Current Events > Why do so many people think Canadians pay exorbitant income tax?

(+) Yeah! (+)

This is such a massive misconception from both Canadians and Americans.

For anyone making under $150k/year there is a 2-3% or lower difference in each bracket between Canadian and US income tax.
And in fact for anyone making $15k or less you pay more in the USA.
The primary difference between countries is the way taxes are spent.
(I've not included both provincial or state income tax brackets as they vary wildly, and there's just too much data to fit here. Provincial income tax ranges from 5%-15% almost across the board.
7 states have no state income taxes. The rest range from 2-15% rather wildly)
Canada:
Under $15k/yr is tax free
$15k-55k/yr is 15%
$56k-111k is 20.5%
$111k-173k is 26%

USA:
$0-12k/yr is 10%
$12-48k/yr is 12%
$48k-103k/yr is 22%
$103k-197k/yr is 24%

Edit:
An example. Take $40k/yr.

In Canada you would pay taxes on 25k of that at 15%. A total of $3,750.
In the US you would pay 10% of 12k ($1200) and 12% of 28k ($3,360), a total of $4,560 .

Because Americans and dumb and think the more "free" things people get, it's because they pay higher taxes.

Not the fact that Canada has a $22B defense budget compared to US' $841B, so Canada can better distribute funds to other areas.

You also need to consider actual vs effective tax rates. The bottom chunk of the US pays an effective tax rate of about 0% after tax returns. Your effective tax rate up to $50k is 0, whereas in your chart it shows as 22%. You need to make nearly 100K for your effective rate to even break 5%
https://en.wikipedia.org/wiki/Income_tax_in_the_United_States#Effective_income_tax_rates

bigblu89 posted...

Because Americans and dumb and think the more "free" things people get, it's because they pay higher taxes.

Why go to Americans are dumb hurr durr, when the OP clearly states Canadians think the same thing?

Because we do

mustachedmystic posted...

Why go to Americans are dumb hurr durr, when the OP clearly states Canadians think the same thing?

Because they are

meestermj posted...

This is such a massive misconception from both Canadians and Americans.

For anyone making under $150k/year there is a 2-3% or lower difference in each bracket between Canadian and US income tax.
And in fact for anyone making $15k or less you pay more in the USA.
The primary difference between countries is the way taxes are spent.
(I've not included both provincial or state income tax brackets as they vary wildly, and there's just too much data to fit here. Provincial income tax ranges from 5%-15% almost across the board.
7 states have no state income taxes. The rest range from 2-15% rather wildly)
Canada:
Under $15k/yr is tax free
$15k-55k/yr is 15%
$56k-111k is 20.5%
$111k-173k is 26%

USA:
$0-12k/yr is 10%
$12-48k/yr is 12%
$48k-103k/yr is 22%
$103k-197k/yr is 24%

Edit:
An example. Take $40k/yr.

In Canada you would pay taxes on 25k of that at 15%. A total of $3,750.
In the US you would pay 10% of 12k ($1200) and 12% of 28k ($3,360), a total of $4,560 .

Both Canada and US apply a standard deduction, but your math only does it for Canada.
Fixed example: Take $40k/yr.
Both US and Canada have roughly a 15k standard deduction for single filers, making taxable income 25k
In Canada you would pay taxes on 25k at 15%. A total of $3,750.
In the US you would pay 10% of 12k ($1200) and 12% of 13k ($1,560), a total of $2,760
Canadian effective tax rate on $40k is 9.375%
US effective tax rate on $40k is 6.9%

Not a huge difference, just about $80 a month, but it is strange that the Canadian system appears to be more regressive against low income earners than the US but definitely eases up as you grow.

meestermj posted...

The primary difference between countries is the way taxes are spent.

Here in the good old US of A, it's mostly embezzlement.

realnifty1 posted...

Both Canada and US apply a standard deduction, but your math only does it for Canada.
Fixed example: Take $40k/yr.
Both US and Canada have roughly a 15k standard deduction for single filers, making taxable income 25k
In Canada you would pay taxes on 25k at 15%. A total of $3,750.
In the US you would pay 10% of 12k ($1200) and 12% of 13k ($1,560), a total of $2,760
Canadian effective tax rate on $40k is 9.375%
US effective tax rate on $40k is 6.9%

Not a huge difference, just about $80 a month, but it is strange that the Canadian system appears to be more regressive against low income earners than the US but definitely eases up as you grow.

That was my mistake. In Canada the 15k is listed as a tax exemption, when I searched that for the US I didn't find anything.

Either way, both countries are payibg almost the same in taxes. The distribution of taxed funds is the primary difference.

It's called effective propaganda

meestermj posted...

This is such a massive misconception from both Canadians and Americans.

For anyone making under $150k/year there is a 2-3% or lower difference in each bracket between Canadian and US income tax.
And in fact for anyone making $15k or less you pay more in the USA.
The primary difference between countries is the way taxes are spent.
(I've not included both provincial or state income tax brackets as they vary wildly, and there's just too much data to fit here. Provincial income tax ranges from 5%-15% almost across the board.
7 states have no state income taxes. The rest range from 2-15% rather wildly)
Canada:
Under $15k/yr is tax free
$15k-55k/yr is 15%
$56k-111k is 20.5%
$111k-173k is 26%

USA:
$0-12k/yr is 10%
$12-48k/yr is 12%
$48k-103k/yr is 22%
$103k-197k/yr is 24%

Edit:
An example. Take $40k/yr.

In Canada you would pay taxes on 25k of that at 15%. A total of $3,750.
In the US you would pay 10% of 12k ($1200) and 12% of 28k ($3,360), a total of $4,560 .

Keep in mind that in the US you can have a standard deduction which lowers your taxable income.

In 2025 the standard deduction will be 15k for a single person. So your 40k example is really

40k - 15k = $25k taxable income

Edit: nvm, someone already covered this.

bigblu89 posted...

Because they are

i guess the Canucks are as well.