C.D. Howe says the ‘unfair’ income tax penalty is worse with regard to lower-income Canadians and small business owners
Does your income differ significantly from one year to a higher?
If so, you’re likely by now well aware of the “tax penalty” you suffer due to the progressive nature of our levy system and its graduated interest rates. In other words, the more you make from a given year, the higher inside the graduated rate ladder anyone climb, resulting in a higher government tax bill.
A new report out this morning from the C.D. Howe Institute entitled “A Question of Justness: Time to Reconsider Income-Averaging Provisions,” takes a deeper look at this problem and attempts to quantify the “unfair” tax penalty Canadians face on swings in their income out of year to year. The report’s co-authors, Jean