As someone who has hired software developers in Canada and looked into opening an office there in a previous role, I'll tell you that taxes are prohibitive both for employers and employees. With the US this close it's often cheaper and easier for everyone involved to deal with the US immigration process and pay and employee's moving expenses than it is to try and set up a Canadian headquarters or hire workers there.
This is true on a state by state basis in the US as well. Hawaii is a nightmare to hire workers in, so much so that our HR put their foot down and told me they're not supporting it anymore. Meanwhile hiring someone in Washington, Texas, or Florida is a breeze.
I pulled out of Mexico in my current role and moved those jobs to Chile, Brazil, and the Balkans. The reason had nothing to do with the talent of the engineers in Mexico and everything to do with how painful it is to deal with their government.
If Canada wants high paying tech jobs there is a very straight-forward way for them to get them: make their government bureaucracy more efficient and pass those savings on to your citizens.
Canadian tech employers pay some of the lowest effective income tax rates in any developed country because the R&D tax credit regime is so generous. For Canadian controlled private corporations, the tax credit on R&D salaries is about 60%, making a $200K engineer cost just $80K after tax.
That engineer, if located in Vancouver, will pay $69K in income taxes. The same person working in San Francisco would pay $67K. But the San Francisco employer doesn’t get a tax credit of $120K and they also have to pay perhaps $12,000 or more per year in healthcare premiums.
Canada has its flaws. Ultimately the country is subsidized by resource revenues, leading to distortions. But the USA has the military industrial complex. Pick your poison. I think Canada is a healthier democracy and a better place to raise your kids.
That's true but the regulations and taxes on corporate entities are quite significant in Canada once it gets past start-up size.
For an office of a few hundred people, large enough to not qualify for most of the cost and paperwork reducing programs, it is likely not nearly as clear-cut.
I’m not sure what these regulations and taxes are that you’re talking about. Have you looked at Alberta? It’s the Texas of Canada. Extremely lightweight corporate regulation and low taxes. Corporate income tax on the first $500,000 of income is just 11%. On the rest it is 23%.
The US federal corporate tax rate is 21%, after which states impose a variety of taxes.
California adds 8.84%. Texas and Washington tax gross receipts rather than net income, so it’s hard to make a direct comparison. But overall, corporate taxes in Canada are considered low by international standards.
As for business regulation, the reality for a tech business is that you rarely cross any regulatory boundaries. Employment law is straightforward. You can fire people easily. There aren’t tons of hidden costs. A little bit is spent on healthcare (1.5% in BC, zero in most other provinces). When I hear from American colleagues they complain of red tape more than my friends in Canada do.
Where you see higher taxes it means you get something for free. Typically it's healthcare and/or education. With comparable living standards the spending per person is roughly the same, the question is who is paying and how.
I.e. higher taxes = no need for medical insurance; lower taxes = you should include private insurance in your overall calculations.
I'd say the spending per person might be higher in the US due to private medical insurance, i.e. you have a middleman who works for profit. In more social states there's no middleman and healthcare is cheaper, regardless of how it's paid for.
I understand the sentiment as I recently had norovirus and got stuck waiting forever to get into a clinic.
That said, if you get into a car accident and are taken to the ER with serious injuries, you will not wait. You will be patched up with some of the best quality care in the world and leave without paying a dime.
Our system isn't perfect but I'd take it over any system where someone can be financially ruined due to an accident, or worse yet have to take shortcuts that jeapardize their health to try and avoid this.
I pay less tax in Switzerland, including health insurance (which is paid privately, not via taxes or by employer), than I did in the UK, and get much better service.
(Conversely I pay more for a bank account and get worse service. But it's negligible compared to taxes of course.)
I've worked as a software engineer both in Canada and in the US. The taxes were no different and I got far more for my taxes in Canada than I did in the US.
The US does sink a considerable amount into what I would call "discretionary social services".
In comparison Canada seems to only spend ~300 billion on healthcare, and ~300 billion on social security. Their economy is a 6x smaller in terms of population, 3x in terms of GDP, so proportionally, saying 4x (4x600 =2.4 trillion) they spend about the same as the US does (~2.5 trillion).
The purported difference in quality is probably mostly to do with drug cost, whereas US drug companies can and do charge premiums Canadian ones can often create or source relatively safe knock-offs, while they may not have the same (number of) sophisticated facilities that the US might have.
At least for those taxes, one gets somewhat free healthcare. I’d rather pay higher taxes and get access to a solid public healthcare system, rather than relying on the expensive private care in the states.
The healthcare system is not as solid as one might think. Getting family doctors in certain provinces is almost impossible - the waiting lists are months to years now. Seeing specialists, again 6-12 months wait time. If you are dying, yes you will get good care at the ER. But anything less urgent, you have to wait for hours to be seen. There is an acute shortage of doctors and nurses. And there is no proper solution being put forward by politicians. Some of them are focused on gutting the public healthcare system so that private players can move in and reap profits.
This is true on a state by state basis in the US as well. Hawaii is a nightmare to hire workers in, so much so that our HR put their foot down and told me they're not supporting it anymore. Meanwhile hiring someone in Washington, Texas, or Florida is a breeze.
I pulled out of Mexico in my current role and moved those jobs to Chile, Brazil, and the Balkans. The reason had nothing to do with the talent of the engineers in Mexico and everything to do with how painful it is to deal with their government.
If Canada wants high paying tech jobs there is a very straight-forward way for them to get them: make their government bureaucracy more efficient and pass those savings on to your citizens.