Fraser Institute: Over the past fifteen years, Ontario’s provincial economy has struggled relative to the rest of the country. The reasons for Ontario’s economic weakness are complex and varied. However, public policy choices have been a contributing factor.
One area that stands out as a particularly strong candidate for reform is tax policy. Specifically, Ontario’s personal income tax (PIT) system undermines Ontario’s economic competitiveness and therefore hinders economic growth. With seven brackets and high marginal rates, Ontario’s PIT discourages a wide range of productive activities and makes it more difficult for Ontario to retain and attract higher-earning individuals. These problems are compounded by the fact that Ontario’s PIT is not competitive with peer jurisdictions in North America. Ontario has the second highest top marginal PIT rate in North America (combined federal/provincial or federal/state) at 53.53 percent.
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