The distribution of income and taxes/transfers in Canada

Indeed, the distribution of the burden of taxation is one of the most fundamental issues of tax policy, most particularly in the public arena — most of the public discussion of tax policy concerns the distribution of taxes. [...] Market income in particular has the expected hump shape: it grows slightly over the first two decades of the active life, peaks around the age of 45-50 (earlier for the first three quintiles, later for the fourth and the fifth) then declines more abruptly than it has increased over the second part of the active life. [...] Tax rates range between 11.8 percent for the average person 75 and older in the second quintile of the income distribution to 36.5 percent for the average 35-39 year old in the top 20 percent of income distribution. [...] After the age of 55 individuals in the bottom 20 percent have higher tax rates than those in the second quintile, and for the 60-64 age cohort, the total tax rate of the lowest quintile is even larger than the tax rates of the third and fourth quintile (27.3 percent for QU1 versus 18.0 percent for QU2, 23.6 percent for QU3 and 26.6 percent for QU4). [...] The higher tax rates of the poorest group at this age are not due to higher taxes paid in dollar terms (in absolute terms their total taxes decline slightly after the age of 50 and generally fluctuate between $1,439 and $1,693 beginning with the age of 55), but to the abrupt decrease in their market income after the age of 55, with transfers only increasing after the age of 65.