New study ranks Canadian provinces high in tax progressivity yet finds US states lead globally
A new report takes a close look at how effectively wealthy countries shift more of the tax load onto higher-income earners, and the results challenge some long-held assumptions.
The Fraser Institute study, titled ‘Measuring Tax Progressivity in High-Income Countries (OECD)’ analyzes 45 different jurisdictions, including 29 countries, three federal systems with high- and low-tax regions, and all Canadian provinces.
It concludes that Canadian provinces (and Canada as a whole) have “amongst the most progressive tax systems in the industrialized world.” Newfoundland and Labrador tops the Canadian list and claims second place overall. Saskatchewan, while the least progressive province, still ranks seventeenth out of all jurisdictions studied. Every province ends up in the top half of the progressivity rankings.
"Despite popular misperceptions, Canada actually has a more progressive tax system than most other high-income, industrialized countries around the world," says Grady Munro, policy analyst at the Fraser Institute and co-author of the report.
However, two American states outperform Canada with California placing first overall and Texas landing in fifth.
Some of the biggest surprises emerge from countries commonly viewed as tax-fairness models. Sweden ranks forty-first, and Norway thirty-seventh, putting them among the least progressive systems examined. Meanwhile, countries such as Hungary and Estonia appear at the very bottom of the list.
The report defines tax progressivity as “the degree to which the total tax burden increases as an individual or family’s income increases. Put differently, it is about how the tax burden is spread across income groups.” The authors argue that Canadian policymakers continue to push for more progressivity “despite its effects on tax fairness, democratic decision-making, and economic growth.”
"The evidence is clear - despite claims from certain groups, governments across Canada already maintain some of the most progressive tax systems in the industrialized world," concludes Jason Clemens, executive vice president at the Fraser Institute and co-author.
