The "Taxing" Issue of Interprovincial and Cross-Border Migration

This paper examines interprovincial and cross-border migration incentives brought about by the Canadian and US tax systems for first-time university graduates in 2006. To illustrate the differences in the systems, effective tax rates (ETRs) on human capital are calculated. Results show that Canadian students face greater tax-side incentives to migrate after graduation, when compared to their US counterparts, and provincial tax structures can have a significant impact on interprovincial migration incentives. The results support policy initiatives aimed at reducing taxation of returns to education as a way of reducing brain drain.