The Myth of Taxes

[Reba 2]

I just found this article (dated 2000, but still relevant) about the Canadian Brain Drain, and the myth of US Taxes being lower than Canada. here

I've run across Americans who've told me that they heard our income taxes in Canada are 75%. They scoff when I tell them that I'd pay about equally here in NC what I was paying in Ontario with my last job there. That's just not possible they say! Canada's taxes are MUCH HIGHER than in the US. hmph! Check this out. (tax rates changed with this tax year, so the salary range is higher for the top tax brackets)

Canadian Taxes (1999)................US Taxes (single person) (1999)

Up to CA$29,590 17%..................Up to US$25,750 15%

Above CA$29,590 26%................Above US$25,750 28%

Above CA$59,180 29%................Above US$62,450 31%

.................................................Above US$130,250 36%

.................................................Above US$283,250 39.6%

Where most of our taxes come from in Canada is at the provincial level, to pay for eductation and medicare. HOWEVER, there are several states that have comparable state income tax, and what do the citizens of those states have to show for it? hmmmmmmm...

Here's the provincial tax chart at CRC here And the State tax chart here

So, my last job in Canada I was making slightly more than $50k per year. I lived in Ontario, so my federal tax was 26% and my provincial tax rate was around 9.15%. 26+9.5=35.5 (if I still lived in Canada making that same salary, my federal tax rate would now be only 22%, but provincial would be the same 22=9.5=31.5%)

I now live in North Carolina, where finding a job that pays $50k per year is damn near impossible!, so lets go by my husband's annual salary of around $30k. Federal tax rate is 28% and state tax rate is lets say around 7% (the chart linked above does not give the exact break down, just that it starts at 6% for the lowest, and goes to 8.5 for the highest and there are 4 tax brackets). 28+7=35%

A half % point, and at home I could spend 5 days in hospital after having major surgery and not have to pay a dime (other than rental cost for the TV at my bed). Here in NC, I can't even afford to see a doctor to get a presctription for muscle relaxants (which are available off the shelf in Canada!). The state is always crying they dont have enough money to keep up with expenses. What the heck are they doing with our money then? Population of North Carolina (census 2000) 8,049,313. Population of Ontario (2005) 12,541,410.

Just thought you might like some ammo for those days when someone tells you that if America ever decided to implement universal medicare that their income taxes would go sky high "like Canada's"

[canucker18 0]

Very interesting. We are in Mass. and I'm just praying to get a job period once I get my EAD. I guess I'll have to wait until next year to see how my taxes shake down.

[neiks 19]

Great info Reba! All I know is that I'm going to be very happy that I will still be a resident of Manitoba so I can benefit from our health care for my pregnancy and deliver and have at least one child born for "free". Crazy that I'm not wishing for fast approval of my CR-1

[Jasman0717 9]

[Flames9_RN 358]

Great Info. Does jasman ever say anything? All I ever see from him is smiley faces!! lol

[Reba 2]

I think his D key is stuck

[clloyd 0]

Those tax rates for the US are off slightly, due to the tax cuts the George Bush made. The 2005 rates are here:

http://www.irs.gov/formspubs/article/0,,id=150856,00.html

And they are marginal rates, meaning it's the rate that's taxed on your last dollar of income. I don't know how it works in Canada. Even though I did my taxes a few times myself up there.

[clloyd 0]

Actually, that's the 2006 rates, sorry. And it looks like Canada has a marginal rate as well.

[chocolaterie 0]

I can't believe someone would ask if you were taxed 75%...

[zyggy 9]

I can't believe someone would ask if you were taxed 75%...

The biggest difference is not in the tax rates, but in the deductions that the US allows you to take vs. the Canadian Government. You can have all the tax rates in the world, but if the taxable income is significantly lower...

Last year I had more than $15,000 in itemized deductions in addition to the personal exemption that each of us got... In Canada, that $15k wouldn't have been there, so in actuality, I would have had to pay signifiacntly more in taxes if I lived in Canada vs. the US...

[Saddle Bronc 124]

Also, US does not use "non-refundable credits"--exemptions/deductions can be calculated toward refund; where Canadian NRC's can at best reduce to 0.