For all those Merkins who think they are overtaxed, I just finished doing my US tax return, having done the Canajun one a couple weeks ago. On the same income, put into USD at the average exchange rate of .9:1, my wife and I paid Canadian taxes that totaled $40,967 ($19,665 to the Feds and 21,302 to Quebec). The US tax that we would have paid save for the foreign tax credit would have been $17,158. To that you would have to add whatever state tax is owing, but I have the impression that that is only a fraction of the federal tax.
Of course, this includes the cost of medicare (47% of the provincial budget, but even so).
As $17,158 does not appear as a tax on the tax tables for Single, married filing separately, or head of household, I’m going to assume you (or Turbo Tax) computed tax using the using the Tax Computation Worksheet. If so, your tax is
(line 43)*0.25-8287.50=17158 meaning your line 43 income was $101,782. (Of course you might have been subject to the AMT and who knows what else.)
If all of $101,782 was ordinary earned income you’d have also paid 6.2% Social Security tax and 1.45% Medicare tax upping your total federal tax by 7786.23 to 24944.32. Of course, some of your income might have been unearned income which is not subject to that tax. And on the other hand you might have had all kinds of deductions like a home mortgage, state taxes, etc. which reduce your adjusted gross income (and your federal tax), but do not reduce your taxable income on which Social Security and Medicare are taxed.
State taxes in the US are rarely (I’d say never, but I guess you might be able to construct some scenario) as high as federal taxes, but they vary a lot from state to state. For me, my state tax was 29% of my federal tax (excluding Social Security and Medicare) so if teh same applied to you, you’d have paid 4969.50 to your “state”. Your total tax would then have been 24944.32+4969.50 = 29913.82.
That is a lot less than you paid; however the huge difference is we have to pay either directly or indirectly through our employer our health insurance costs. That’s why your “state” tax is so much higher than ours. If you remove 47% of your provincial tax, you come out just about the same.
No, Hari’s provincial tax is so high because he lives in Quebec, which is the highest tax province, not because of health care. My provincial tax hovers between 40 - 50% of my federal tax, and has never been more than my federal tax.
The total income was around 101,750 as you deduced. All but about 95,000 are pensions, both government and private and, in any case, I am too old for SS tax. But even if I ignored the provincial tax, the Canadian Federal tax is still higher.
Looking at income tax doesn’t tell the whole story. Consider real estate tax, sales tax, gasoline tax, personal property tax, alcohol and tobacco taxes - without taking all of that into consideration, how can you really compare costs from one place to another?
I don’t mind the higher taxes for higher services at all. What I hate is filing two countries’ tax returns every year for forever. Each year I and millions of other duals have to spend hours filling out complex forms that essentially say “look, I paid taxes in Canada. I owe you nothing.”
I know I whine about this every year, but it’s annoying.
That does nothing to show that “merkins” (:rolleyes:) aren’t overtaxed, it could just be that “canajuns” are even more overtaxed. It says nothing about how overtaxed or not you are without giving your income, or how much of a percentage of your income those taxes you paid are. Not that your exact income is anyone’s business here, just if you’re going to throw out raw tax amounts, that doesn’t say much in a vacuum.
Okay, I will suggest that it would be better if Americans paid more taxes. Their infrastructure is going down the tubes and nothing is being done to fix it. But that was not the point of my OP, which was only to contrast the two, out of interest.
I should also mention that my income was not the same for the two countries. My contributions to my pension plan were untaxed in Canada, but taxed (or would have been but for the income exclusion) in the US. As a result some of my pension is legally excluded from US income that is fully taxed in Canada. But that was about $24K, all the rest is the same.
