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March 16, 2011

Increasing corporate income tax rates is the most costly way to raise government revenues, compared to other forms of taxation, according to a study released today by the C.D. Howe Institute. In What Does it Cost Society to Raise a Dollar of Tax Revenue? The Marginal Cost of Public Funds, authors Bev Dahlby and Ergete Ferede compare the effects of higher tax rates on provinces’ corporate income tax, personal income tax and sales tax bases, and conclude that corporate income tax increases are the most costly form of tax hike.