his report provides a cross-provincial analysis of the marginal effective tax rates (METRs) faced by working families across Canada, highlighting the significant impact these rates have on low- to middle-income earners.
Individuals and families with modest incomes, particularly those earning between $30,000 and $60,000, face the highest METRs. In Quebec, for example, the METR for a representative family within this income range is as high as 53%.
The structure of METRs across provinces results in very low net-of-tax returns for earnings in the low- to middle-income range for Canadians. This creates a disincentive for earning additional income, as the financial benefits are significantly offset by increased taxes and reduced transfer benefits.