The United States regularly makes international headlines for its mega-billionaires and high per-capita earnings, but the average Canadian enjoys a structurally stronger and more resilient base of household wealth.
Medical bills
Medical bills are the number one reason individuals declare bankruptcy in America. Anyone can go from financial stability to suddenly owing more than they can ever hope to repay in the span of a few hours if they receive a life-altering medical diagnosis.
Canadians don’t have to worry about developing a private debt crisis when they get really sick, have unexpected surgery, or require long-term treatment, as they enjoy universal health care.
Stable banks
Canadian banks are considered to be some of the safest and most conservative banks in the world. The Canadian banking system consists of a handful of highly regulated banks that have strict rules on capital reserves as well as restrictions on risky and predatory lending.
The government regulation affords regular citizens depositor protection from unexpected bank collapses and stock market runs.
Lower student debts
Public schools in Canada are provincially funded, as opposed to local neighborhood taxes. This means there is a far more equal baseline from zip code to zip code.
University isn’t free, but it is subsidized, allowing Canadians to pay a fraction of the price of private and out-of-state American universities. Young Canadians also begin their lives debt-free, allowing them to invest and grow equity at a younger age.
Longer compound lifespan
According to statistics, Canadians live about three to four years longer than Americans on average. When it comes to investing for our future, time is our greatest lever.
Compound interest works its magic over the long haul. The longer we live, the more time our retirement savings, real estate investments, and generational wealth have to grow.
Secure housing requirements
Despite both countries going through wildly inflated real estate bubbles, mortgages in Canada work on a completely different principle.
Banks aggressively police strict stress tests here, and we don’t have widespread subprime. Since borrowers are legally required to qualify at higher interest rates, Canadian housing is a very stabilizing forced-savings mechanism that anchors the net worth of a massive percentage of the population.
Strong safety nets
Whether it’s comprehensive employment insurance or affordable daycare subsidies, Canadian’s social programs aim to create a financial safety net for citizens when they need it most.
If a Canadian suddenly finds themselves out of work or dealing with a family crisis, these government programs help pad the loss of wages. Social programs ensure Canadians don’t need to dip into long-term retirement savings or rely on credit cards to get by.
Tax-efficient inheritances
As a result of generations of Canadians in the middle class enjoying high rates of homeownership, rising wages, and protected savings, Canada is experiencing a huge intergenerational transfer of wealth right now.
What makes it so efficient is that Canada has no formal, stand-alone inheritance tax or estate tax on recipients, so barring capital gains taxes and probate fees, a larger portion of a family’s wealth transfers to the next generation.
Higher base wages
The federal minimum wage in the United States hasn’t budged in more than ten years. Canadian provinces often increase their minimum wage floors to account for inflation and the cost of living.
Raising the bottom for entry-level and service-sector workers means they have a stronger economic floor. Low-wage workers can then spend more on the economy, pay off debts, and stay away from predatory payday loans.
Funded public pensions
Canada’s retirement system is built around a very successful tiered public system: Old Age Security and the Canada Pension Plan. Canada’s CPP is one of the best-managed pension funds in the world and is regarded as being sustainable for the long-term.
In fact, it is fully funded for the foreseeable future, unlike many state pension plans in the United States, which are woefully underfunded.
Stricter credit regulations
Predatory lending laws, credit card interest rates, and debt collection laws for Canada are all federally regulated.
When compared to Americans, it is much harder for Canadians to fall prey to hidden fees, exorbitant interest rates, and predatory auto loans that leave people in never-ending debt.
Uncapped housing profits
If a Canadian sells their primary residence, we keep 100% of the proceeds gained tax-free due to the federal Principal Residence Exemption. Since Canadians do not have a dollar limit on their principal residence exemption, if you own a home in Canada in a place like Toronto or Vancouver where real estate appreciates greatly, you could make over a million dollars in profit and not pay a dime of tax.
However, if an American citizen were to make more than $250,000 ($500,000 Married filing jointly) in capital gains on the sale of their primary residence, the IRS Section 121 will only allow them to exclude $250k / $500k of gains.
High union protections
Canada has an average union density across the workforce of about 30%, almost triple that of the U.S.’s 10%.
This structural advantage affords the average Canadian worker far greater institutional power to demand higher base pay, guaranteed benefits, and rigorous, legislatively enforced severance packages.
In contrast, most Americans work under at-will-termination employment laws, placing families at extreme risk of unforeseen wage loss.
Capped personal liability
Canada’s civil justice system has a long-standing, strict, and non-discretionary cap on “non-pecuniary” damages (e.g. pain and suffering). This ceiling was established by the Supreme Court of Canada’s 1978 decision law case, called the “Trilogy”, which limits these subjective damages to approximately $470,000 CAD adjusted for inflation.
Since Canadian law forbids civil judgments for subjective harm from ever reaching multi-millions of dollars, business insurance premiums are affordable, protecting entrepreneurs from the aggressive, equity-wiping lawsuits common in the U.S.
Sources: Please see here for a complete listing of all sources that were consulted in the preparation of this article.