It starts at the top!

The misconception as to what Canadians pay in taxes starts at the top. In Tuesday night’s Presidential Debate Mitt Romney stated “Canada’s tax rate on companies is now 15 percent. Ours is 35 percent. So if you’re starting a business, where would you rather start it?”

What Romney does not look at is the overall cost of doing business in the U.S. vs other countries, Canada included. It is also why the average American has such a misconception as Canada’s “free healthcare” and the fact that we are taxed and pay considerably higher costs for virtually every product and service we receive. Let’s look at a typical Ontario based company…and what they pay.

Federal Tax Rate – 15%

Ontario Tax Rate – 14%

CPP – 4.95%

E.I. – $1,175/employee (EI premium payable is 1.4 times the EI premium payable by each employee)

Workers Compensation – Average $3.00/mth/employee

Benefits – Average $200/employee/month

Add to this 13% HST on all equipment, fixtures, services, insurance, rent etc.

Higher transportation, vehicle, shipping, electricity, gas, water and rent and other costs.

We don’t have any “Buy Canadian” incentives even at the Federal Government level, in fact if your not the lowest bidder there is a good chance you wont get any business. Fact is that most Canadian made goods are cheaper in the U.S. and it not just the cost of booze and cars. It’s virtually every product Finally let’s not forget how compassionate and supportive our banking system is to small business.


About 2sidesof49

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2 Responses to It starts at the top!

  1. flynnroad says:

    I found all these election references very interesting too. I love how people can use almost any statistic to make any point they want to.

    Your quote Federal tax rate of 15% is on the first $42,707 in Canada. So, for my comparison:

    Canada Federal Tax Rate – 15% (for $42,000)
    US Federal Tax Rate – 25%

    Ontario Tax Rate: 14%
    NYS Tax Rate: 6.9%

    CPP: 4.95% (You max at $2,163)
    Soc Security : 6.25% (You Max at $6,813)

    Canada: E.I. – $1,175/employee
    US/NYS: I think this is $0

    Workers Compensation: Average $3.00/mth/employee
    US: $0 Not itemized in pay statement

    Canada Medical: $0 (Not itemized in pay statement)
    US Medicare: 1.45%

    Canada Benefits $200/employee/month
    US Benefits : At least $200 /employee/month

    Canada:Add to this 13% HST on all equipment, fixtures, services, insurance, rent etc
    US: Depends on the state. NYS is 8.5%.

    Canada Income and Payroll Taxes: 15+14+4.95+2.8%+0 = 36.75%
    US/NYS Income and Payroll Taxes: 25+6.9+ 6.25+0+1.45% = $39.6%

    But, when you file in the US, you can deduct any State and local taxes from your federal income and reduce your Federal tax liability. It is VERY complicated. things change drastically if you are a renter or a homeowner in the US.

    Is my math right? I think it is about right.

    • 2sidesof49 says:

      The numbers that I quoted were for businesses not individuals. If we look at individuals then it really gets out of wack. Someone making $43K has an actual tax rate of 16.5% and a marginal tax rate of 32.6%. Jump that up to someone making $70K and is closer to 26% and 34%. As you know we don’t get any breaks for deductions re taxes paid, mortgage interest etc. If a company pays an employees benefits this is also added to their income. Romney would not dare compare Canada’s personal tax rate to that of the U.S. – Basically the country can either “raise the bridge” or “lower the lake” in Canada individuals support the system in the U.S. businesses support the system.

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