Mr. Speaker, when people say the term “marginal effective tax rate”, eyes begin to glaze over right across the land, but it is a very important concept, because that is the amount of money one loses for every extra dollar one earns. This loss happens in two ways. First, social benefits are often clawed back as someone earns an additional dollar. Second, income and payroll taxes apply to what is left. The combined effect can mean real marginal tax rates of over 100%.
For example, in Saskatchewan, until recently, minimum-wage workers on disability assistance who went from part-time to full-time work would actually have a pay cut. In other words, they would make less money working 40 hours a week than they would working 20 hours a week. These are people trying to escape from poverty, improve their situation and climb the ladder, and the government punishes them for doing so. Surely we can adjust our social benefits and tax system to ensure that people keep more of their wages than they lose to clawbacks and taxes.