Spending much of the last year with lockdown measures in place has meant slow economic growth and catastrophic losses in employment. Job creation will be right near the top of Canada’s to-do list exiting the pandemic.
One sure way to increase jobs is by lowering income tax rates, a Fraser Institute report says.
Ergete Ferede, a professor of economics at MacEwan University, found that income taxes have significant adverse effects on private-sector employment. The rates of the capital gains tax and the corporate income tax have similar negative effects on employment.
Ferede’s study found that if the government were to lower the top statutory marginal personal income-tax rate to 2015 levels — dropping it from 33% to 29% — it would result in the private sector creating about 110,000 jobs in the year following the cut.
The bottom line: Cutting the top personal income-tax rate “would provide a vital boost to the economy that has suffered significant job losses as a result of the pandemic.”
