On April 16, 2024, Canada’s Department of Finance unveiled “Tax Fairness for Every Generation,” a program designed to increase tax rates in order to fund programs for younger voters. While the program is described by the Canadian government as an important step towards a more progressive taxation system, many see this as contributing to an already troubled national economy.
This article will discuss how Canadian citizens concerned about Canada’s uncertain economic outlook can secure a more promising future by pursuing U.S. permanent residency.
Canada’s New Tax Rates
Why Americans Pay Less Taxes Than Canadians
Fast Track to a U.S. Green Card: The EB-5 Program
EB-5 Visa for Canadians
Canada’s New Tax Rates
In its recently released 2024 budget, the Canadian government announced significant tax increases. Specifically, the budget calls for an increase in capital gains tax from 50% to 67% in order to pay for tens of billions in spending projects and programs aimed at improving the lives of younger voters.
These changes to the tax system are raising concerns for many Canadians who are already uneasy about the country’s existing financial landscape. Jessica Brandon-Jepp, Director of Fiscal and Financial Services Policy at the Canadian Chamber of Commerce, stated that “throttling the success of Canadian businesses with new taxes will limit opportunities and employment for Canadians, putting economic growth and productivity even further out of reach.”
In a review of the 2024 Federal Budget announcement, Beata Caranci, Senior Vice President and Chief Economist of Toronto Dominion Bank, said that the announced increased tax rates are, at best, “unhelpful in promoting capital investment that Canada desperately needs.”
Addressing additional provisions in the new budget, Brandon-Jepp went on to say that “the Canadian Chamber was disappointed to see the government double down on the harmful and punitive Digital Services Tax in today’s budget. This tax will affect far more than just large multinational corporations. If enacted, the DST will ripple across the Canadian economy to affect many small and medium businesses, and hurt Canadians.”
Particularly hard-hit by the new tax program are Canadian investors and entrepreneurs. Already, there is significant talk about Canadians seeking to take their business elsewhere. Regarding the new law, Beata Caranci recently commented: “The entire package of possible tax treatment… could very well be the straw that breaks the camel’s back and pushes [investment] elsewhere in a globally competitive environment.”
Higher tax rates are not the only fiscal challenge Canadian businesses and families are facing. After experiencing robust growth for several years, the Canadian economy has hit a significant slowdown. Similar to other countries, Canada has been struggling with high inflation in recent years, leading to a surge in interest rates. Moreover, a slowdown in GDP growth has resulted in lower demand for goods and services. This troubled economic situation has also caused a downturn in Canada’s financial markets.
Why Americans Pay Less Taxes Than Canadians
In contrast to Canada, the U.S. economy is strong, and it is widely acknowledged that Americans typically pay lower taxes than their Canadian neighbors to the north. For instance, data shows that, in 2021, as much as $14,493 per capita was collected for tax in Canada, whereas only $11,365 per capita was collected in the United States. A 2024 study conducted by the public policy think tank the Fraser Institute recently concluded that “Canadians are currently paying significantly higher tax rates than their American counterparts at all income levels.”
This disparity between tax systems can be attributed in large part to the differences in the two nations’ socioeconomic priorities. Generally, the U.S. tax system emphasizes individualism and limited government intervention in financial matters, placing a focus on incentivizing investment and entrepreneurship through tax cuts and deregulation.
Canada’s tax system, on the other hand, has generally focused on imposing higher tax rates on citizens in order to provide social benefits. Taxation revenue in Canada is more directed toward maintaining strong social safety nets, as well as subsidized services and social assistance programs. While both systems have their advantages and disadvantages, it is generally acknowledged that the U.S. tax system is more welcoming to entrepreneurs, investors, and the business sector in general.
As the cost of living in Canada continues to climb and economic challenges persist, an increasing number of Canadians are considering emigrating to other countries. Often and for good reason, the United States emerges as a top choice.
Additional Benefits of Relocating to the United States
The United States continues to stand as the most stable nation globally, with a robust economy and enduring political and social structures. With a GDP of $20.89 trillion, the U.S. maintains its position as the world’s largest economy. Furthermore, with a disposable income per capita of $54,854, the United States leads the world in individual wealth.
There are currently more than 800,000 Canadians living and working in the United States. Apart from enjoying a more advantageous tax system, Canadians are relocating to the U.S. in order to benefit from a larger job market, enjoy expansive cultural and recreational opportunities, and have more avenues for building wealth.
To achieve the American dream, a preferred path to U.S. permanent resident status for many is the EB-5 Immigrant Investor Program.
Fast Track to a U.S. Green Card: The EB-5 Program
The EB-5 program is often described as the most direct path to a U.S. Green Card. This is because the program does not require any type of outside sponsorship, nor does it involve complex processes involving the U.S. Department of Labor, as is the case with other programs.
Moreover, changes to the EB-5 program have dramatically accelerated the processing times of some EB-5 applications. For these and other reasons, the EB-5 program is often the choice of savvy foreign investors seeking a future in the United States.
What Are the Requirements of the EB-5 Program?
Created by the Immigration Act of 1990, the EB-5 program provides a pathway to lawful permanent residency for foreign investors.
To qualify for an EB-5 visa, a Canadian investor must invest a minimum of either $800,000 or $1,050,000. The lower investment amount is for investments made in a targeted employment area (TEA). A TEA is either a designated rural area, or a designated part of the U.S. experiencing high unemployment rates. The higher investment amount applies to investments made in any other region of the country not designated as a TEA. In either case, the United States Citizenship and Immigration Services (USCIS) requires that the investment, which is placed in a new commercial enterprise, must create or preserve at least ten full-time jobs for qualifying U.S. workers.
Regarding the management and oversight of the project, investors may directly finance and operate their own businesses. Alternatively, they may opt to invest through EB-5 regional centers. Regional centers coordinate larger projects by pooling investments from multiple sources, and also assume responsibility for the job creation requirement of the EB-5 program.
Once the investment is made and the requirements are met, the investor, their spouse, and their unmarried children under the age of 21 can become lawful permanent residents of the United States. You can read about a Canadian investor’s personal journey to U.S. permanent residency via the EB-5 program here.
How Can Canadian Investors Apply for an EB-5 Visa?
In order to apply for an EB-5 visa, the first step is to identify an eligible investment opportunity. Once a strong EB-5 project is identified, the investor files an I-526/I-526E immigrant petition. Depending on the investment vehicle selected, the application, which once took years to adjudicate, can now be approved in a matter of months.
If an investor is outside of the U.S., they can apply for U.S. permanent residency as soon as their application is approved, assuming visas are available for the investor’s country of origin. Fortunately for Canadian citizens, visas are almost always available for all EB-5 categories.
Following the approval of their permanent residency application, investors receive a conditional Green Card for a period of two years. Investors and their eligible immediate family members are afforded all of the benefits and privileges of permanent residents during the two-year conditional residency period. When the two-year conditional permanent resident status is nearing its end, investors file an I-829 petition to remove the “conditional” nature of their status and apply for full permanent residency. Detailed information regarding the EB-5 application process may be found here.
EB-5 Visa for Canadians
The path to U.S. permanent residency is unique to everyone, and each future U.S. resident brings to the process their own specific needs, goals, and resources. Having said this, the EB-5 program is fast becoming the “go-to” solution for many seeking to fast-track their journey to U.S. permanent residency.
EB5AN has helped more than 2,300 families from 60 countries relocate to the United States. Our expert team has more than a decade of experience, and offers clients first-rate, low-risk EB-5 regional center projects with 100% USCIS project approval rate to date.
If you are a Canadian citizen interested in obtaining the economic and personal benefits available through U.S. residency, please schedule a one-on-one call to speak with our team today.
