Canada's Taxes are Way too High?

So, here's the thing. Is it really true that the average Canadian carries a higher tax burden than the average American? 

It depends on how you look at it, but before I get into that, I want to dispel another myth about taxation in Canada. It's all about those greedy folks in Ottawa.

Yup, when people complain about Canada's taxes, they usually point the finger at Ottawa.

This is where the argument falls apart.

Last year, Canada's Federal Government collected revenues of $511 Billion

That revenue was made up primarily of:

• Personal income tax: $234.3 billion (45.9%)
  Corporate income tax: $97.0 billion (19.0%)
  GST: $52.5 billion (10.3%)
  Other taxes and duties: $19.4 billion (3.8%)
  Employment Insurance premiums: about $32 billion
  Other revenues (Crown corporations, fees, investment income, etc.)

We'll get back to this in a moment, but all of those numbers are in Canadian dollars.

Last year, the United States Federal Government collected revenues of $5.235 Trillion.

The largest sources were approximately:

• Individual income taxes: US$2.66 trillion (50.5%)
  Payroll taxes (Social Security & Medicare): US$1.76 trillion (33.6%)
  Corporate income taxes: about US$486 billion
  Customs duties (tariffs): about US$195 billion
  Other receipts (excise taxes, estate taxes, fees, Federal Reserve earnings, etc.)

Now, in order to compare these numbers, we'll have to make sure we're comparing apples to apples. Those Canadian numbers will need to be translated to U.S. Dollars. So, let's take another look at the Canadian Federal Government.

Last year, Canada's Federal Government collected revenues of $359.1 Billion (USD)

That revenue was made up primarily of:

• Personal income tax: $164.7 billion (45.9%)
  Corporate income tax: $68.2 billion (19.0%)
  GST: $36.9 billion (10.3%)
  Other taxes and duties: $13.6 billion (3.8%)
  Employment Insurance premiums: about $22.5 billion
  Other revenues (Crown corporations, fees, investment income, etc.)

That's a lot of numbers to digest, but what do they mean?

Yes, Canada has a much smaller population than the United States 41.58 Million versus 341.8 Million in the United States.

However, when we do the math, we find that Canada's Federal government collected about $8,640(USD)/person in taxes and revenues, while the United States Federal Government collected roughly $15,316/person.

So no, Canada's Federal Government doesn't tax its citizens considerably more than the United States Federal Government does. In fact, it taxes its citizens almost $7,000/person less.

With the "it's all about Ottawa argument out of the way", is the average Canadian's tax burden really higher?

To finish answering that, we'll have to look at other levels of government. Provincial-Local versus State-Local.

General Government Revenue is a measure of revenue collected by all levels of government.

In Canada, for 2025, that figure was $1.37T (CAD). Divide that by Canada's population and you get a figure of $33,005/person. Convert that to USD, and you get a figure of $23,434/person.

Total General Government revenue for the United States was 9.07T.
Divide that by the U.S. population and you get $26,559/person.

So, no Canadians don't pay more taxes than Americans, at least not in actual dollars.

But, what about as a percentage of GDP?

Canada's GDP in 2025 was $3.25T (CAD). Federal government revenues consumed 15% of that.

The U.S. GDP was $30.26T. Federal government revenues consumed 19% of that.

So no, Ottawa didn't collect as high a percentage of Canada's GDP in revenue as Washington collected of the U.S. GDP.

It doesn't matter what measure you use, federal taxation in Canada is lower.

But again, that's not the whole picture. To complete the picture, we need to look at revenues collected by other levels of government.

When provincial and local governments are taken into account, that number rises to 42% for Canada.

For the United States, when you take state and local revenue into account, their number rises to 30%.

So, as a percentage of GDP, the Canadian tax burden is higher than the U.S. tax burden.

Why is that so?

Here's at least part of the reason:

I've already thrown a lot of numbers at you, so we're going to skip over Federal deficits and go straight to General Government Deficits for 2025.

In Canada, that figure was $79.2B(CAD). Convert that to USD, and you get $56.2B or about $1,355/person. As a percentage of GDP, that works out to 2.4%

In the United States, that figure was $2.3T or about $6,734/person. As a percentage of GDP, that works out to 7.6%.

So, 5.2%, almost half of the gap in taxation as a percentage of GDP, can be explained solely by the willingness of governments in the United States to take on additional debt.

Just for fun, and maybe it really doesn't apply here, we'll look at healthcare spending in 2025. Americans spent 5.2% more of its GDP on private healthcare costs than Canadians did.

So, additional government borrowing and additional private healthcare spending account for 10.4% of America's GDP.

Those two realities alone represent about 87% of the gap in taxation as a percentage of GDP between Canada and the United States.

So, are Canada's taxes way too high?