I think you are missing the larger personal exemption in your analysis here. BCs 12k personal exemption vs Alberta’s 20k personal exemption means that up to about 27000 in income Alberta is lower taxed. I actually prefer the Alberta Model as I think earners between about 75k and up don’t pay enough tax. We need broad tax increases on anyone making over median income AND targeted tax increases on the top 5%
It would be interesting to see a line graph showing what you'd pay in each province from zero earnings and up, to see how they all compare and every income level.
It would be interesting to see a line graph showing what you'd pay in each province from zero earnings and up, to see how they all compare and every income level.
The last piece to include would be how to account for PST. It doesn’t apply to housing or food or utilities so that is probably 80% of spending for people in the brackets where the comparison would matter. So then is saying say 20% of 70% of your income is subject to PST a reasonable number? So 14% of income so effectively equivalent of a 1% income tax??? Those factors would very by income as well.
The tax question doesn’t really matter though as housing costs dominate all discussion of affordability when comparing Alberta to BC. But as a philosophical exercise it’s still interesting.
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It would be interesting to see a line graph showing what you'd pay in each province from zero earnings and up, to see how they all compare and every income level.
I built the below using the data from taxtips.ca. It took longer than I thought so I only did the 4 biggest provinces. Obviously Quebec is a big outlier on the high side, with AB/BC/ON all pretty comparable. Alberta has the lowest taxes on very low incomes because of the higher personal exemption. On the highest incomes Ontario is the lowest, although not by a lot.
I definitely feel I am paying a lower tax amount overall over here, but note that I also pay PST on everything so that gap gets tighter. Mind you, I do pay much less in utilities and property tax (although the land transfer tax is a big one up front). Owning homes here can be much more lucrative though.
I'd say all in all, it's a wash. Alberta doesn't really have an advantage one way or the other IMO, but the main one at the moment are house prices. But insurance and utilities are somewhat humbling there.
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Ontario also has a surtax that applies at certain personal income and tax levels.
The graph doesn't really reflect that at that highest rate in Ontario you're actually paying about 53.5% tax, while in Alberta you're paying 48%. Ontario's line would be pretty close to BC's, maybe slightly higher at $350,000.
Alberta does still have a tax advantage with no PST, low probate fees, no land transfer tax, lower tax rates and no medical premiums. We do get gouged in other ways with utilities and insurance but the taxes are the lowest of all the provinces.
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Ontario also has a surtax that applies at certain personal income and tax levels.
The graph doesn't really reflect that at that highest rate in Ontario you're actually paying about 53.5% tax, while in Alberta you're paying 48%. Ontario's line would be pretty close to BC's, maybe slightly higher at $350,000.
Alberta does still have a tax advantage with no PST, low probate fees, no land transfer tax, lower tax rates and no medical premiums. We do get gouged in other ways with utilities and insurance but the taxes are the lowest of all the provinces.
Thanks! I'm not familiar with ON taxes at all and just took the rates from taxtips.ca. But they do have a separate table showing the "with surtax" rates, and you're right - that makes them higher than Alberta on higher incomes. And it also doesn't account for health premiums which are just another name for an extra income tax.
Thanks! I'm not familiar with ON taxes at all and just took the rates from taxtips.ca. But they do have a separate table showing the "with surtax" rates, and you're right - that makes them higher than Alberta on higher incomes. And it also doesn't account for health premiums which are just another name for an extra income tax.
I'm pretty sure they make their surtax complicated on purpose so that the average person can't figure out exactly how much they're paying. So with Alberta's personal taxes at the lowest rates, and no PST, we have to rely on Oil and Gas to continue spending the way we do.
Although I'd personally find it annoying, I've thought for a long time that if Alberta just had a 5% or so PST, most of our reliance on Oil and Gas, as well as our budget shortfalls in bad years could be reduced. And we'd still have the lowest overall taxes of all the provinces
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I don't know if it's easy to find but here's a newspaper article. Alberta charges a very small land title fee but no transfer tax. I know Ontario and BC charge significant transfer taxes.
I don't see many people who move to the other provinces so not sure how high the rates are otherwise.
Alberta is also more generous with tax credits for some types of dependents. If you're taking care of lower income elderly parents/grand parents, Alberta still offers the easy to qualify for caregiver credit that only needs for them to live with you. BC and Ontario switched to the more difficult Federal standard which requires them to qualify for the disability tax credit first.
The income limits are also higher and the cash equivalent value is also higher because it's based off the 10% bracket, while BC in comparison uses its lowest bracket, 5.06%.
Ontario also has a surtax that applies at certain personal income and tax levels.
The graph doesn't really reflect that at that highest rate in Ontario you're actually paying about 53.5% tax
And what are those levels? Let's dive in.
- The first surtax (20%) gets added at about 88k of income. It bumps up to 36% after about 98k of income. This is tax on the tax payable.
- Surtax is not a flat number here; it is dependent on how much tax one pays, so deductions matter here, including charitable credits, medical expenses, tuition, pension income credit, disability tax credit, rrsp contributions, etc.
- It can also be affected by things like capital gains, income splitting, dividend tax credits, etc.
You also have to earn about 235k to get to a 53.5% tax rate, which is basically 1-2% of all Ontarians. Average individual income is 55k to 60k per year in Ontario.
Based on the numbers, its about 15-20% of Ontarios likely pay surtax at all, which is the vast minority of earners in the province.
Technically it's correct, but I think it's a bit disingenuous to suggest Ontarians pay surtax when that's missing a whole chunk of context.
Should also add: we don't pay health premiums in Ontario either.
I definitely feel I am paying a lower tax amount overall over here, but note that I also pay PST on everything so that gap gets tighter. Mind you, I do pay much less in utilities and property tax (although the land transfer tax is a big one up front). Owning homes here can be much more lucrative though.
I'd say all in all, it's a wash. Alberta doesn't really have an advantage one way or the other IMO, but the main one at the moment are house prices. But insurance and utilities are somewhat humbling there.
When you compare property tax how are you doing the comparison? Actual tax paid for equivalent sized home or mil rate?
- The first surtax (20%) gets added at about 88k of income. It bumps up to 36% after about 98k of income. This is tax on the tax payable.
- Surtax is not a flat number here; it is dependent on how much tax one pays, so deductions matter here, including charitable credits, medical expenses, tuition, pension income credit, disability tax credit, rrsp contributions, etc.
- It can also be affected by things like capital gains, income splitting, dividend tax credits, etc.
You also have to earn about 235k to get to a 53.5% tax rate, which is basically 1-2% of all Ontarians. Average individual income is 55k to 60k per year in Ontario.
Based on the numbers, its about 15-20% of Ontarios likely pay surtax at all, which is the vast minority of earners in the province.
Technically it's correct, but I think it's a bit disingenuous to suggest Ontarians pay surtax when that's missing a whole chunk of context.
Should also add: we don't pay health premiums in Ontario either.
You're correct. The surtax only kicks in at higher levels but with the exception of Quebec, Bizaro's graph shows pretty even levels of taxation up to about $200,000. After that, Ontario's line should shoot upwards mimicing BC's line.
Unless the Ontario government got rid of it recently, you do pay between $0 and $900 of health premiums with your taxes each year. It just gets included into the Ontario tax figure.
Unless the Ontario government got rid of it recently, you do pay between $0 and $900 of health premiums with your taxes each year. It just gets included into the Ontario tax figure.
Ontario Health Insurance Plan (OHIP) is not paid through separate health premiums. Health care is funded through general provincial and federal taxes. Just like Alberta does through general taxation. I don't think there's any 'premium' hidden in general tax collection, unless you have a source for such a silent method?
In fact, per capita health contributions in Ontario are about $6500 annually, whereas in Alberta it's about $7500.
Ontario Health Insurance Plan (OHIP) is not paid through separate health premiums. Health care is funded through general provincial and federal taxes. Just like Alberta does through general taxation. I don't think there's any 'premium' hidden in general tax collection, unless you have a source for such a silent method?
In fact, per capita health contributions in Ontario are about $6500 annually, whereas in Alberta it's about $7500.
You can check your most recent personal tax return and see if you have a health premium included in your tax schedule. If you're based in Ontario you likely do.
You can check your most recent personal tax return and see if you have a health premium included in your tax schedule. If you're based in Ontario you likely do.
Good find. I had to get some help from AI to find out a bit more. Here's what it spit out at me to explain this a bit (which I think we're both correct at the end of the day here):
Spoiler!
Ontario Health Premium Clarification
Existence of the Health Premium:
The term "Ontario health premium" is indeed listed on tax forms. It is a part of the provincial tax system and is used to contribute towards health care funding. Although it might seem like a direct charge, it functions as part of the overall income tax system rather than a separate, distinct health insurance premium.
Historical Context:
Ontario had a health premium system in the past, which was replaced with a different model. However, the term remains part of the tax form as a legacy from that system.
Current Structure:
The Ontario health premium, as it appears on the tax return, is a part of the personal income tax system. It is calculated based on income levels and is integrated into the overall provincial taxation system.
Maximum Premium: $900 per year for individuals, based on income brackets.
No Separate Health Insurance Premium:
Unlike some provinces that have direct health insurance premiums billed separately, Ontario’s health premium is included within the income tax system.
Health care funding is primarily covered through general taxation, including income taxes, sales taxes, and other revenue sources.
Integrated Tax System:
The health premium is a component of the personal income tax return and helps contribute to overall health care funding. It is not a separate or additional health insurance policy but part of the overall provincial tax contribution.
Summary:
The "Ontario health premium" is a part of the income tax system and contributes to health care funding but does not represent a direct health insurance premium like those in other provinces.
The term persists in the tax system, reflecting its historical context and ongoing role in health care funding through income taxes.
This explains why you see the "Ontario health premium" on tax forms despite the broader context of health care funding through general taxes.
I built the below using the data from taxtips.ca. It took longer than I thought so I only did the 4 biggest provinces. Obviously Quebec is a big outlier on the high side, with AB/BC/ON all pretty comparable. Alberta has the lowest taxes on very low incomes because of the higher personal exemption. On the highest incomes Ontario is the lowest, although not by a lot.
Keep in mind Quebec is an outlier mostly because Revenu Québec collects income taxes and remits lower federal amounts to the CRA, with the difference in federal income taxes collected being counted as part of Quebec's equalization transfers. Effective federal income tax rates on individuals in Quebec are "abated" by 16.5%.
Keep in mind Quebec is an outlier mostly because Revenu Québec collects income taxes and remits lower federal amounts to the CRA, with the difference in federal income taxes collected being counted as part of Quebec's equalization transfers. Effective federal income tax rates on individuals in Quebec are "abated" by 16.5%.
since when does Quebec collect income taxes for the federal government?
