Dear John,

Today, the Fraser Institute released a new study, Alberta’s Lost Advantage on Personal Income Tax Rates.

This study finds that the province’s top combined personal income tax rate is now more than 10 percentage points higher than the top rate in several other energy-producing jurisdictions. In fact, whereas Alberta’s top combined (federal/provincial) PIT rate was the lowest in North America as recently as 2014, now it is the 10^th highest following tax increases by the provincial and federal governments, and a reduction of the federal top rate in the United States.

Below is the news release and accompanying infographic. Please share with your colleagues and friends.

Best,

Niels

Niels Veldhuis | President
The Fraser Institute
Suite 2215, 500 4th Avenue SW
Calgary, AB T2P 2V6
www.fraserinstitute.org

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

CALGARY—Alberta’s top combined personal income tax rate (federal plus provincial) is now more than 10 percentage points higher than the top rate in several other energy-producing jurisdictions, making the province less competitive, finds a new study released today by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank.

“One of the cornerstones of the former Alberta Advantage was competitive personal income tax rates and the province’s rates are now among the highest in North America,” said Ben Eisen, Fraser Institute senior fellow and co-author of Alberta’s Lost Advantage on Personal Income Tax Rates.

The study notes that over the past five years, Alberta’s top combined (federal/provincial) personal income tax rate increased by nine percentage points—from 39 per cent to 48 per cent—from 2014 to 2019 as a result of tax hikes by the provincial and Canadian federal government in 2015 and 2016 respectively.

What’s more, in 2018, the U.S. Congress and Trump administration cut the top federal U.S. personal income tax rate by 2.6 percentage points—from 39.6 per cent to 37 per cent. In fact, Texas, Alaska and Wyoming—three energy-producing states that don’t have any state income tax—have the lowest PIT rates in North America while Alberta now has one of the highest.

Whereas in 2014, Alberta’s top PIT rate was the lowest in North America, now it is the 10^th highest.

Crucially, Albertans face a substantially higher marginal PIT rate than in energy-intensive American jurisdictions at all income levels ranging from $50,000 to $300,000.

“Alberta can no longer claim a clear advantage when it comes to personal income tax rates, and uncompetitive taxes have negative effects throughout the economy,” said Tegan Hill, Fraser Institute economist and study co-author.

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