I noted earlier that average tax rates in Canada are an approximately constant fraction of income. What about marginal income tax rates (MITRs)?

My colleagues Bernard Fortin and Jean-Yves Duclos have a recent paper
(written in French) with Andrée-Anne Fournier in which they try to wade
through the alphabet soup of tax and transfer programs in Quebec.
Here’s a representative profile of MITRs for a
two-parent household (click on the graphs for a larger version):

It doesn’t matter if you can’t figure out what the acronyms and abbreviations mean; the point to take here is that the graph is insanely complicated, and that the MITRs for lower-income households are generally higher than for those with higher incomes.

That’s the profile for a representative household. Here’s a scatter plot of MITRs plotted against income:

There’s an enormous range of variation for MITRs, especially for low-income households. Here’s what the MITR density looks like:

Although 10.6% of Quebecers see a negative MITR (thanks to a form of earned income tax credit), 2.5% of Quebecers face marginal rates of more than 100%!