The typical Canadian pays 70 percent more income tax than the typical American

In the recent federal election, the Liberals and Conservatives both campaigned on lowering income taxes to ease the burden on working- and middle-class Canadians. Sure enough, an income tax cut is planned for July 1st.

This focus on tax cuts raises the question: how much of a burden are income taxes on the typical Canadian?

The “typical Canadian”—defined as the median income earner—is currently taxed at an average of just over 17 percent (federal plus provincial). The upcoming tax cut will decrease that by about half a percentage point, bringing it to just under 17 percent.

But how much you pay in income taxes varies depending on where you live and how much the “typical” person makes in each province. In Nova Scotia, where income taxes are highest, someone earning the provincial median income pays one-fifth of their income in tax. Those in British Columbia and Ontario pay the least, at 15 percent. Meanwhile, median earners in half of Canada’s provinces—including Quebec, Manitoba, and Saskatchewan—pay somewhere in the middle at 18 percent.

All that said, are those numbers high? They are when you look across the border.

Median income earners in every U.S. state have a lighter tax burden than Canadians do—usually by a lot. In California, often thought of as a high-tax state, the median income earner’s combined tax bill is 10 percent—the U.S. average. That falls to just 7-8 percent for the nine states with no state-level income tax, like Texas, Florida, and Washington.

To put that into perspective, if Canada’s combined average income tax rate were the same as in the U.S., the typical Canadian would save almost $4,000 a year. But even seemingly small tax cuts can have an impact, like the change coming on July 1st—it reduces the lowest federal tax bracket by one percentage point, and will save the typical Canadian around $400 a year.

It’s important to note that income taxes are only part of the story when it comes to the impact on our take-home pay—and how that compares to the average American. Sales taxes, property taxes, and payroll taxes also chip away at income. But the differences in these taxes between Canada and the U.S. don’t seem to favour one country or the other.

Of course, the higher taxes Canadians pay aren’t for nothing. Governments use that revenue to provide far more generous family and unemployment benefits than in the U.S, as well as things like subsidized post-secondary education and government-funded universal health care. In the U.S., those costs don’t show up on the tax bill, but Americans still pay them at the end of the day.

Still, few Canadians would object to some tax relief, especially while affordability challenges persist across the country. The planned tax cut isn’t a game-changer, but it offers Canadians at least a little breathing room.

A version of this post was originally published by the Business Council of Alberta at businesscouncilab.com.