Working More Can Cost You
Canada's tax and benefit system can create poverty traps where earning an extra dollar costs more than it pays. The Marginal Effective Tax Rate (METR) reveals these hidden cliffs.
The Poverty Trap
When taxes rise and benefits claw back simultaneously, some families face marginal rates above 80% — keeping less than 20 cents on each new dollar earned. This creates a “dead zone” where working more hours results in less take-home pay.