Marginal tax rate - delta_november
Apr. 15th, 2006
03:59 pm - Marginal tax rate
I sit here on a glorious sunny Saturday trying to finish off my taxes. I think I've broken the back of it now, but it's taken far too long. Next year I may get some software to help it along.
For a while I've been wondering what my marginal tax rate really is. This year, thanks to having to recalculate based on a $13 piece of investment income that snuck up on me, I now know. For every additional $1.00 that I make, the government takes $0.43. Of that, $0.26 is federal and $0.17 is provincial.
I'm taxed on the other end too. While my major expense (rent) isn't taxed, it's also not marginal: if I find a $100 windfall, I'm not going to rent a larger house. Instead, I'd likely buy something that's taxed at 15% for GST and PST. Adding it all up, an additional $1.00 of income gives me a purchasing power of $0.4956. Let's call it $0.50 in even numbers. So the government gets to keep half, and I can spend the rest.
At least now I know :P.