Economy
High taxes hurt Canada’s ability to attract talent

From the Fraser Institute
By Alex Whalen and Jake Fuss
With Major League Baseball’s regular season winding down and NHL training camps starting up, some big-name athletes including Maple Leafs captain John Tavares and former Toronto Blue Jays Josh Donaldson and Jose Bautista are involved in lawsuits with the Canada Revenue Agency. While the specifics of each case differ, the overall theme is the same—when signing their contracts in Toronto, these athletes adopted tax planning strategies to manage Canada’s burdensome tax structure.
One might ask: who cares about the tax plight of multi-millionaire pro athletes? But these high-profile cases underscore Canada’s comparative disadvantage in attracting top performers in all fields.
Similar to professional athletes, other high-skilled individuals including doctors, engineers, scientists and entrepreneurs are more likely than other workers to consider tax rates when choosing where to live and work. By maintaining high tax rates relative to similar jurisdictions, Canada has a harder time attracting and retaining these talented individuals.
And you’re almost guaranteed to face higher tax rates in Canada than in the United States. When it comes to top personal income tax rates, 10 of the top 15 highest-taxed jurisdictions in North America (among 61 provinces and U.S. states) are Canadian including the entire top eight.
In fact, a top performer in Ontario, British Columbia or Quebec faces a marginal tax rate at least 11 percentage points higher than the median U.S. state, and 16 percentage points higher than nine U.S. states (which have no state income tax). For a doctor, entrepreneur, professional athlete or other high-skilled worker, the tax differences between these jurisdictions can be substantial. Not surprisingly, the nine U.S. states with no state tax such as Texas, Florida and Tennessee have become favoured destinations for pro athletes and other top talent.
In addition to hurting Canada’s ability to attract high-skilled individuals, high personal income taxes reduce incentives for Canadians to work, save and invest. For example, higher taxes reduce the income workers take home from each hour worked, so many will choose to work fewer hours, resulting in reduced economic growth and prosperity. And higher taxes reduce savings and investment by consuming larger portions of a worker’s earnings.
High tax rates can also lead to less innovation and entrepreneurship, which limits economic growth and thereby affects all Canadians, not merely the wealthy. These innovators and job creators operate in a global marketplace for talent. Once achieving free agency, the typical hockey or baseball star generally will only have 30 to 32 destinations to choose from, all within North America. In contrast, Canada competes for other types of talent with countries from around the globe, making competitiveness even more important.
Professional athletes have a few things in common with other top performers. They are highly mobile, and all else equal, will move to jurisdictions that allow them to take home the highest possible after-tax earnings. While no Canadians are likely losing any sleep over John Tavares’ tax lawsuit, the broader concern over Canada’s competitiveness should be a top priority for policymakers.
Authors:
Business
Most Canadians say retaliatory tariffs on American goods contribute to raising the price of essential goods at home

- 77 per cent say Canada’s tariffs on U.S. products increase the price of consumer goods
- 72 per cent say that their current tax bill hurts their standard of living
A new MEI-Ipsos poll published this morning reveals a clear disconnect between Ottawa’s high-tax, high-spending approach and Canadians’ level of satisfaction.
“Canadians are not on board with Ottawa’s fiscal path,” says Samantha Dagres, communications manager at the MEI. “From housing to trade policy, Canadians feel they’re being squeezed by a government that is increasingly an impediment to their standard of living.”
More than half of Canadians (54 per cent) say Ottawa is spending too much, while only six per cent think it is spending too little.
A majority (54 per cent) also do not believe federal dollars are being effectively allocated to address Canada’s most important issues, and a similar proportion (55 per cent) are dissatisfied with the transparency and accountability in the government’s spending practices.
As for their own tax bills, Canadians are equally skeptical. Two-thirds (67 per cent) say they pay too much income tax, and about half say they do not receive good value in return.
Provincial governments fared even worse. A majority of Canadians say they receive poor value for the taxes they pay provincially. In Quebec, nearly two-thirds (64 per cent) of respondents say they are not getting their money’s worth from the provincial government.
Not coincidentally, Quebecers face the highest marginal tax rates in North America.
On the question of Canada’s response to the U.S. trade dispute, nearly eight in 10 Canadians (77 per cent) agree that Ottawa’s retaliatory tariffs on American products are driving up the cost of everyday goods.
“Canadians understand that tariffs are just another form of taxation, and that they are the ones footing the bill for any political posturing,” adds Ms. Dagres. “Ottawa should favour unilateral tariff reduction and increased trade with other nations, as opposed to retaliatory tariffs that heap more costs onto Canadian consumers and businesses.”
On the issue of housing, 74 per cent of respondents believe that taxes on new construction contribute directly to unaffordability.
All of this dissatisfaction culminates in 72 per cent of Canadians saying their overall tax burden is reducing their standard of living.
“Taxpayers are not just ATMs for government – and if they are going to pay such exorbitant taxes, you’d think the least they could expect is good service in return,” says Ms. Dagres. “Canadians are increasingly distrustful of a government that believes every problem can be solved with higher taxes.”
A sample of 1,020 Canadians 18 years of age and older was polled between June 17 and 23, 2025. The results are accurate to within ± 3.8 percentage points, 19 times out of 20.
The results of the MEI-Ipsos poll are available here.
* * *
The MEI is an independent public policy think tank with offices in Montreal, Ottawa, and Calgary. Through its publications, media appearances, and advisory services to policymakers, the MEI stimulates public policy debate and reforms based on sound economics and entrepreneurship.
Business
Trump confirms 35% tariff on Canada, warns more could come

Quick Hit:
President Trump on Thursday confirmed a sweeping new 35% tariff on Canadian imports starting August 1, citing Canada’s failure to curb fentanyl trafficking and retaliatory trade actions.
Key Details:
- In a letter to Canadian Prime Minister Mark Carney, Trump said the new 35% levy is in response to Canada’s “financial retaliation” and its inability to stop fentanyl from reaching the U.S.
- Trump emphasized that Canadian businesses that relocate manufacturing to the U.S. will be exempt and promised expedited approvals for such moves.
- The administration has already notified 23 countries of impending tariffs following the expiration of a 90-day negotiation window under Trump’s “Liberation Day” trade policy.
Diving Deeper:
President Trump escalated his tariff strategy on Thursday, formally announcing a 35% duty on all Canadian imports effective August 1. The move follows what Trump described as a breakdown in trade cooperation and a failure by Canada to address its role in the U.S. fentanyl crisis.
“It is a Great Honor for me to send you this letter in that it demonstrates the strength and commitment of our Trading Relationship,” Trump wrote to Prime Minister Mark Carney. He added that the tariff response comes after Canada “financially retaliated” against the U.S. rather than working to resolve the flow of fentanyl across the northern border.
Trump’s letter made clear the tariff will apply broadly, separate from any existing sector-specific levies, and included a warning that “goods transshipped to evade this higher Tariff will be subject to that higher Tariff.” The president also hinted that further retaliation from Canada could push rates even higher.
However, Trump left the door open for possible revisions. “If Canada works with me to stop the flow of Fentanyl, we will, perhaps, consider an adjustment to this letter,” he said, adding that tariffs “may be modified, upward or downward, depending on our relationship.”
Canadian companies that move operations to the U.S. would be exempt, Trump said, noting his administration “will do everything possible to get approvals quickly, professionally, and routinely — In other words, in a matter of weeks.”
The U.S. traded over $762 billion in goods with Canada in 2024, with a trade deficit of $63.3 billion, a figure Trump called a “major threat” to both the economy and national security.
Speaking with NBC News on Thursday, Trump suggested even broader tariff hikes are coming, floating the idea of a 15% or 20% blanket rate on all imports. “We’re just going to say all of the remaining countries are going to pay,” he told Meet the Press moderator Kristen Welker, adding that “the tariffs have been very well-received” and noting that the stock market had hit new highs that day.
The Canadian announcement is part of a broader global tariff rollout. In recent days, Trump has notified at least 23 countries of new levies and revealed a separate 50% tariff on copper imports.
“Not everybody has to get a letter,” Trump said when asked if other leaders would be formally notified. “You know that. We’re just setting our tariffs.”
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