Overview

Abstract (English)

Since 2012, six provinces and the federal government have increased tax rates on high-income taxpayers. Using administrative tax return data in the 2008-2016 period, we estimate taxpayer responses to the new top federal and provincial tax rates and analyze the implications for government revenues. Avoidance responses have been large, particularly among high-income owners of small business corporations, and particularly around the 2016 federal rate increase. Moreover, the increase in tax avoidance is likely to be persistent over time, and does not merely reflect the retiming of income in 2015 in anticipation of the tax increase. We discuss the implications of our results for government revenues and for policies to limit tax avoidance among high-income taxpayers.

Abstract (French)

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