Much higher taxes in Canada: A myth? (sales, car insurance)

[lebleu]

A complaint I always hear from Canadians is that they get taxed so "much more" than Americans. I looked into it myself, with an online calculator from Paycheckcity.com (very accurate) for the US. And, I used the Canada Revenue website for the Ontario figures.

The results are surprising. I did the calculation with several American cities, with salaries ranging from 30k to 1M+. Taxes are not much higher in Canada, and in certain cases, considerably lower. The differences, for the most part, were not significant. NYC (listed below) and California have higher income tax than Toronto.

I did a comparison of the same salary ($100,000 USD/$115,000 CAD) in NYC (where I live) and Toronto, as a single person with max taxation. Results below:

US Paycheck (New York)
$100,000/year
$3846.15 bi-weekly gross pay
No deductions, or exemptions

Federal Withholding $813.31
Social Security $238.46
Medicare $55.77
New York $230.73
NY SDI $1.20
City Tax $134.60
Net Pay $2,372.03 USD
(Source: PaycheckCity.com)
Note: Residents of the NYC suburbs do not pay city taxes, however, the property taxes in the counties surrounding NYC are insane ($6000+ for a starter home).

Canada Paycheck (Toronto)
$115,000/year
$4423.08 bi-weekly gross pay
No deductions, lowest claim code for federal and provincial taxes

Federal $829.99
Provincial $491.76
CPP deductions $212.28
EI deductions $76.52
Net amount $2,812.53 CAD or $2445.78 USD
(Source: https://apps.cra-arc.gc.ca/ebci/rhpd)

Other taxes:

Sales Taxes: higher in Ontario - 13% in ON vs. 8.6% in NY
Property Taxes: suspect property taxes are higher in NY, no real figures though
Gas: Slightly higher in Ontario - Around $2.90 USD per gallon in NY and $3.26 USD in Toronto (97 cents per liter, $3.76 CAD per gallon)

I am not proving a point here, I am simply sharing information. If anyone can disprove this calculation or provide input or real life examples, please do.

[KevK]

Canada's taxes are about the same as one of the higher taxed states in the U.S.A. But unlike the United States, you actually GET services for your taxes in Canada like health care, good police and fire protection, great schools and other things. In the USA you don't get as much in the way of services for what you pay.

[Fred Derf]

Property tax in Toronto is close to 1% of the home's value per year.

[mikeyyc]

The entire cost of living is about 15-30% higher for everything from food to vehicles.

Having moved from Alberta to Texas, I pay about a third of what I did in Canada. Don't underestimate all the deductions that you get in the US that aren't available in Canada. Interest on your mortgage and property taxes are not tax deductable items in Canada.

[Cart24]

If you independently compare marginal tax rates between the two countries, there does not appear to be a huge difference. The drastic difference starts to come into play when you compare deductions and exemptions which are considerably more generous in the US than Canada.

I have lived in both countries and have my CMA, so you have to dig a little deeper to compare.

[Fred Derf]

Then again, it depends on what you include. If my family were to live in the Texas or New Mexico then I'd have to pay from private school for each child. Adding $10,000 per child per year adds up pretty quickly. In Toronto, I'm perfectly happy with the public school system that gives me a choice of primary languages, a religious option and small class sizes. He also receives special gifted education with 1:1 instruction. I'd stack that up against most private schools with no qualms.

[lebleu]

Originally Posted by mikeyyc

The entire cost of living is about 15-30% higher for everything from food to vehicles.

No doubt about that. My jaw dropped at the cost of groceries in Canada. And, I'm coming from an expensive area in the US... But I think that has much to do with the small population in a vast land mass and the logistics involved.

[lebleu]

Originally Posted by mikeyyc

Having moved from Alberta to Texas, I pay about a third of what I did in Canada. Don't underestimate all the deductions that you get in the US that aren't available in Canada. Interest on your mortgage and property taxes are not tax deductable items in Canada.

Well, to be fair, moving from any "high tax" state to Texas would have a similar effect. And, as another posted mentioned, the costs of private schools would definitely add up if your area is lacking.

Thanks for mentioning the deductions not available in Canada. I was not aware of that.

[Cart24]

Originally Posted by Fred Derf

Then again, it depends on what you include. If my family were to live in the Texas or New Mexico then I'd have to pay from private school for each child. Adding $10,000 per child per year adds up pretty quickly. In Toronto, I'm perfectly happy with the public school system that gives me a choice of primary languages, a religious option and small class sizes. He also receives special gifted education with 1:1 instruction. I'd stack that up against most private schools with no qualms.

Why would you assume that every Public School in Texas and New Mexico are substandard? It all depends on school district. Plus on top of that you should take a look at the Fraser Institutes school ranking study each year for Canada, Toronto is far from the best Public School system in Canada.

[kkgg7]

My perception is that tax wise Canada is only slightly higher if you make only moderate amount of money. It is the PRICE that makes the difference. Car insurance for example, is at least twice as much in Toronto than in major US cities (for some weird reason). Cellphone plans is WAY more expensive as well.
Plus, you don't get paid as much as in the US as well. For example, a similar job probably pays 20-30% more in Chicago than in Toronto.