Could the next “American Dream” be in Canada, instead of the US?

When American politicians promote their policies, be it for healthcare or social security, they always imply the legendary American Dream and their longing to bring it closer to reality. However, the original ethos suggests more freedom of the American people with less government intervention in their lives. And those immense social policies go against that ethos.

Long gone are the times when the United States could be considered a beacon of freedom. Take any major aspect of the country’s political, economic, or social policies and you’ll be able to find other countries with much fewer constraints and limitations, be it taxes, social security programs, or healthcare.

While American conservatives are very proud of their “free” country, other nations are challenging that same posture. Even Canada has freer sectors than the US. The same conservatives may ridicule their “socialist neighbor”, but the truth remains unchallenged: Canada is freer when it comes to tax system complexity, education policies, etc.

To prove this is not some unfounded claim, here’s a quick slap in the face to those cocky conservatives: almost every year, Canada ranks higher on the Index of Economic Freedom made by the Heritage Foundation – #8 for Canada, while $12 for the US. Surely, these real-world results should suggest a thing or two about the myths of the American Dream being in the US, while Canada is getting closer to Bernie Sanders’ dream utopia.

One of the many reasons why Canada ranks higher in this freedom index is its less complex taxation system. On top of that, a more liberal federalist structure gives more air to the private sector to breathe. In fact, a more decentralized federal structure is also apparent in taxes. Let’s take a closer look at each of these points.

A more liberal tax system

Unlike Washington, Ottawa is less greedy of its provinces’ coffers and revenues. Instead, they have more headroom to decide on income, corporate, and other tax caps and brackets. Granted, the income tax system is still progressive in Canada, causing repulsion among many libertarians; yet more liberal taxation results in just five income tax brackets starting from 15% for the lowest incomes – which is around $48,000 – all the way to 33% for the highest incomes.

And when it comes to corporate taxation, there’s only one tax rate of 28 percent for every corporate income size. Therefore, whether it’s gambling operators or major banks with a large reach, the government only imposes a single corporate tax rate on them.

Speaking of gambling sites, there’s a similarity between the US and Canada which is loathsome to many freedom-loving people. In both of these countries, be it online VIP casinos in Canada or regular online providers in the US, the majority of the industry is exclusively owned by the Native American tribes. And their right is stamped by the governments which, in turn, curbs the further development of the industry, creation of jobs, etc.

What’s more, the Canadian Revenue Agency continuously claims that the income tax is actually closer to a 15% rate, whereas for the smaller entrepreneurs and businesses, it goes even lower at 10.5%.

On the other hand, we have the United States tax system which is notoriously burdensome. To put it in the same perspective, there are seven individual income brackets and even the lowest one is a lot more punishing to the lowest income classes.

Remember Canada with its 15% tax for the lowest $48,000 income? The US has a 22% tax rate for those earning from $38,000 to $82,000, while the lowest $0-$9,000 incomes are taxed by 10%. The same punitiveness is present in the highest income brackets. While Canada has a 33% tax over $215,000 incomes, the US has a 35% for the vaguely same bracket – $200,001-$500,000, while above $500,001 the tax rate is 37%.

And then there’s corporate taxation, which is also progressive with eight brackets and starts from 15%, whereas Canada stops at that point. No wonder, then, that Canada is always higher in the Freedom Index, as well as Tax Competitiveness index among OECD countries – #15 for Canada and #21 for the US.

Less complexity in federal laws

The next important difference between the two countries is the federal system and how it affects social policies. Canada’s constitution, written in 1867, clearly stamps that hospitals should be exclusively run by the provinces and not the federal government – with few exceptions.

One of the few federal acts that work on this level is the Canada Health Act, and even that one is just 18 pages in size. In total, the federal health care legislation combines eight individual laws and 137 pages.

So, did you remember those numbers? Now, let’s turn to the United States and its ridiculous public healthcare system. One of the most notorious pieces of legislation – the Affordable Care Act also known as Obamacare – is staggering 906 pages long, and it’s just one piece. Take Title XVIII of the Social Security Act (Medicare) with 1,149 pages and Title XIX of the Social Security Act (Medicaid and CHIP) with 414 pages, you’re getting more than two thousand pages of legislation.

The same thing happens in other sectors, including education. Here, Canada has a 33-page two-piece federal act that governs the whole education system in the country, whereas there’s a full-on Department of Education in the US. In OECD’s PISA index, Canada ranked #2 in 2018, whereas the US was #9.

Not going beyond the limits

Now, we’re not stating that Canada is, in any shape or form, closer to a libertarian dream. Those extensive and numbing social programs, socialized healthcare, high costs, and waiting lines are still major problems curbing the freedom in the country. And the current Prime Minister Trudeau doesn’t seem to be drawing those excessive policies back. However, in the last couple of years, we can see more and more Americans who have decided to immigrate to Canada from the US after being inspired by the opportunities the great north country has to offer ”

In fact, he has considerably increased the budget deficit which, before his ministership, was in a $2 billion surplus. In general, Trudeau is an interventionist politician who believes that government spending can boost the economy. However, there’s nothing that can support his claim in that territory: GDP growth is still around the same rate it was before Trudeau.

As the common wisdom goes, there’s no perfect libertarian country in this world. And neither Canada nor the United States is closer to that dream. In this article, we just showed that when American conservatives condemn their northern neighbor for its socialist policies, they should also look at their own system and try to make a tangible difference there.