Katherine Scott, a senior economist at the Canadian Center for Policy Alternatives, told the Canadian Press that the analysis supports the clamor of anti-poverty campaigners and businesses for a comprehensive overhaul of the tax system. She notes that the tax system was designed in the past and does not fully capture the economy as it exists in the present, making difficult decisions about working more but not earning more money.
Based on 2017 data used in the research, workers lost $341 for every $1,000 increase in their income. About $146 was attributed to an increase in federal income tax payments, $23 to a decrease in federal benefits such as the income-tested Canada Child Benefit, and $45 to paying taxes.
The remainder was made up of a mixture of provincial levies and benefits. The most severely affected were individuals earning between $24,739 and $33,724, who lost an average of $413 for every $1,000 in additional earnings. The average loss was marginally higher than the loss experienced by the top 10% of income.
According to the report, the proportion of low-income workers who lost 50% or more of their additional income was twice as high as those in the highest income group in the country.
Workers who are not doing much better or who are financially poor because of wage increases may be hesitant to take extra hours, while others may choose to stay out of the labor market entirely.
