Toy,
The following story is for you:
Why Canada is losing its minds
March 7 ¡X Fate, pure and simple,?says Canadian software test engineer Ken Grierson, describing how his pursuit of a job led him across the border to the United States. Translated: the market drove him to it, like a fast-growing proportion of Canada the best and brightest.
IN A FOUR-MONTH long job search in British Columbia, Grierson couldn¡¦t even get large Canadian companies to return his calls ¡X he says they didn¡¦t like his formal credentials. The best offers he got were from four tiny ISP/Web companies that paid C$10 an hour, a wage he says is ¡§below poverty level¡¨ for the city of Vancouver. To make matters worse, he says, even for these back-office jobs, the employers insisted that he wear a suit and tie.
Then Grierson filled out an on-line application with a U.S. personnel recruiter. Within three weeks he was whisked off to Microsoft¡¦s Redmond, Wash. campus, following the path of hundreds of his compatriots. Now, a year later, he¡¦s paid two-and-a-half times what he would have been paid in British Columbia. Figure in the strength of the U.S. dollar compared with the Canadian dollar, and lower U.S. tax rates, and his end-of-day pay is more than three times greater.
What¡¦s more, Grierson says, he¡¦s received valuable training in the U.S. ¡§If I stay five years I¡¦ll be able to write my own ticket once I decide to leave Microsoft,¡¨ he says. In the meantime ¡X hey ¡X no neckties at Microsoft. (MSNBC is a joint venture of Microsoft and NBC News.)
Grierson¡¦s story is being repeated across Canada as professionals north of the border are pushed out by high Canadian taxes, low salaries, a weak dollar and fewer opportunities than in the United States.
The Tax Gap
Canadians pay a larger portion of their gross incomes in taxes than do their U.S. counterparts. And keep in mind, the Canadian dollar is worth considerably less than the U.S. dollar.(C$1=66 U.S. cents)
Salary level* Canadian tax rate U.S. tax rate
$50,000 34.7% 28.1%
$100,000 37.3% 29.6%
$250,000 47.7% 34%
*Salaries are in both U.S. and Canadian dollars
SOURCE: Conference Board of Canada
Another powerful factor has been the cutting of red tape for Canadian immigrants since the U.S.-Canadian free trade agreement in 1989. The deal created a renewable work visa especially for Canadians ¡X the TN-1. In many cases, Canadian professionals can just pick up the TN-1, or other temporary work visas, at the border. As a result, there has been sharp increase of Canadians working in the United States in the last few years. The Reform Party of Canada estimates that 660,000 Canadians now are legally working in the United States.
CAN CANADA STEM THE FLOW?
As Canada watches the exodus of trained nurses, scientists, financial experts and other university grads, the debate on how to keep the talent is heating up. Then last month, what REALLY made people mad was rumors that Molson, a Canadian beer company, was considering the sale of the nation¡¦s beloved hockey team, the Montreal Canadiens. The speculation was that the weak Canadian dollar and high Canadian taxes made it difficult for the team to attract players and compete ¡X financially ¡X with National Hockey League franchises in the United States.
¡¥I think most would agree that Canada is a nicer place to live. But it is the money,¡¦
¡X KEVIN BESNER
Canadian ex-patriot The NHL estimates that a Canadian team pays about $12 million a year in taxes compared to $3.9 million for a U.S. team. On top of that, the Canadian dollar has fallen to a 17-year low against the greenback.
Last week, Canada¡¦s Finance Minister Paul Martin responded by offering tax breaks for hockey teams, which provoked irritation in equal measure. ¡§Hockey teams are not alone,¡¨ spat an editorial in the Calgary Sun. ¡§Every Canadian citizen and every Canadian business is too highly taxed compared to our American neighbors. Canadians are the highest taxed people in the world,¡¨ the Sun said.
Canada¡¦s technology industry, which needs to pay higher salaries to compete for talent with U.S. firms is lobbying hard to get the government to cut personal income tax to a competitive level. Not only does Canada¡¦s federal government have a higher maximum rate than the U.S. but it slaps a five percent surtax on the highest income bracket. And the highest income bracket starts at just C$60,000, versus about $250,000 in the U.S.
Canadian companies may get new graduates, but they often lose them as they approach higher levels. ¡§This is the type of thing that drives our members crazy,¡¨ says David Paterson, Executive director Canadian Advanced Technology Alliance, which is funded by Canadian high tech companies. ¡§They find candidates in university, bring them in and train them, and then they are just getting good at their jobs, and ¡X presto, they¡¦re gone.¡¨
Organizations like CATA are also lobbying government to lower the hefty capital gains tax, which makes company stock a less powerful incentive for staff. Basically, says California transplant Nicole Carlson, ¡§Canada certainly doesn¡¦t encourage companies to operate within it¡¦s borders, therefore leaving people flat-out unemployed.¡¨
The Liberal government has acknowledged that taxes need to come down, but so far, cuts have been marginal. They eliminated a 3 percent surcharge on people earning more than $50,000. They also beefed up science and technology spending in the budget presented last month ¡X giving fat increases to the Canadian Space Agency and programs promoting technology and innovation.
¡¥Brain drain is a serious problem, one that threatens to hurt Canadian economic prospects and competitiveness,¡¦
¡X PRESTON MANNING
Leader of Reform Party Still, for now it¡¦s just more expensive to hire in Canada. A Canadian software company looking for a senior marketing person, for instance, wanted to hire an American in California who was earning $125,000. ¡§In order for him to even break even in terms of after tax, disposable income, they would have had to pay something like C$275,000 ¡X it was a hideous number,¡¨ says Paterson. ¡§The guy would have been the highest paid in the firm. So it wasn¡¦t practical.¡¨ Instead, the company moved the new hire to Bellingham, Wash., just 25 miles south of the Canadian border, and he runs marketing from there.
That said, some Canadians pursuing a new life in the land of Silicon dreams find it less than ideal. The cost of living is high in many places, and medical insurance is expensive in the U.S. Dealing with the Immigration and Naturalization Service for visa renewals is nerve-wracking and time consuming.
Also, after five years of mulling it over, the U.S. still does not grant work permits to spouses of Canadian workers on TN visas ¡X so many couples forfeit one salary.
Nicole Carlson, who came to the U.S. three years ago when her husband got a job in Silicon Valley, complains that she has been unable to work. Moreover, she was not granted in-state tuition to study at the University of California, which she says, came as surprise. After all, she says, her husband pays U.S. and California taxes. Now she warns: ¡§Think twice before moving to the U.S. as a Canadian. There are a lot of things that the U.S. companies don¡¦t tell you.¡¨
But it is clear that there will be many more Canadians moving South before the flow reverses and the industry settles down. A recent survey shows 80 percent of Canadians technical students are interested in U.S. employment. On a Web page by Joe Grasmick, a Buffalo, N.Y. lawyer who specializes in Canadian immigration, there are hundreds of posted queries, nearly all pursuing work and temporary visa information for moving south. While many Canadians are wistful about their home country, its universal health care and low crime rates, hard-headed pragmatism rules the day. Why live in the U.S.? ¡§Money,¡¨ says Kevin Besner, a transplant who responded by e-mail. ¡§Canadian companies cannot match the money ¡X plain and simple. I think most would agree that Canada is a nicer place to live. But it is the money.¡¨
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