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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 Canadia

by ttul 3y ago

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.

MichaelZuo 3y ago
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.
- ttul 3y ago
  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.
  - MichaelZuo 3y ago
    You chose the jurisdiction with the least regulatory burden out of all 10 provinces, so you likely already know the differences. Why ask me?

by ttul 3y ago

MichaelZuo 3y ago

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.

ttul 3y ago
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.
- MichaelZuo 3y ago
  You chose the jurisdiction with the least regulatory burden out of all 10 provinces, so you likely already know the differences. Why ask me?