Tax compare btw Canada and US

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stellal
Posts: 22
Joined: Sun Apr 08, 2012 2:43 am

Tax compare btw Canada and US

Post by stellal »

1. In Canada, if I make 100K, then I need to pay Federal 43561*15% + (87123-43561)*22% + (100000-87123)*26% =19458, I need to pay provincial tax(BC) 37568*5% +(75138-37658)*7.7% + (86268-75138)*10.5% +(100000-86268)*12.29%=7620, altogether I need pay tax 19458+7620=27078

2. In US, if I make 100k, then I need to pay Federal 8925*10%+(36250-8925)*15%+(87850-36250)*25% +(100000-87850)*28%=21293, I also need to pay social secure tax 100000*6.2% = 6200, medicare 100000*1.42%=1420, altogether the tax is 28913, plus the state tax, say in Oregon, 100000*9%=9000, so the tax I need to pay is 37913.

The above example did not count the exemption, in US it is 3900, in Canada it is 10800.

37913 is way bigger than 27078, I dont know why people always say that US has lower tax than Canada.
LC
Posts: 2
Joined: Sat Jan 18, 2014 8:42 pm

Post by LC »

I've just started trying to figure out how much tax one has to pay between the two countries based on the same amount of income (ignoring investments or RRSP/401(k)/IRA/ROTH), but a few things I can think of that you might be missing from the calculation for Canadian equation are:

1. provincial medical insurance. in BC that's about 780 a year, maybe it has increased since I last checked, I know it's not direct comparison, as in the US, well, you have to get private health insurance or health insurance through employer, and that might be a even higher cost if you can only get private.
2. employment insurance (EI) premium. I think EI premium is extra, similar to social security tax, if that's comparable.

I might be wrong on some of the points above, but I agree with you, at least for people who are single and are making the amount you described, US doesn't seem to have lower tax, only much higher.
rlb
Posts: 139
Joined: Thu Feb 17, 2011 8:51 pm
Location: NB, Canada

Post by rlb »

Tax comparisons are extremely difficult, and can depend on individual circumstances. We moved to New Brunswick from Buffalo, New York, three years ago. In NB our provincial income taxes are much higher than in NY. However, our medical insurance premiums are far lower in NB since all doctor/hospital expenses are completely covered by the province (mostly though the income tax). And in Buffalo, the property taxes on our home were about $7,000 per year, while in NB they are about $1,200 on our new house of almost the exact same value. On the other hand (economists have at least three hands), sales tax in NB is 13% instead of 8.75%, but then we spend a lot less now that we are retired.

Roughly speaking, the total tax burden (fed+state+county, income+property+sales) here in NB is about the same as it was in New York, but if we include not having the larger medical insurance premiums that we had in New York (despite most of the burden being picked up by the company I retired from), NB is lower tax. Your mileage will undoubted vary.
rlb
Posts: 139
Joined: Thu Feb 17, 2011 8:51 pm
Location: NB, Canada

Post by rlb »

And I think you forgot to add CPP on the Canadian wages, which you should do if you count SS against the US side.
worryfreeinvestor
Posts: 145
Joined: Thu Mar 24, 2005 6:17 pm
Location: Seattle, WA

Post by worryfreeinvestor »

I see you have included state income tax. However, you have not included sales tax/GST. In the U.S. state sales tax is between zero and eight or nine percent, and no federla GST. In Canada, the combined rate is about fifteen percent, right?

So, I think you have to look at consumption taxes as well as income taxes and payroll taxes.
zhulin
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Post by zhulin »

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Ottawa123
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Post by Ottawa123 »

Thanks
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