Taxes: Ontario Vs. New York State

I’ve always been under the impression that taxation in the U.S. was much lower than in Canada, and I’m pretty sure that has been the case for almost all of you on AF. After running some numbers, it seems as though a little more than 80% of households would experience less taxation in Ontario than in New York State. A family of 4 in Ontario will do better than a family of 4 in New York, taxation wise (including the 9% sales tax difference and $20,000 spend on taxable items annually), up to about $105,000. This assumes everything is the same (which it is (i.e. IRA/RRSP deductiblity, etc) but includes deductiblity of CPP/EI, UCCB benefits, ONT Health Premium, and greater tax credits in ON and mortgage and property tax deductiblity in NY.

why does Canada get such a bad rap for taxation when at least 80% of families and at least a majority of singles filers would do better in Canada? especially considering our EI/maternity benefits are much better and our CPP is reliable and actually backed by assets (unlike SS). or is this perception only b/c of the Snowbird crowd who are comparing ON (and all of Canada really) to FLA?

It’s not like NY gets a good rap for taxes…

Is Ontario a low or high tax region in Canada? Or about average? It might be misleading to use NY as representative of the US, since this is a particularly high tax area. Other states, like Texas or Nevada, have measurably lower taxes. I do think that the purported high taxes in Canada vs. the US tend to be exaggerated, but we should at least use a fair comparison; that is average Canada taxes vs. average US taxes, not cherry picking of specific areas.

ON isn’t exactly Alberta either. ON and QB are notoriously high taxation areas and I used ON and NY b/c they both hold financial centres.

Agree. For fair comparisons, you need to to Texas or Nevada vs. Alberta (since they’re they bottom tax) and California/NY/NJ/IL vs. Ontario/Manitoba/Quebec.

Also it’s worth comparing cost of living of actual goods, most of which are more expensive in Canada from my experience living in both places.

Truth be told, most average folks and lower are probably better off in Canada. If you make above average incomes and locate in a good state, I think you’re better off in the US. Of course things may look materially different in 15-20 years.

thanks for the input. you’re right, it is regional.

i think it’s safe to say that anywhere in Canada is better for at least 50% of households than anywhere in the U.S. once you break the 50% line in Canada, you start to lose some serious government assitance (child care benefits, gst/hst credits, welfare, etc).

it seems as though high tax Canada (ON, MB, QB) is better for at least 80% of households vs. high tax U.S. (Cali, NY, NJ, IL)

mid to upper middle class is obviously better in no tax states vs. any Canadian province.

i just find it funny that most Canadians complain about taxation and use the U.S. as an example when they’re better off in Canada. i think they just say, hmm, tax rate here is 25%, tax rate here is 20%, so i must be better in the 20% and forget to look at tax credits and government entitlements. cost of most items is higher in Canada (particularly comparable housing) but in the end, i don’t think it’s enough to debunk any of the statements above.

Why not just get gross* tax revenues and divide by population. In the US it comes out to about $17,100 pp in 2013 at all levels (using the number)? That’s about a 32% rate based on per capita income. What is it in Canada?

*You could also do net, but you’re only talking about paying taxes, not receiving benefits.

That $17k is probably overstated, since the US has fat tail rich people like Bill Gates, Zuckerberg, Warren, or even hacksaw worthy people like Mitt Romney who merely have hundreds of millions of dolalrs of net worth. What is the number after cutting off the tails (let’s say top 0.005% or whatever)?

Rich people don’t pay taxes, remember?

Let’s not forget that you’re only talking about the taxes that you see, which are income tax and sales tax, and to a lesser extent, property tax.

For every dollar in these taxes, there’s probably another dollar in “invisible” taxes, such as tax on cigarettes and alcohol (which vary by state), gasoline (which is 20 cents per gallon in Texas, varies by state), hotel tax (which is 14% in Texas), mixed beverage tax (which is 14% in Texas), vehicle registration (which is not called a tax, but is a tax nonetheless, and is about $65 in Texas), “pole” tax (which is $5 every time you enter a strip club in Texas), etc.

And only God knows how much the feds make in tariffs and import taxes. Just the Sugar program alone costs US sugar consumers almost $1.5 billion annually.

Well, you’d have to cut off 47% of the lower tail, remember? That’s the people who pay zero income tax.

in my comparisons, i incorporated average health costs and copays for NY families ($5k-$6k; please tell me if this assumption is way off) as Canada includes most of this in taxation, so using just tax divided by population won’t give us a good comparison. i did incorporate sales tax and property tax but not excise taxes, which will most likely be higher in Canada (mostly due to alcohol and cigarette taxes; i’m not aware of any soda/sugar taxes in canada).

Over half of all health care expenditures are governmental, so this is probably way off.

from what i read, average NY family health care costs for those with employer sponsored coverage range between $14k and $20k and pay about 1/3 of those costs out-of-pocket. i leaned toward the top end of the range considering I’m using a family with income of $105,000

For a family, that’s probably reasonable. My company, family health insurance is $4500 per year for the employee portion. Mine as an individual is $1500. Keep in mind thats pre tax, so it’s about $1100 after tax for me. Dental and vision is about another $100 per year, which provides a far, far better return and actually tangible benefits.

105k in New York isn’t very much. Is the cost of living in Ontario comparable? And I think it’s a good idea to do the best case case study as well, so you see the relative differences in range.

Ontario is much cheaper than NYC.



I didn’t read the whole thread, but was tax deductions for interest on mortgages taken into account?

i’m not comparing Ontario to NYC. i’m comparing Ontario to NY State. Buffalo is much cheaper in many respects (housing, etc) than Ontario, but total taxes are higher, apparently.

this just means the degree to which Toronto is cheaper than NYC is far beyond what i initially thought. i’d hazard to guess you’re better off in Toronto than NYC up to $200,000 joint filing or so due to higher NYC muni and sales taxes, housing costs, transportation costs, etc.

tax deductions for mortgages were taken into account. that said, mortgage rates are much lower in canada currently (upwards of 2%) and this wasn’t taken into consideration so the income breakeven level might be as high as $115,000 including this but this may be mostly offset by higher cost of consumer products in Canada in general. higher RRSP contribution limits relative to IRAs/401(k)s also support a lower cost of living for most middle to upper class Canadians vs. middle to upper middle class Americans.

no special deductions were taken into account but from what i see, there are plenty more unique deductions in canada than in the U.S. (public transport, health & fitness).

seeing as i’m licensed in both Canada and the U.S. and advise clients on both sides, i will look into this in much more detail.

Our mortgage rates are lower because everyone has 5 year ARMs or essentially daily LIBOR and yet we criticise Americans with their 15 and 30 year fixed as excessively risky… A 5 year ARM in the US is about the same as the prevailing Canadian rates, maybe a few bps lower.