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Barack Obama

France, Socialist candidate

deal with the NDP to support his budget and avoid an election. McGuinty said all revenues from that new tax would be devoted to "accelerating our plan to eliminate the deficit."

According to finance officials, about 23,000 people — or 0.2 per cent of tax filers — would pay an average of about $19,000 more in income tax. The Liberals and NDP have estimated the new tax will generate somewhere between $440 million and $570 million. But Milligan said those numbers are "ambitious."

"There’s very strong evidence there as well that, especially for the highest earners who have access to really good tax advice, when tax rates go up, they find legal ways to readjust their affairs so they lower their tax bill."

Asked about how that might affect overall revenues, Marion Nade, a spokeswoman for NDP Leader Andrea Horwath, said via email that "all governments are concerned with tax avoidance. We support any means of addressing those loopholes."

Milligan also said he doubted the tax would scare off the very wealthy.

“We know quite a bit about the impact of this kind of tax,” said Milligan. “You hear some people say it will deter business investment , this will deter entrepreneurship. And the evidence on that is pretty strong that that’s not the case.” Milligan said that's because at the very, very high end of income distribution, most of the income is earned income. "These aren’t entrepreneurs and investors. These are people who are working for a living. They are very well-compensated people working for a living, but it just makes it a very different set of people than if these were all investors with a big pot of money wondering where they will invest it." But Milligan said he doesn’t believe top executives won't work as hard or leave the province because they’re earning a couple percentage points less.

Milligan estimates that the marginal rate for someone earning over $500,000 would now climb to 49.5 per cent from 46.4 per cent. (When factoring in the provincial surtax, the overall tax hike will actually be 3.12 per cent.) But he also noted that tax rates approaching 50 per cent are common in other very high income OECD countries. He said there is a "tipping point" where pushing the tax rates higher could yield no more revenue, or, in fact, drop the revenue. "I don't think evidence suggests that we’re hitting that point yet. My own best estimate is you have to get rates into the 60s before you stop raising new revenue."