Business
Alberta freest Canadian province, ranks 12th in North American; other provinces rank near bottom
From the Fraser Institute
By: Dean Stansel, José Torra, Matthew D. Mitchell and Ángel Carrión-Tavárez
Alberta is, once again, the Canadian province with the highest level of economic freedom, while most other provinces rank in the bottom half in the annual Economic Freedom of North America report, published today by the Fraser Institute, an independent, non-partisan, public policy think-tank.
Individuals have more economic freedom when they are allowed to make more of their own economic decisions such as what to buy, where to work and how to start and run a business. And research shows that economic freedom is fundamental to prosperity.
The report ranks the provinces and states individually for each country (Canada, the U.S. and Mexico). In addition, there is a fourth measure comparing and ranking all states and provinces, across all three countries. All of the rankings measure government spending, taxation, regulations and labour market restrictions using data from 2022 (the latest year of available comparable data).
“Higher taxes, higher levels of government spending and overly burdensome regulations continue to depress economic freedom across much of Canada, which makes it harder for individuals and businesses to thrive and create jobs,” said Matthew Mitchell, a senior fellow at the Fraser Institute and co-author of this year’s report.
In the ranking covering all three countries, which includes both federal and provincial government policies, Alberta is once again the highest-ranking Canadian province. It tied four U.S. states at 12th, having improved its ranking from 41st last year.
The next freest province is British Columbia, which ranks 43rd out of 93, followed by Ontario (47th), Saskatchewan (50th), Manitoba (53rd) and Quebec (54th).
The four Atlantic provinces— New Brunswick (57th), Prince Edward Island (58th), Nova Scotia (59th) and Newfoundland and Labrador (60th)—have the lowest levels of economic freedom among all provinces and U.S. states, only outranking the Mexican states and Puerto Rico. New Hampshire, once again, earned the overall top spot amongst all provinces and states in the rankings this year.
“The link between economic freedom and prosperity is clear: people who live in provinces or states that have comparatively lower taxation, lower government, sound regulatory regimes and more flexible labor markets tend, on average, to live happier, healthier and wealthier lives,” Mitchell said.
For instance, according to the latest report, total income in the freest jurisdictions grew 29 per cent after adjusting for inflation over the last decade, while in the least-free jurisdictions, total inflation adjusted income fell 13 per cent.
The Economic Freedom of North America report (co-authored by Dean Stansel, José Torra and Ángel Carrión-Tavárez) is an offshoot of the Fraser Institute’s Economic Freedom of the World index, the result of more than a quarter century of work by more than 60 scholars including three Nobel laureates.
Detailed tables for each country and subnational jurisdiction can be found at www.freetheworld.org.
Economic Freedom of North America 2024
- The indices in the Economic Freedom of North America 2024 measure the degree to which governments in North America permit their citizens to make their own economic choices.
- They include data from the 10 Canadian provinces, 50 US states, 32 Mexican states, and the US territory of Puerto Rico.
- In the all-government index—which takes account of federal as well as state/provincial policies—the most economically-free jurisdiction in North America is New Hampshire, followed by Idaho, Oklahoma and South Carolina tied for third, and Florida and Indiana tied for fifth.
- The lowest-ranking jurisdictions are all Mexican states. In last place is Ciudad de México. Above that is Colima, Campeche, Tamaulipas, and Zacatecas.
- Alberta is the highest-ranking Canadian province, tied for 12th place with Tennessee, South Dakota, Colorado, and Texas. The next-highest Canadian province is British Columbia, which is tied with Massachusetts, Minnesota, and New Mexico for 43rd.
- Average economic freedom across all 93 jurisdictions has fallen every year since 2017 and is now slightly above its all-time low.
- Incomes in the freest top 25 percent of North American jurisdictions were 21 times higher than in the least-free.
- From 2013 to 2022 the population of the freest US states grew 10 times faster and total employment grew three times faster than in the least-free states.
From the Fraser Institute
By Jake Fuss and Grady Munro
On Monday outside Rideau Cottage in Ottawa, after Prime Minister Justin Trudeau told Canadians he plans to resign, a reporter asked Trudeau to name his greatest accomplishments. In response, among other things, Trudeau said his government “reduced” taxes for the “middle class.” But this claim doesn’t withstand scrutiny.
After taking office in 2015, the Trudeau government reduced the second-lowest personal income tax rate from 22.0 per cent to 20.5 per cent—a change that was explicitly sold by Trudeau as a tax cut for the middle class. However, this change ultimately didn’t lower the amount of taxes paid by middle-class Canadians. Why?
Because the government simultaneously eliminated several tax credits—which are intended to reduce the amount of income taxes owed—including income splitting, the children’s fitness credit, children’s arts tax credit, and public transit tax credits. By eliminating these tax credits, the government helped simplify the tax system, which is a good thing, but it also raised the amount families pay in income taxes.
Consequently, most middle-income families now pay higher taxes. Specifically, a 2022 study published by the Fraser Institute found that nearly nine in 10 (86 per cent) middle-income families (earning household incomes between $84,625 and $118,007) experienced an increase in their federal personal income taxes as a result of the Trudeau government’s tax changes.
The study also found that other income groups experienced tax increases. Nearly three-quarters (73 per cent) of families with a household income between $54,495 and $84,624 paid higher taxes as a result of the tax changes. And across all income groups, 61 per cent of Canadian families faced higher personal income taxes than they did in 2015.
The Trudeau government also introduced a new top tax bracket on income over $200,000—which raised the top federal personal income tax rate from 29 per cent to 33 per cent—and other tax changes that increased the tax burden on Canadians including the recent capital gains tax hike. Prior to this hike, investors who sold capital assets (stocks, second homes, cottages, etc.) paid taxes on 50 per cent of the gain. Last year, the Trudeau government increased that share to 66.7 per cent for individual capital gains above $250,000 and all capital gains for corporations and trusts.
According to the Trudeau government, this change will only impact the “wealthiest” Canadians, but in fact it will impact many middle-class Canadians. For example, in 2018, half of all taxpayers who claimed more than $250,000 of capital gains in a year earned less than $117,592 in normal income. These include Canadians with modest annual incomes who own businesses, second homes or stocks, and who may choose to sell those assets once or infrequently in their lifetimes (when they retire, for example). These Canadians will feel the real-world effects of Trudeau’s capital gains tax hike.
While reflecting on his tenure, Prime Minister Trudeau said he was proud that his government reduced taxes for middle-class Canadians. In reality, taxes for middle-class families have increased since he took office. That’s a major part of his legacy as prime minister.
Jake Fuss
Director, Fiscal Studies, Fraser Institute
Grady Munro
Policy Analyst, Fraser Institute
Earlier this week Mark Zuckerberg rocked the world of information with the news that Facebook, Instagram, and his other Meta properties would no longer use third party fact checking groups to censor information. As the week wraps up, Zuckerberg sits down for an extended conversation with Joe Rogan. For anyone interested in the world of information, this is a must see / listen.
From the Joe Rogan Experience
Mark Zuckerberg is the chief executive of Meta Platforms Inc., the company behind Facebook, Instagram, Threads, WhatsApp, Meta Quest, Ray-Ban Meta smart glasses, Orion augmented reality glasses, and other digital platforms, devices, and services.
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