You may be wondering where you are paying the most amount of tax in North America. This is an interesting question since everyone thinks they are paying the most.
This article breaks down which of the most populated states/provinces tax you the most- in form of both income and sales taxes.
Which Big State or Province Would I Pay the Most Tax in the US/Canada?
The four most populous states in the United States are: California (39 million), Texas (29 million), Florida (21 million) and New York (19 million).
The 5th largest administrative division in North America is Ontario, with a population of over 14.5 million people.
In this article, the tax predictions are going to be based on a single person with an $80k salary.
Average Income Tax Calculations
| State/Province | Income | Income Tax | Sales Tax (if 20k spent on items) | Total Tax |
| Ontario | $80,000 | 20,500 | 2,600 | 23,100 |
| California | $80,000 | 16,895 | 1700 | 18595 |
| Texas | $80,000 | 16,895 | 1640 | 18535 |
| Florida | $80,000 | 16,895 | 1360 | 18255 |
| New York | $80,000 | 16,895 | 1700 | 18595 |
Who Pays the Most Taxes?
From this table, it is clear that you would pay more tax in Canada’s largest province, Ontario; than you would in each of America’s big cities: California, Texas, Florida and New York.
To calculate the income taxes we used the WOWA Canada income tax calculator and for the US one we used USA Today’s estimation. Ontario total taxes are over $4000 higher than what you’d pay in America’s big states.
Sales tax refers to a form of consumption tax paid to the government when certain goods and services are sold. It is also known as Value-Added Tax (VAT) in the US or Goods and Services Tax (GST)/Harmonized Sales Tax (HST) in Canada.
In this comparison, sales tax is calculated based on a projection that about $20,000 is spent on buying things. In Ontario, the amount paid as sales tax is double that paid in California and other large states in the US.
In the four American states compared, income taxes are very similar, but sales tax differs- with the highest amount paid in California and New York at 8.5% of taxable amount ($1700) and the lowest amount paid in Florida, at 6.8% of the taxable amount ($1360).
The only good thing about Ontario taxes in comparison to the large US states is that their property taxes are less than the US cities. For example Toronto property tax is only 0.6% of the assessed property value.
What Accounts for these Differences?
While these cities share one common characteristic- being large; there is a huge difference in how taxes are collated in each country.
Another important detail to note is that Canada runs a socialized health care system, which some of the income tax paid goes to fund. For this reason, Canadian residents are able to access medical care and procedures at little additional cost. The same cannot be said for the United States where healthcare is paid for either on an out-of-pocket basis, or via an health insurance plan.
Conclusion
Based on a $80,000 salary, US residents living in large cities especially New York, pay less in terms of income and sales tax than Canadian residents in big cities like Ontario. A critical factor in determining the amount of tax paid is the availability of, and access to social amenities like health care- which Canada provides for her citizens at little to no cost besides what is paid for via tax.
So if you would like to move to any of these states, consider the amount of tax you’d be paying but also weigh factors like how much you’d be paying for healthcare.