The personal income tax systems in Canada, the United States, and elsewhere permit deductions or tax credits for out-of-pocket health care expenditures and private medical insurance premiums. Little is known about the effects of such tax measures on individual behaviour, in contrast to the...

Intergovernmental transfer programs in many federal systems, including Canada, attempt to equalize differences in subnational jurisdictions' tax capacities on the basis of the so-called representative tax system (RTS). It is shown that RTS equalization grants effectively compensate subnational...

A simple theory suggests that a common form of federal horizontal equalization grants should cause subnational governments to levy higher tax rates, distorting local tax bases and so increasing federal transfers. To test this, I examine Canadian provincial tax policies in the 1972-2002 period....