ECON 3C03 McMaster Public Sector Economics & Optimal Income Taxation Questions Since 2010, the federal government and many provinces have increased the tax rate on top income earners. This question asks you to think about whether these policies were a good idea. In a 2015 paper titled “Taxation and Top Incomes in Canada”, Kevin Milligan and Michael Smart estimated that the elasticity of taxable income (ETI) for the top one percent of income earnings in Canada is εz = 0.51. (a) The income cutoff to be in the top one percent in Newfoundland is $168,094 (or $168.094 thousand dollars) and the average taxable income re- ported by individual tax filers in the top one percent is $283,720 (or $283.720 thousand dollars). In 2015, 4,170 individual tax filers were in the top one percent in Newfoundland. Suppose that the province is interested in in- creasing its top marginal rate from τ…    read more