Considering Taxes...

The Low Down Taxes are one of the primary considerations when deciding to move to the U.S, and in fact that is the largest reason why people make the move. The Ottawa Citizen reported that the average U.S person takes home an extra $4000/yr than the average Canadian. However that is just average, the best thing to do is evaluate your actual situation. Taxes may be lower in the U.S, however taxes are just one component that makes up overall cost of living. In any case, the odds are that if you are earning the upper end of the spectrum when it comes to taxes you most likely would be able to save a considerable amount in the U.S. Now we're not talking just income tax, but also include sales tax, property tax, gas tax, luxury tax, and deductible expenses. Federal Income Tax Revenue Canada conducted a study (view report) that determined: For the one-third of families in Canada and the United States with incomes of less than C$25,000 in 1997, average effective tax rates were the same or lower in Canada. The largest difference (5.3 percentage points) in effective tax rates between the two countries was for families with incomes of $50,000 to $99,999. Except for the lowest income group, effective tax rates varied more widely in Canada than in the United States. The average effective tax rates in 1997 for families with incomes of $150,000 or more were 32.8% in Canada and 27.6% in the United States. In the 1990s, the gap between Canadian and American income levels widened significantly. Real personal income per capita in Canada fell 9 percentage points from 87.2% of the U.S level in 1989 to 78.1% percent in 1999, the largest 10 year decline in recorded recent Canadian economic history. Canada's top federal-provincial rate of personal income tax is about 48 percent -- and it kicks in when workers have earned the U.S. equivalent of about $41,000. The U.S., by comparison, has a top tax rate of about 39.6 percent that doesn't apply until earnings exceed about $285,000. State Income Tax Some states have no personal income tax, these include: Alaska, Florida, Nevada, Texas, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. Other states range from only 0.6% (Idaho) to as high as 9.3% (California) depending on tax bracket. For more information on state income tax breakdown, check out: TAX-ADMIN State Income Tax Schedule TAX Policy Center State Income Tax Facts Gas Tax Although Canadian gas prices are relatively low compared to the rest of the world (especially Europe) it is a distance second compared to the United States, and this is mostly due to gas tax. According to GasPriceWatch.com, Canadian pump prices represent a 45% tax charge, compared to the U.S which is a 29% hit. Country Price $US/liter Tax Excluded Price $CDN/liter Tax Excluded Tax % of Price Canada $0.45 $0.25 $0.67 $0.37 45% United States $0.34 $0.24 $0.51 $0.36 29% Sales Tax Sales Tax rates in the United States are also considerably lower than in Canada. Below are the provincial sale tax rates: PROVINCE RETAIL SALES TAX B.C 7.0% Alberta 0.0% Saskatchewan 6.0% Manitoba 7.0% Ontario 8.0% Quebec 7.50% New Brunswick 8.0% Nova Scotia 8.0% P.E.I 10.0% Newfoundland 8.0% Of course this alone isn't what makes Canada so expensive to live in, it's the dreaded GST which adds another 7% onto your sales tax rate making a combined total of up to 17% in sales taxes! Visit the Canadian Taxpayers Federation for more details on how much Canadians pay in taxes, revenue by province, and much more. STATE BASE +LOCAL   STATE BASE +LOCAL   STATE BASE +LOCAL   STATE BASE +LOCAL   STATE BASE +LOCAL AL 4.00% 0%-7%   AK 0.00% 0%-7%   AZ 5.6% 0%-4.5%   AR 5.125% 0%-4.75%   CA 6% 1.25%-2.75% CO 2.9% 0%-6%   CT 6% 0%   DE 0.00% 0%   DC 5.75% 0%   FL 6.% 0%-1.5% GA 4% 1%-3%   HI 4% 0%   ID 5% 0%-3%   IL 6.25% 0%-3%   IN 5% 0% IA 5% 0%-2%   KS 5.3% 0%-3%   KY 6.00% 0%   LA 4% 0%-6.75%   ME 5% 0% MD 5% 0%   MA 5% 0%   MI 6% 0%   MN 6.5% 0%-1%   MS 7% 0%-.25% MO 4.23% .5%-4.13%   MT 0% 0%   NE 5% 0%-1.5%   NV 4.25% 0%-3%   N.H 0% 0% NJ 6% 0%   NM 5% .125%-2.25%   NY 4% 0%-4.5%   NC 4.5% 2%-2.5%   ND 5% 0%-2.5% OH 5% .25%-2%   OK 4.5% 0%-6%   OR 0% 0%   PA 6% 0%-1%   RI 7% 0% SC 5% 0%-2%   SD 4% 0%-2%   TN 6% 1.5%-2.75%   TX 6.25% 0%-2%   UT 4.75% 1%-3.25% VT 5% 0%-1%   VA 3.5% 1%   WA 6.5% .5%-2.4%   WV 6% 0%   WI 5% 0%-1% WY 4.0% 0%-2%                                 In the United States you'll find some states have a 0% sales tax. Though take note that most states have a base sales tax, and then regions will append an additional local sales tax. For the latest and greatest news on sales taxes visit the Sales Tax Institute for more information. Deductible Expenses Another very important difference. In the United States there are more possible tax deductions compared to Canada. Most notably the interest on your mortgage is tax deductible. If you refinance your house or buy a new house, the points on the loan are also deductible. When you sell your first house (after two or more years of ownership) the capital gains are tax free. Interest on a student loan are tax deductible (if your adjusted gross income is less than $75K/yr). If you move because of a new job, those moving related expenses are tax deductible. Certain parts of your fees to your DMV are tax deductible. Bottom Line One could dedicate an entire website to taxes, however this primer is intended to just provide a launch point for your investigation process. However in the end, the bottom line is there is no contest when it comes to taxes. Living in the United States is highly preferencial to high income earners when it comes to taxes.