Canada’s shift to a more regressive tax system, 2004 to 2022

The opinions and recommendations in this report, and any errors, are those of the authors, and do not necessarily reflect the views of the funders of this report. [...] Among our tax reform recommendations: Increase the progressivity of the income tax system: While there have been some modest increases in the top marginal income tax rate federally and provincially, the income tax system could do a much better job at mitigating market-driven increases in inequality and the concentration of income and wealth at the very top. [...] This included a reduction of the general corporate income tax (CIT) rate in a series of steps, from 21% in 2007 to 15% in 2012, as well as limitation of the capital tax in 2006 and elimination of the corporate surtax in 2008. [...] The top decile often conceals the extreme inequality at the top of the distribution, so we break the top 10% into the top 1%, the next 4%, and the next 5%.16 Some anomalies can emerge in the bottom decile because this can include ostensibly wealthier households reporting large capital losses and closing the year with low income. [...] 13 This is the conclusion of the state-of-the-art economic analysis by American economists Peter Diamond and Emmanual Saez in the Journal of Economic Perspectives, and a key recommendation of the Mirrlees review in the UK, which is the most comprehensive tax review undertaken in the developed world in the last decade.