Quote:
Originally Posted by Enoch Root
Except price differentials don't fluctuate as much as currencies do.
When the dollar is 1.10 - 1.20, you're probably losing with respect to purchasing power.
But when it's over 1.30, you're definitely winning.
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Fair enough, but you're not winning by 33%, which is what GFG, FDW and others appeared to be implying.
I just looked up the most recent OECD figures, which have purchasing power parity for the Canadian dollar at 1.25 to the U.S. dollar (2017 figures). If that hasn't changed in the last several months (dubious), then an exchange rate of 1.33 CAD/USD means you gain about six percent by spending your money in Canada instead of the U.S.
But that's only on the money you actually spend. I guarantee you John Tavares is not going to spend the after-tax portion of $10 million. The bulk of that money will be invested, and as I mentioned earlier, investments cost what they cost no matter what currency you use. You don't get a discount on stocks, bonds, certificates of deposit, REITs, or commodities by paying for them with Canadian dollars.
At that level of income, just the
difference in tax rates between jurisdictions is a bigger budget item than your entire cost of living. If Tavares earns $10m in Las Vegas or Florida, he keeps $6.1m after taxes. In Toronto or Montreal, he keeps about $4.7m. I think I can safely say that he is not spending more than $1.4m on the housekeeping.