CD Howe proposes tax overhaul

The C.D. Howe Institute published Commentary No. 707, titled “Big Bang” Tax Reform: Unleashing Growth in the Canadian Economy, on March 3, 2026, authored by Jack Mintz, Alexandre Laurin and Nicholas Dahir. (cdhowe.org) Federal corporate options in the paper include either a 10% “Irish‑style” corporate rate with base broadening or a 13% distributed‑profits tax that defers federal taxation on retained earnings until profits are distributed. (cdhowe.org) The personal‑tax redesign targets taxpayers earning above $117,000 — a cohort the authors say pays roughly 55% of federal personal income taxes — by collapsing five federal brackets into three and lowering the current third‑to‑fifth bracket rates by about 3–7 percentage points. (cdhowe.org) The report’s modeled long‑run impact includes a GDP uplift of roughly $79 billion (about 2.5%) and projected additional annual public revenues exceeding $26 billion. (cdhowe.org) Short‑run revenue neutrality is a stated constraint in the plan, with proposed offsets including a modest GST increase or a new employer‑paid payroll tax dedicated to health care funding. (cdhowe.org) A simplified federal tax option in the proposal would add a $10,000 federal simplified tax credit to the basic personal amount — which the authors illustrate would let taxpayers earn more than $26,000 tax‑free under that option — while preserving limited deductions for retirement savings, charitable donations, disability and income‑earning expenses. (cdhowe.org) The authors contend that three‑ to four‑fifths of the corporate income tax is borne by labour, argue the overhaul would strengthen investment incentives and wages, and state the changes would reduce the scope for costly tax planning. (cdhowe.org)