Study

February 20, 2020 | EST. READ TIME 1 MIN.

Alberta’s personal income tax rates uncompetitive compared to energy-producing U.S. states

Summary

As recently as 2014, Alberta had the lowest combined top federal/provincial or federal/ state marginal personal income tax (PIT) rate in Canada or the United States—a cornerstone of what was once known as the “Alberta tax advantage.”
Tax policy changes at the provincial and federal levels combined to increase Alberta’s top marginal PIT rate by nine percentage points: from 39 percent to 48 percent.
Also during this period, federal tax reform in the United States lowered the top federal personal income tax bracket by 2.6 percentage points: from 39.6 to 37 percent.
The combined effect of these policy changes is that Alberta has lost its status as having the lowest top combined PIT rate in North America, where it is now the tenth highest.
In addition, Alberta’s top PIT rate applies at a significantly lower threshold than several resource-intensive U.S. states.
The recent (October 2019) announcement of a pause in Alberta’s indexation of tax brackets and tax credits means that the personal income tax burden on Albertans will continue to grow.

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Ben Eisen

Senior Fellow, Fraser Institute

Ben Eisen is a Senior Fellow in Fiscal and Provincial Prosperity Studies and former Director of Provincial Prosperity Studies at the
Fraser Institute. He holds a BA from the University of Toronto and an MPP from the University of Toronto’s School of Public Policy and Governance. Prior to joining the Fraser Institute Mr. Eisen was the Director of Research and Programmes at the Atlantic Institute for Market Studies in Halifax. He also worked for the Citizens Budget Commission in New York City, and in Winnipeg as the Assistant Research Director for the Frontier Centre for Public Policy. Mr. Eisen has published influential studies on several policy topics, including intergovernmental relations, public finance, and higher education policy. He has been widely quoted in major newspapers including the National Post, Chronicle Herald, Winnipeg Free Press and Calgary Herald.
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Tegan Hill

Director, Alberta Policy, Fraser Institute

Tegan Hill is Director, Alberta Policy at the Fraser Institute. She holds a Bachelor of Economics and a Master’s Degree in
Public Policy from the University of Calgary. Ms. Hill’s articles have appeared in major Canadian newspapers including the Globe and Mail, National Post, and Ottawa Citizen. She specializes in government spending, taxation, and debt.
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