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Fiscal Analysis of a Targeted Tax Credit for Taxpayers in the Second Bracket.pdf
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Targeted Tax Credit for Taxpayers in the Second Bracket.xlxs
In response to a request from the Chair of the Standing Senate Committee on National Finance, PBO estimated the average benefit to taxpayers in the second tax bracket, if the estimated projected $1.8 billion in revenues from introducing a 33.0 per cent tax rate on income over $200,000 were redistributed to them.
PBO used four options in determining this amount:
- A redistribution of the benefit that increases, reaches a maximum, then decreases with the level of taxable income. This option would provide a maximum benefit of $486 to taxpayers with $67,923 of taxable income.
- A redistribution that is linearly progressive, providing $0 to taxpayers with $90,563 of taxable income, and the largest benefit of $399 to taxpayers with $45,283.
- An equal redistribution that would provide the 7.2 million taxpayers in the second tax bracket each with a benefit of approximately $245.
- A redistribution that increasingly diminishes as taxable income increases (that is, the value of the benefit is reduced exponentially). This option would provide $317 for taxpayers with $45,283 of taxable income.