Measuring marginal income tax rates for individuals in Canada: Averages and distributions over time

Average marginal tax rates (AMTRs), and the dispersion of marginal tax rates across income groups, for Canada over 1947-91 are reported. Federal AMTRs fluctuated with little trend from 1947 to the mid-1960s, rose to the mid 1970s, fell, and then rose from the early 1980s through to 1991. Federal plus provincial AMTRs trended upward after 1949, increasing fastest from the mid-1960s to the mid-1970s. Relative dispersion of MTRs shows a strong downward trend over the sample period. This compression has been due partly to a decline in top MTRs, but the main influence has been the steady increase in the portion of the population, and of income, subject to tax. The AMTR time series is quite volatile. Difference stationarity is not rejected.