Taxation
Main articles: Taxation in Canada and Taxation in the United States
The Canadian 50 Dollar Bill
The American 50 Dollar Bill
In Canada total tax and non-tax revenue for every level of government equals about 38.4% of GDP,[2] compared to the U.S. rate of 28.2%.[1]
A significant portion of this tax differential is due to spending differences between the two countries. While the US is running deficits of about 4% of GDP,[3] Canada has consistently posted a budget surplus of around 1% of GDP.[4] Considered in a revenue-neutral context, the differential is much smaller - Canada's total governmental spending was about 36% of GDP[5] vs. 31% in the US.[3] In addition, caution must be used when comparing taxes across countries, due to the different services each offers. Whereas the Canadian healthcare system is 70% government-funded, the US system is just under 50% government-funded (mostly via Medicare and Medicaid); adding the additional healthcare-spending burden to the above figures to obtain comparable numbers (+3% for Canada, +7% for the US) gives adjusted expenditures of 38–39% of GDP for each of the two nations.
The taxes are applied the same as well. Canada's income tax system is more heavily biased against the highest income earners, thus while Canada's income tax rate is higher on average, the bottom fifty percent of the population is roughly taxed the same on income as in the United States. However, Canada has a national goods and services tax of 5% on most purchases, while the U.S. federal government does not, increasing the tax burden on Canadian low-income earners due to the proportional nature of a sales tax. Canadian GST does not tax food and other essentials and a GST rebate for low-income earners mitigates regressiveness.[6]
In addition to the 5% GST levied on most purchases, some Canadians also pay a provincial sales tax at a rate that varies by province and can be as high as 10%. In Ontario, for example, where the provincial sales tax (PST) is 8%, consumers must pay a total of 13% sales tax on top of the purchase price. (It should be noted that Ontario has eliminated both the PST and GST, replacing them with harmonized sales tax, or HST, of 13%, which changes the sales tax on some items.) There are some purchases which are PST exempt, such as children's clothing. In the U.S., most states impose a sales tax, and cities and counties are often permitted to levy taxes as well, which can exceed 10% on purchases but realistically average at about 6-8%. Five U.S. states do not have any sales tax imposed.[7]
Government Spending
Government spending at all levels (federal, state/provincial and local) has traditionally been higher in Canada than the United States. In Canada, government spending as a percentage of GDP peaked at 53% in 1992. Since 1992 spending has steadily declined in Canada to just below 40 percent in 2008.[8]
Spending in the United States fluctuated narrowly around 34-38 percent of GDP over the same period.[9] However, starting in 2008 US spending has turned sharply upwards to reach an estimated 42.7% of GDP in 2009[10] from 39% in 2008. Spending is expected to reach 45% of GDP in 2011,[11] and stabilize at that level.
Social programs
See also: Canadian and American health care systems compared.
For its higher taxes Canada has a larger system of social programs than the United States. This includes having a national broadcaster in the CBC, a largely government-funded health care system, and having all major universities receive partial government funding. The United States, however, does have most of its major universities subsidized by state government. The US also has two national public broadcasters which receive partial government funding, PBS (television) and NPR (radio).
The greatest difference in social programs is in health care. Contrary to popular belief, the U.S. Government spends as much on health care, 7% of GDP, as the Canadian government does,[12] and total healthcare spending is much higher - 14.6% of GDP in the US vs. 10% in Canada.[13] Canadians, however, receive comparable care to those Americans who receive treatment, and result measures, such as life expectancy and infant mortality are better in Canada. The Canadian health care system is said by some also to be attractive to employers, as in Canada health care is mostly paid through employee income taxes, while in the United States most companies choose to extend health benefits to full-time employees. Many employers in Canada do offer employees some additional medical coverage, for non-necessary treatments, and for pharmaceuticals which are not universally-covered the government-paid health insurance system. The most common complaint regarding the Canadian system are the long lines and waiting periods that have appeared for minor and non-life threatening procedures over the last 15 years, since the introduction of widespread cuts to public funding. Separately, a number of medical tests and screenings are not covered (or due to increasing costs, are no longer covered) by the Canadian health system, forcing patients to pay for these services out of their own pockets. For these reasons, some relatively wealthy Canadians undergo treatment at private healthcare facilities at their own expense, either in Canada, in India, or in other nations[14] to avoid waiting for medical treatment, joining "medical tourists" from many nations, including the US.[14] Despite these sporadic problems, Canada's healthcare performance is generally on par with, or better than, the US.[citation needed] Furthermore, healthcare coverage is universal for Canadians.
Anti-trust
Main articles: Canadian competition law and United States antitrust law
The United States has since the Sherman Anti-Trust Act been strongly opposed to monopolies. In Canada this has been far less of an issue, and Canada has never had rigorously enforced rules against monopolization, and in certain situations the government has even encouraged monopolies. However, the Canadian government is more willing to interfere in the operations of large, integrated firms where they appear to be acting against the public interest, offsetting in part one reason that American law prevents large-scale monopolizatio