Because they already have type of sensible government policies that Tea Partiers are trying to implement here!
Relative to the U.S., Canada has lower taxes, lower debt per capita, lower debt to GDP, and a sound banking system:
- Lower corporate income tax rates. The U.S. statutory federal corporate income tax rate is 35 per cent, a number that is more likely to go up than down given the country's debt burden. Canada's is 18 per cent, down from 19 per cent in 2009. Scheduled tax cuts will bring Canada's rate to 16.5 per cent in 2011 and to 15 per cent in 2012, giving Canada the lowest statutory tax rate in the G7.
- Competitive personal income tax rates. It may comes as surprise for Americans to learn that Canada's federal personal income tax rates are lower than those in the U.S. The U.S. rate on income between $34,000 US and $82,400, US for example is 25 per cent. In Canada the rate on income between $40,970 and $81,941 is 22 per cent. On income from $171,850 US to $373,650 US the U.S. rate is 33 per cent. Canada's rate reaches a maximum of 29 per cent for all income over $127,021.
Of course, most of Canada's provinces and territories impose personal income tax as well, but so too do many U.S. states and some municipalities. It is true that Canada obtains slightly more personal tax revenue per capita than the U.S. does -$5,800 US vs. $4,700 US -but this difference is easily offset by the cost of health care that Americans incur privately and Canadians cover through taxation. It's worth noting that the U.S. has inheritance taxes and Canada does not.
- Lower capital gains tax rates. Canadians pay tax on 50 per cent of their capital gains at their marginal rate. On a gain of $1,000, for instance, only $500 would be subject to tax. At a combined federal-provincial rate of, say, 35 per cent, the tax payable would be $175. Americans pay tax on the net total of capital gains. More importantly, the reduced rates introduced in 2003 by then president George W. Bush, initially due to expire in 2008 and extended until 2011, will finally sunset, raising the discounted rate of 15 per cent to 28 per cent. So, on that same $1,000 capital gain, an American investor would pay $280.
- Canada can maintain low tax rates: Because Canada is in better fiscal shape than the U.S., Ottawa can keep taxes low while Washington will have little choice but to raise them. The U.S. national debt is $13.6 trillion US, or $42,942 US per capita. Canada's is $534.7 billion, or $15,715 per capita.
The ratio of debt to gross domestic product stands at about 93 per cent in the U.S., and the U.S. Treasury Department sees it rising to 102 per cent when debt is expected to reach $19.2 trillion US in 2015. Canada debt-to-GDP ratio is 33 per cent.
Government spending as a percentage of GDP has declined in Canada since hitting a peak of 53 per cent in 1992 and recently slipped below 40 per cent. In the U.S., it has turned sharply higher, rising to 42.7 per cent in 2009 from 39 per cent in 2008. It is expected to reach 45 per cent next year.
The White House has forecast the U.S. deficit for 2010 to be $1.6 trillion US or 10.6. per cent of gross domestic product, the highest level since the Second World War. Canada's deficit is seen at $49.2 billion, or 3.7 per cent of GDP. Canada should be able to manage its debt and still lower taxes. The U.S. clearly cannot.
- Canada's banking system is sound. [They didn't have the same problems with corruption and incompetence in the Canadian equivalents of the Federal Reserve, Congress, the SEC, the FDIC, the Treasury Department, etc.]
- Regulation is similarly stable and streamlined in other sectors of the Canadian economy, resulting in less uncertainty, better planning and a lower cost of capital.
Yes, Canada has nationalized health care, but the full cost of it is included in that lower spending/GDP and those lower taxes (Obama explicitly rejected health care cost savings from areas like trial lawyers and Big Pharma, where Canada has much lower costs). And Canadians have the freedom to seek private care across the border. Where will we go for medical freedom if ObamaCare is allowed to stand?
Canada just passed the U.S. on the Index of Economic Freedom, and I'd expect the U.S. decline to continue as long as the Obama regime is in power.
The Liberator Today also links a recent WSJ article with a similar view.