This is an addendum to one of my posts last week regarding comments made by Navdeep Bains, Minister of Innovation, Science and Economic Development - he hopes that that Trudeau's new budgetary measures will attract "top-notch workers, scientists and scholars from the U.S."
Lets look at the competition he and Canada faces in trying to attract U.S. workers. USA Today published an article this past weekend on "Tech Job Migration" (the link is at bottom of Blog. The salient points from this article are...
Many Tech startups and even existing "Big Players" are relocating to cities like Phoenix, Tucson, Houston and Denver for reasons of lower operating costs and an increased ability to attract new talent based on the lower costs for housing and lower costs of living.
Lets take a look at the attraction for a potential tech employee and what they will choose Phoenix for example over Ottawa.
Taxes & Cost of Living
An individual in Phoenix making $80K will have a tax rate, before deductions of 17.9%. The save individual in Ottawa will have a personal tax rate of 31.5% (nearly double). In Phoenix the worker will be able to purchase a 2,000 sq/ft home, within a 30 minute commute, for approximately $250K. The same home within a hour commute of Ottawa will cost approximately $650K. The employee in Phoenix will only require a downpayment of $12.5K with 100% of the mortgage interest being deductible. The Canadian will need $65K downpayment to obtain a reasonable mortgages rate without CMHC Insurance. Taxes on the Phoenix house will be $1,900/yr whereas the property taxes on the Ottawa home would be $6,000/yr. Utilities, gas and other costs of living are approximately 17% higher in Ottawa than in Phoenix (https://www.expatistan.com). HST tax in Ottawa 13% in Phoenix 8.6% (only on goods, services not taxed). Health Care, the Ottawa employee will receive "Free" Healthcare, the company will, in all likelihood, have a Benefits package for the employee. As of January 2016 U.S. employers are required to provide adequate health insurance coverage options for employees. At a minimum the Phoenix company will provide the employee with 70 percent/30 percent. Out of pocket premium expense (fully deductible) for the employee would range from $1,118 for single or individual employee coverage; $2,824 for employee-plus-one coverage and $4,236 for family coverage.
Will all the above taken into consideration the Phoenix employee will have approximately $38,000 more for discretionary spending per year than the Ottawa employee!
Get ready for the stampede Minister Navdeep Bains!!!!!
I’m writing this post as a follow-on to one of my earlier posts on Canadian ExPat’s. It is prompted by a recent CTV News article titled “Howie Mandel on hosting Canadian Screen Awards, and why he 'resented' leaving Canada”
Now I remember the “Canadian” Howie Mandel quite well having seen him and fellow Canadian Jim Carrey perform at Yuk Yuk’s in Toronto way back when. You will know how far back because that’s when we saw Keith Morrison do the local Canadian news, Alex Trebek hosted the Canadian Reach for the Top, John Roberts was a VJ on the Canadian Much Music, Kenny Rogers fronted the CTV Canadian house band The First Edition and Lorne Michaels was doing the Canadian Hart & Lorne Terrific Hour. William Shatner was already long gone! What do they all have in common? They all bailed out of Canada and are now Expats or US Citizens.
The intent of this post is not to condemn these people it’s to praise them, they figured out the Canadian Tax system, cost of living and limited opportunities (high paying) early in their careers and made, what I’m sure were wise decisions to move to the U.S.. What I don’t condone however is the false Canadian Flag waving and praise for a country that they bailed on every time they are interviewed– call a spade a spade. here to edit.
Many will tell you that they left Canada for opportunities. Howie is quoted in the article as saying "Once I made the decision that this is what I wanted to do for a career and for my life, I realized it's really hard to have a comparable career financially (in Canada)." Now lets get one thing clear from the get go, you can reach virtually any U.S. city from a Canadian airport every day of the week in a max of six hours. If a Canadian entertainer had a show, gig or otherwise they could get to that city without an issue. Not a cheaply as they could from within the U.S. but never the less it could be done. If a Canadian actor was filming a show for an extended period they could stay in a hotel or rent a place, hell they could even own a U.S. condo or home that they could stay in while working. (just like a lot of snowbirds do). A U.S. Visa would allow them to work there with no issue it would just mean that they would pay taxes in both jurisdictions. Canada and the U.S. The Canada/U.S. Income Tax Convention was signed in 1942.
U.S. Citizens however are taxed at a different rate than Canadian Citizens to the point that a U.S Citizen, paying U.S. taxes working in Canada will keep a lot more of their money in their pocket than a Canadian Citizen, working in the U.S., paying Canadian taxes. It’s a substantial difference. This is why, I believe, there is an entertainment and professional emigration south of the border. Can you blame someone for wanting to keep more of their money, isn’t that what we would all like to do?
I’ll end on another Howie quote "I ring the bell loud and clear every time I'm on something, that I was born and raised in Canada and I'm Canadian," said Mandel. Maybe he should add I just don’t want to be taxed to death in Canada!
This week a number of Canadian statistics were released; Retail Sales fell in December by 0.5% with 9 of the major 11 sectors registering declines including automobiles. The Canadian consumer price index rose .9%. Inflation now sits at 2.1%. Despite the decline retail sales however posted a 4.5% growth. In a previous post I discussed the growth of a couple of Canadian retailers. Again this is simple math; they are either selling to more people or they are increasing their prices within the existing base! Not too hard to figure out.
The annual inflation rate took its highest jump in the last two years, the leader? Gasoline! The price of which has increased over 20% - the largest increase in six years. How did our friends south of the border do? Well they don't have an issue as their gas prices decreased at the pump over the same period. Oh, and no they didn't see a carbon tax either!
This POST will build on one of my previous posts re all the Canadian expats that are now living in the US. In a July 2013 FP article titled Why Is Canada Failing at Tech it was estimated that 350,000 Canadian technology professionals were living in the San Francisco Bay area. The Reason? "a veritable lost generation lured by good, high-paying tech jobs and access to collaborators and capital." It's not getting any better, in fact most Canadian proffesionals would gladly head south if the opportunity arose
The following are excerpts from the February 16th. George Takach, senior partner at McCarthy Tétrault LLP article Canada's Patent Deficit....
"relative to our key trading partners, and especially the United States, we are not as innovative and have not invested as heavily in information technology and other productivity-enhancing devices, systems and methodologies (such as state-of-the-art e commerce platforms). This gap – this deficit – threatens our future prosperity. For example, roughly 3 per cent of our workforce is made up of people in information and telecommunications jobs. In leading digital countries, that percentage is between 6 and 8 per cent.
How dismal is the state of patent-filing in Canada? Even the North Koreans are outperforming us! We are simply not among the top 20 countries in terms of patents filed per capita. Read the full article here.
Many Canadian companies state that finding qualified engineers and programmers has always been a challenge. It’s only getting harder. Forecasts indicate that in a decade there will be a staggering 1.5 million jobs unfilled in Canada
What is our Federal and Provincial Governments doing to keep our talent in Canada once educated? Oh ya, take 53% of their income in taxes and more.
I am a concerned Canadian that is fed up seeing companies and people leave Canada due to the high cost of doing business and living.