal-tax-rates","status":"publish","type":"post","link":"http:\/\/nayrb.org\/~blog\/2011\/07\/04\/marginal-tax-rates\/","title":{"rendered":"Marginal Tax Rates"},"content":{"rendered":"

People talk a lot* about marginal tax rates**. You often hear that the income tax rate is going down from 16% to 15.5%, or that the highest marginal tax rate is now 29%. What we don’t talk about is the full structure of the tax system, and what the marginal tax rate is overall as you go up (or down) in income***.
\n

\"Marginal<\/a>
Marginal Tax Rates, Ontario, 2011<\/figcaption><\/figure><\/p>\n

Looking at the above graph, you may notice a few things. One is that the highest tax rates are paid by those with the least income (this is largely due to the 50% clawback of all income for those on welfare). The marginal tax rates for those earning less than $15k are never reached by anyone earning more than $15k. Many consider this a very strong disincentive to work (or at least a strong disincentive to report income).<\/p>\n

There are a few oddities in the graph:
\nAround $15k, the spike is caused by the loss of the welfare prescription drug benefit
\nBetween $43k and $49k, the tax rate decreases by about 7%, because Employment Insurance and Canada Pension Plan contributions max out
\nThe spikes at $20-25k, $36-38k, $48k, $72k, $201k are caused by the strange way that the Ontario Government implemented the Ontario Health Premium<\/p>\n

It might be interesting to overlay this graph with a graph of what percentage of the population is in each category, and what percentage of each of those groups vote.<\/p>\n

-Nayrb<\/p>\n

Some calculations:<\/p>\n

Welfare: $224 basic needs, $368 shelter allowance
\nWelfare: $592\/month = 7104 + 848\/yr = 7952\/yr
\n(includes ** Includes 2010 Ontario Energy and Property Tax Credit and 2010-11OntarioSales Tax Credit.)<\/p>\n

*Well, probably not that much.
\n**Marginal tax rates in this instance are defined as the amount of tax paid per thousand dollars of income (marginal tax rate at $10k income would be: (Tax paid @$10k-Tax paid @ $9k)\/$1000 )
\n***This post assumes Toronto, Ontario residents, 2011 tax rates, single adult<\/p>\n

References:
\nhttp:\/\/www.socialassistancereview.ca\/income-assistance-and-other-benefits<\/a>
\nhttp:\/\/www.mcss.gov.on.ca\/en\/mcss\/programs\/social\/directives\/directives\/ODSPDirectives\/income_support\/6_1_ODSP_ISDirectives.aspx<\/a>
\nhttp:\/\/www.rev.gov.on.ca\/en\/taxcredits\/CalculatorQuestions.asp<\/a>
\nwww.caledoninst.org\/Publications\/PDF\/488ENG.pdf<\/a>
\nhttp:\/\/www.e-laws.gov.on.ca\/html\/regs\/english\/elaws_regs_980134_e.htm#BK59<\/a>
\nhttp:\/\/www.cra-arc.gc.ca\/E\/pub\/tg\/rc4210\/rc4210-e.html#P137_11147<\/a>
\nhttp:\/\/www.cra-arc.gc.ca\/tx\/ndvdls\/fq\/txrts-eng.html<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

People talk a lot* about marginal tax rates**. You often hear that the income tax rate is going down from 16% to 15.5%, or that the highest marginal tax rate is now 29%. What we don’t talk about is the full structure of the tax system, and what the marginal tax rate is overall as … Continue reading Marginal Tax Rates<\/span> →<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[11,12],"tags":[],"_links":{"self":[{"href":"http:\/\/nayrb.org\/~blog\/wp-json\/wp\/v2\/posts\/15"}],"collection":[{"href":"http:\/\/nayrb.org\/~blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/nayrb.org\/~blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/nayrb.org\/~blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/nayrb.org\/~blog\/wp-json\/wp\/v2\/comments?post=15"}],"version-history":[{"count":13,"href":"http:\/\/nayrb.org\/~blog\/wp-json\/wp\/v2\/posts\/15\/revisions"}],"predecessor-version":[{"id":1030,"href":"http:\/\/nayrb.org\/~blog\/wp-json\/wp\/v2\/posts\/15\/revisions\/1030"}],"wp:attachment":[{"href":"http:\/\/nayrb.org\/~blog\/wp-json\/wp\/v2\/media?parent=15"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/nayrb.org\/~blog\/wp-json\/wp\/v2\/categories?post=15"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/nayrb.org\/~blog\/wp-json\/wp\/v2\/tags?post=15"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}