The average tax rate for a single person making 250K in Sunnyvale is 32.93% [1]
The average tax rate for a single person making 250K in Ontario is 39.80% [2]
But with the extra taxes you also get some better benefits like healthcare, cheaper education. Of course if your main goal is to save as much money as you can, then it probably better in the US because you earn more salary and USD converts better into other currencies.
The “taxes” assessment is also way off as soon as the numbers a bit larger.
In Ontario, you’ll hit the top marginal rate of 54% just north of 200k CAD (140k USD), and you’ll already have an effective rate of ~36% so you’re only keeping ~130k and giving most incremental earnings to the government.
In Washington state, your effective tax rate on that much is ~25% and so is your marginal rate. The marginal rises to at most 37% above 700k CAD.
California and New York are probably 5-10% more (progressively), but that still puts it a ~10% under Ontario.
How did you calculate the income tax in both places?
If I put $100,000 US dollars in this[1] calculator I get an income tax rate of 34% for central park west in NYC (not including the employer side of FICA, which would at another 7.5% for a total of 41%).
If I put $126,000 into this[2] calculator, I get an income tax rate of 31% of Ontario. Maybe there are other Canadian income taxes that this calculator does not account for? I'm American and don't know the details. The EI (Employment Insurance) is also taken out in America, but not usually included as an income tax.
Marginal tax rates can be misleading, especially because (as the linked article itself states) they apply to different levels of income.
Effective tax rates provide a clearer picture. Let's take one example.
I plugged in $200k (CAD 270k, admittedly quite high for Ontario) of income to a California[1] and Ontario[2] tax calculator.
For California, I used the following: "Filing status - Single, 401k deductions - $19k". Effective tax rate: 30%.
For Ontario, I assumed CAD 26.5k in RRSP deductions. Effective tax rate: 35%.
> cost of real estate/rent in Toronto or Vancouver is not significantly cheaper than SF
Buying isn't cheaper. Renting is still significantly cheaper (at least by 1/3).
> salaries are lower
This is true.
> cost of living expenses...are higher
Cellphones and internet, yes. Everything else (yes, even milk and dairy products if you shop at Costco) is comparable to US prices.
> you're still going to want to carry supplemental health insurance
Most employers provide this. And vision/dental is far cheaper than paying for everything.
I'm not saying you'll end up with more money if you live in Canada. I just want to point out that many of the fears of "higher taxes" and "higher CoL" may be a bit overblown.
Marginal tax gets above 50% pretty quickly. For example Ontario takes a bit about 200k a year to get >50%. For average tax rate yes you’ll need a lot more. 800k a year gets you pretty close at 49.1%. Sounds like a lot but that’s “only” 600k usd at today’s exchange rate. High but in the ball park of a staff level engineer at Facebook or google.
The Canadian figures seem insanely low. 11.5% total? When I lived in BC making an approximately average income, my effective tax rate alone was 21% [EDIT: originally put 23%]. I paid pension, health insurance, and unemployment deductions on top of that. And that only counts the employee side of deductions.
This example is "married with two kids", so it's possible that there are massive offsets that I didn't have access to as a single person, but 11.5% still seems very low.
I would expect Canada to fare favourably in this comparison, though. The taxes are not as bad as most Americans think. Although they do ramp up very quickly for higher earners, which was an incentive for moving to the states as my income increased. Also, pay is higher in the US (by a factor of about 2 or 3) for the same job.
You might have a skewed sense of what median Canadian income is. And your job might be further above that median than you realize.
Median Canadian individual income is ~$35,000 [0].
In B.C., your average 2019 tax rate would be 13.34% not including non-refundable tax credits (and so the effective rate would likely be a point or two lower). [1]
A median tax rate of 11.5% against a median Canadian individual income seems entirely reasonable.
stormqloud seems to have a bit of an axe to grind, so it's worth taking their words with a grain of salt.
Someone earning 60K USD in Canada (~75K CAD) would have a marginal income tax rate ranging from 27% to 38%, depending on their province. If they're a contractor, they'd have access to a bunch of deductions against their expenses. They could further use an RRSP to shelter their income, or at least defer taxes to future years with lower income, thus driving their average tax rate down.
"You've also got a top marginal personal income tax rate approaching 60% which is nearly twice that of the US and political suicide."
That's only true if you count Federal Income Taxes alone. By the time you're done with Social Security, Medicare, state and city taxes (esp in NY, CA), the top marginal tax rate here approaches 50%.
i don't think i'm comfortable enough to share the exact numbers. let me just say that i'm probably a mid-to-upper middle-class guy and i was comparing tax rates in Ontario vs Oregon.
The tax information is way off, at least for Canada. I'm guessing they are quoting federal taxes only, ignoring provincial taxes. In Ontario/Toronto, the highest combined marginal taxes are around 54% [0]
California marginal income tax rates for a single person on $300k are less than 10%. On the other hand, federal rates are higher than 20%. You don't pay 10% sales tax unless you're using your entire income (uh, including the stuff that was taxed away?) on items that the sales tax applies to (and you certainly aren't).
If you're a single person in California, at $300k, if you have no special tax situation, you'll pay a bit less than 40% tax. If you're married, significantly less than that.
You are confusing marginal and effective tax rate, a very common mistake. At $150k you pay only 29%+12% on each additional dollar, but your earlier dollars were taxed much less.
You probably also contribute 18% to your RRSP on that huge salary, which drops your effective tax rate to about 27.4%.
Also, you aren't paying 13% VAT on everything you buy - lots is exempt like food and your mortgage/rent. Even if you spend every dollar of your net income, VAT is probably closer to 8% of your total net income (which is 72.6% of your gross, so 5.8% of your gross going to VAT).
CPP and EI total $3754 in 2020, so that's another 2.5% total.
So that's a total of 35.8% tax on your gross salary. Also note it's much less if you have any common deductions, like children, dependents, education expenses, etc.
The average tax rate for a single person making 250K in Ontario is 39.80% [2]
But with the extra taxes you also get some better benefits like healthcare, cheaper education. Of course if your main goal is to save as much money as you can, then it probably better in the US because you earn more salary and USD converts better into other currencies.
[1] https://smartasset.com/taxes/income-taxes#I4RNWQ9WYm [2] https://simpletax.ca/calculator
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