Income Tax Rate In Canada
Q: Someone just told me that for a Canadian making about $60,000 gross will pay about 54% on tax on the entire income. Is that true? In comparison, a person in U.S. with that income are taxed at a top rate of 28%, and take home about 2/3 of gross. What is the truth of take-home/gross pay up north?
A: -Conventional wisdom is that in a recession or depression, interest rates will drop as consumers reduce their borrowing and this will eventually help stimulate a recovery. We have seen a major reduction in consumer borrowing but unfortunately our governments have hundreds of billions of dollars of debt and are running even higher deficits than before due to lower tax revenue and higher spending due to the recession. Unless governments can reduce their appetite for borrowed money I don't expect interest rates to drop much more. It's interesting to note that the Canadian Federal government had a high debt load when the Great Depression hit back in the 30's. That debt load was created by collapse of the TWO new transcontinental railroads that the government funded shortly before WW I as well as the bankruptcy of the Grand Trunk Railroad (a major railroad in Eastern Canada). -Every place that's desirable to live in the United States (for a Canadian) has higher consumer prices for everyday items (luxury goods are another matter) and high sales taxes. New York City has state and local sales taxes of 8.25% (as does California), and Long Island now sits at 8.50%. In a couple of years, with continued closing of the price gap in Canada due to forced free trade efficiencies, the shelf price plus GST difference won't counteract the gas, time and tolls (and border hassles) of the cross-border shopping rebellion. 2) More wealth is distributed to low income Canadians through social programs, lower income tax rates, sales tax rebates, etc. To support this wealth distribution someone else has to pay more and