The Costliest Tax of all: Raising Revenue through Corporate Tax Hikes can be Counter-Productive for the Provinces

Ergete Ferede & Bev Dahlby
Raising taxes can come at a serious cost. Not just to the taxpayer, of course, but to the economy. Every tax hike naturally leads people or companies to reallocate resources in ways that are less productive, resulting in a loss of income-generating opportunities. At a certain point, raising taxes becomes manifestly counterproductive, with the revenue lost due to the negative economic effects outweighing any tax gains. In cases like that, a government would actually raise...
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