Tax Rates

Money: Canada VS. America

Disclaimer: I've never handled my own tax return (when I called the Canada tax people- edit: the Canada Revenue Agency- about my rebate cheque, they laughed at me since I knew quite literally nothing about my income or deductions for the previous year), so this knowledge is really up for correction.

Everytime someone discusses universal healthcare with me, they end up saying, "it would be nice, but I suppose you must pay so much in taxes"...

Well, let's see.

As far as I can tell, despite what everyone says, American taxes aren't any lower than Canada's (except if you live in a state, like Washington, where you don't pay state income tax), and Canada's tax, well, covers health care and other nice things.

As far as I can tell, provincial and federal tax in Canada, if you live in BC runs from 20%-around 44%. Also, for practically every moderately poor (I think making under 37,000 a year) young person I know, we receive this nice cheques from the government which total to about 400/year in sales tax rebates.
Recently, I just got a cheque for about 100 to "fight climate change" in my community.

Federal tax rates for 2008 are:

* 15% on the first $37,885 of taxable income, +
* 22% on the next $37,884 of taxable income (on the portion of taxable income between $37,885 and $75,769), +
* 26% on the next $47,415 of taxable income (on the portion of taxable income between $75,769 and $123,184), +
* 29% of taxable income over $123,184.

British Columbia Tax Rates are:

5.24% on the first $35,016 of taxable income, +
7.98% on the next $35,017, +
10.5% on the next $10,373, +
12.29% on the next $17,230, +
14.7% on the amount over $97,636

U.S.A.

For 2008, the Federal tax brackets for a single (unmarried) person are:[1]

* 10%: from $0 to $8,025
* 15%: from $8,026 to $32,550
* 25%: from $32,551 to $78,850
* 28%: from $78,851 to $164,550
* 33%: from $164,551 to $357,700
* 35%: $357,701 and above

And in Oregon, for example, the tax rates range from 5% to 9%.

So, it is fairly comparable. If you make lots of money in Canada, you're taxed at 44%, and in Oregon you're taxed at 44% too (although you don't pay sales tax in Oregon).

There are a couple major differences in tax deductions though. One major one is that interest paid on mortgages in the US can be used as a tax deduction, and there is no limit to this. You could own 35 homes, or so many you're not sure how many you own (like my pal John McCain), and that just adds to your tax deductions.

And, that, obviously, benefits middle class to upper class people (bigger the mortgage interest, the larger the deduction, as far as I understand).

Another thing, which I don't believe that is deductible in the US, but is in Canada, is school tuition. I'm not sure though- I asked Paul a year ago, but he had no idea. He fronts as a self-sufficient skid, but he never really had to pay his own tuition/rent in Philly.

Of course, tuition is generally lower in Canada since we don't really have "private" universities. It's like if, hypothetically, you were from the US, you were from New Mexico, and could pay in-state college tuition at Yale and Harvard. And, I'm too lazy to google this, but I believe that the most expensive law school tuition in Canada is around 12,000 at the University of Toronto. In contrast, I believe law school tuition in the US usually runs between 30-40,000 a year. This, obviously, creates less of a two-tier society...but, I'll stay on topic.

But, for example, the tax credits I earn on my tuition have meant that I basically haven't ever had to pay tax in Canada. I can also transfer them to my parents to compensate for them helping me out at school or I can transfer them to my future earnings. This means that, if you went to school for 4 years but didn't really make any money, you can use the tax credits you accumulated during school and apply it to your post-graduation income for up to 5 years. I believe this is the case.

Off-topic, but another nice thing is that if you're struggling with student loan debt and not making very much money for a while, you can apply for "interest relief" for up to 3 years, I think, if you can't afford the payments.

So what it comes down to is that the mortgage tax break helps people with money and school tax break helps people like me.

I'm only thinking about this now since I'm looking for jobs in Portland, Oregon.

Another thing is that it seems like the executive positions in the US generally pay higher salaries than in Canada (as in a few hundred thousand) but the "other" jobs pay a lot less.

I keep coming across these jobs with lists and lists of requirements, and the salary is something laughable, like 19,000.

I really really hate applying for jobs, which is what I'm doing right now. I hate it so much, I'm tempted to return to school.