17 July 2014

After this week's Ontario budget

Here are the combined marginal tax rates for Ontario for a single working person, after taking into account the changes announced on Monday. For this presentation, I am taking all taxes, reductions and surtaxes into account, including CPP/EI and the dreaded Ontario Health Premium. However, the Working Income Tax Benefit and Ontario Tax Credits are not taken into account - that is an exercise for another day. As you can see, the rates jump around a fair bit. The effective thresholds for when Federal and Ontario tax kick in are different from the base amounts that are normally publicized, as the effects derived from the CPP/EI inclusion in nonrefundable tax credits must also be taken into account.

Tableau's presentation is a bit complex. Here is the summarized version on an Excel chart, showing the total marginal tax rates on a logarithmic scale. Unfortunately, Excel does not allow this on a more granular level:

It's also unfortunate that the Ontario Health Premium is structured the way it is, with 6% and 25% marginal spikes occurring over a short scale before flattening out. Surely a better way could have been formulated! I also take issue with the Ontario Tax Reduction and Surtax: it would be very easy to integrate them into the personal amount and the various tax brackets. That, however, would add visibility to the present structure, and that is something the present crowd at Queen's Park has tried very hard to avoid.

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