Taxes, without Death

[pyat]

I've had many an American friend make a crack about the high income tax I pay in Canada, to fund our socialized ice cream parties and national policy of providing free ponies for children under 5. Heck, I've heard many a conservative Canadian look admiringly southward and talk about the low, low taxes Americans are burdened with. It strikes me that comparing taxation rates in the two countries should be pretty straightforward. This is what I got from a shallow Google search:

Canadian Income Taxes
These are the most recent Canadian federal income brackets I could find:

0%: $0 - $9,600
15%: $9,601 - $35,595
22%: $35,596 - $71,190
26%: $71,191 - $115,739
29%: $115,740+

In addition, I pay provincial tax. For Ontario (which is higher than most) this is as follows:

6.05%: $0 - $36,020
9.15%: $36,021 - $72,040
11.16%: $72,041+

So, I pay 31.15% of my salary in federal and provincial income tax. In addition, I also pay a flat 4.95% for the Canadian Pension Plan, and 1.73% to Employment Insurance, which I collect if I get laid off.

So, total taxes for me in Ontario are 37.83%.

U.S. Income Taxes
Now, let us compare federal tax rates for an American:

10%: $0 - $7,300
15%: $7,301 - $29,700
25%: $29701 - $71950
28%: $71951 - $150150
33%: $150151 - $326450
35%: $326450+

Add to that a state income tax – we’ll use New York State, since it’s just a 40 min drive from me.

4%: $0 - $8,000
4.5%: $8,001 - $11,000
5.25%: $11,001 - $13,000
5.9%: $13,001 - $20,000
6.85%: $20,001 - $100,000
7.375%: $100,001 to $500,000
7.7%: $500,0001 +

I’d be paying 31.85% of my salary in federal and state income tax, if I were an American citizen. As leonard_arlotte notes, this does not take into account the Federal Insurance Contributions Act (FICA) taxes of 6.2% and 1.45% to support Social Security and Medicare, respectively.

My total income tax in New York State would come to 39.5%

Sales Taxes and Cost of Living
Now, this does not take into account the various sales taxes. Canada has a universal 5% goods and services tax, and most provinces have an additional sales tax. In Ontario, this is an additional 8%, or 13% total. Other provinces are less. In New York State, there is a 4% state sales tax, plus municipal and country sales taxes, averaging out to 8.25% total. So far as I know, there are no city or county sales taxes in Canada. Goods tend to be more expensive in Canada.

However, there are notable exceptions. The cost of food and housing is lower, for example, even in metropolitan areas. Toronto and Vancouver were listed 89th and 96th in 2004 on the lists of “highest costs of living” for cities worldwide. NYC was 12th, LA was 27th, Chicago 35th, San Francisco was 39th.

The price of gasoline is historically substantially higher, though this is dependent
on the dollar exchange. Currently, gas in Ontario is averaging at $1.07 CD per litre. Checking the East Coast U.S. prices online, I see they are currently averaging $3.22 US a gallon, or $3.83 CD a gallon, which comes to…. $1.01 CD a litre.

Cost of Healthcare
Now, U.S. citizens have one more expense than Canadians – private healthcare insurance. According to 2006 data, this averages $4,605 US annually for a single worker in New York state, and $12,075 US for family coverage.

If I were a freelance tech writer in New York state, the total cost of income tax, FICA, and health coverage for my family would represent 68.25% of my total income.

I realize, however, that most employers pay some, most, or all of this premium, which strikes me as a sort of needless tax on employers. Indeed, in 2004, U.S. automakers claimed that $1300 of the price of a new mid-sized car reflected the cost of providing healthcare benefits to their workers. According to wiki, GM spends $7 billion annually on healthcare coverage.

So, those are the numbers I was able to find. Are Canadians taxed more? That depends which province and state you’re comparing, but certainly the income tax rates are comparable, or lower in many cases.

Comments

[slothpuck.livejournal.com]

I guess everyone will pay more in taxes or have public spending reduced because of all the billions being thrown at the banks.

BTW I'm guessing VAT in the UK = Sales tax over there. Ours is at 17.5% !

SP

[slothpuck.livejournal.com]

BTW I'm not sure - what's canada's healthcare system like? We have the NHS ( http://en.wikipedia.org/wiki/National_Health_Service_(England) ) in the UK.

SP

[pyat.livejournal.com]

We have a similar system, though it varies somewhat from province to province.

[zenten.livejournal.com]

NHS is more comprehensive than anything in Canada from my understanding, for instance drugs are not covered under any provincial plan that I'm aware of (not counting things like welfare and disability).

[velvetpage.livejournal.com]

Drugs delivered outside of a hospital aren't covered - anything delivered in the hospital is.

[zenten.livejournal.com]

Right, I forgot about that.

Although sometimes prescriptions are given to patients with an extended stay within a hospital, and they are expected to fill the prescription at the hospital pharmacy on their own.

[velvetpage.livejournal.com]

I've never had that happen, so I can't comment on it.

[zenten.livejournal.com]

I had a fair amount of free time to read random signs while my wife was in labour in January.

[velvetpage.livejournal.com]

Hmm. I can't say I was paying much attention to signs when last I was the one in labour, so you've got me there. :)

[zenten.livejournal.com]

To be fair, she went to the hospital on the Tuesday, and James was born on the Friday, so I was there for a long while, and most of it was just Kerry sitting and trying to sleep in the hot tub between contractions.

[velvetpage.livejournal.com]

Good lord. There's something to be said for medicalized birth if it speeds THAT up.

[zenten.livejournal.com]

That was with the induction. She's now rather strongly against them, and chilaxing at home without the really messed up contractions that the medication gave her would have been much more pleasant, even if the pregnancy lasted a few more days.

[velvetpage.livejournal.com]

Hmm. My induction was lickety-split by comparison, though I didn't think that at the time. I hear you on the messed-up contractions, though.

[zenten.livejournal.com]

Yeah, I could tell that the doctors/nurses were starting to get kind of worried that things weren't progressing further, although once she had dilated enough to break her water it only took like 12 hours.

[velvetpage.livejournal.com]

Ah, that was the difference. I went in with broken water, so they were on a schedule. Mine ended in a c-section.

[zenten.livejournal.com]

Given all the complications and the fact that Kerry has a rather nasty reaction to most local anesthetic (luckily the anesthesiologist was able to find something that works for her), and that she plans on having another kid c-section was something that she was trying to avoid.

But yeah, it was basically she had a regular appointment that day, she had been having real contractions since the night before, and we were so excited and she was so sick about being pregnant that she opted into the induction. She didn't know about the nastiness of the contractions or that it doesn't always help speed things along that well until *after* she was given them.

[doc-mystery.livejournal.com]

For seniors over 65, if their medication is on a list approved for (free) Ontario Drug Benefits (in this province), other than paying the dispensing fee and a yearly deductible, their medications are free.

::B::

[velvetpage.livejournal.com]

Thanks! I knew there was something like this out there, but I didn't know what it was.

[kallisti.livejournal.com]

Quebec covers some drugs, depending on your income.

ttyl