After living in New York City for most of her life, advertising executive Elizabeth Ryba moved to Toronto in 1988 to work for a major agency. Ryba, 38, an American citizen, says that compared with New York, she found Toronto safe, clean and quiet. Ryba moved back to New York four weeks ago shortly before her work permit expired, but says that she might have chosen to renew it and stay longer were it not for Canada’s high taxes and cost of living. Declared Ryba: “I loved Toronto, but the Goods and Services Tax was the icing on the cake for me. Prices are already expensive. When you add taxes, it compromises your quality of life.” Although there are no statistics on how many Americans are leaving Canada for similar reasons, many accountants who prepare tax returns for U.S. citizens living in Canada say that they frequently encounter Americans who are thinking of returning home, even after long stays in Canada. They note that a growing number of married couples in which one partner is American are also leaving to take advantage of lower living costs, lower taxes and
cheaper housing south of the border. Says Stephen Singer, an accountant and past president of the American Club of Toronto, a social organization for expatriate Americans: “A lot of Americans are saying, ‘It’s a wonderful country, it’s a good place to raise your kids, but it’s too expensive.’ ”
The financial differences between living in Canada and the United States are well documented in a study published earlier this year by Robert Brown, chairman of Toronto-based Price Waterhouse and company partner Richard Gimbert. Americans, they explained, are entitled to three major tax deductions that are unavailable in Canada: interest on their mortgages, state income tax and real estate taxes. As a result, a husband and wife living in New York City and each earning $50,000 (U.S.) would pay a total of $18,300 in income tax, while a couple with a similar income in Toronto would pay $30,100. The same couple would pay $19,800 in income tax in Chicago, but in Montreal they would pay $34,800.
For many U.S. citizens residing in Canada, the increasing tax burden of their adopted
country has become unbearable. John Simon, a 53-year-old swimming coach, came to Canada from Westchester, Pa., in 1985 to become head coach of the Scarborough Swim Club in suburban Toronto, but returned to the United States in August, 1989, to teach swimming and sell real estate. Simon said that his disposable income dropped about 10 per cent during the four years he lived in Canada, largely due to rising taxes. Added Simon: “It would take me triple or more what I could make in a midsized community down here to make a living in the Toronto area.”
For corporations based in either Canada or the United States, Canada’s taxes, living costs and real estate prices now make it much more difficult to move employees across the border. Richard Pease, personnel manager at Torontobased Procter & Gamble Inc., said that an employee earning $50,000 in the United States must be paid about $86,500 (U.S.) in order to preserve his income and lifestyle if he moves to Canada.
Professional athletes, especially baseball players, are another group of Americans reluctant to move from the United States to Canada because of tax reasons. Los Angeles-based agent Richard Moss, who represents 35 majorf league baseball players, including Nolan Ryan I of the Texas Rangers and Andre Dawson of the s Chicago Cubs, said that several of his clients who played for the Montreal Expos insisted upon having equalization clauses in their contracts. Moss explained that those clauses provided extra compensation to offset Quebec’s provincial income taxes, which were deemed to be higher than those of any American state.
Many of the Americans who are moving from Canada to the United States were living in southern Ontario. Ian Smyth, president of the Calgary-based Canadian Petroleum Association, which represents the country’s largest oil and gas producers, says that the lack of energy jobs in the United States is stopping Americans living in Alberta from moving south. Similarly, Albert Baker, an international tax specialist with the accounting firm Samson Belair Deloitte and Touche in Montreal, says that he is unaware of any exodus of American citizens among his clients. Some have arrangements, he added, that protect them from the full brunt of Canada’s tax system.
But other Americans who are longtime residents of Canada readily acknowledge that they admire Canada’s publicly funded, universally accessible health-care system, and add that they are concerned about having to purchase private health insurance south of the border. Says the American Club of Toronto’s current president, Stanley Katz, a Brooklyn, N.Y., native: “Canada was a great place to live, but with the high tax rate and confused economic situation, most people would like to leave. If the United States had a health plan like Canada’s, we’d probably all be gone.” It seems that for many Americans, only Canadian health care and the difficulties of abandoning legal, accounting or other professional practices are preventing an exodus across the border.
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