Canada more free than the U.S.?

Oh Canada, here I come!

Well, not really. At least not permanently. This week I’m in Montreal and Quebec City for summer vacation. Before leaving, I decided to check out how the U.S. compares economically to Canada, and there’s no better source than the Heritage Foundation’s Index of Economic Freedom.  Believe it or not, according to Heritage’s 2018 report, Canada at #9 is more free than the U.S., which ranked #18.

Here’s how the U.S. stacks up with Canada:

Rule of Law

Canada bested the U.S. on Property Rights and Government Integrity, and virtually tied on Judicial Effectiveness.                                            

Government Size

Here’s why the U.S. got crushed – Canada has a lower Tax Burden and is in better fiscal shape than the U.S.

Regulatory Efficiency

When it comes to government red tape, the U.S. and Canada are at parity, except for Labor Freedom. In this category, the U.S. trounced Canada – one of the few big wins for Team USA.

Open Markets

Canada is a few bips higher on Trade Freedom and Financial Freedom, but the U.S. has a better investment climate.

While Canada now takes the top spot in the Americas, it may be endangered of being knocked off its perch.  Its overall score has fallen from previous years due to declines in the categories of Judicial Effectiveness, Government Integrity, and Labor Freedom.  Heritage reported that top tax rates have gone up nationally and in some provinces, and the government has been forced to scale back small-business tax reform. Moreover, the renegotiation of NAFTA has created economic uncertainty.

The Heritage authors are more optimistic about the U.S.  Its decade-long slide on the Index may be finally arrested. The U.S. managed to boost its score after the election of Donald Trump, and promises “a sharp break with his predecessor’s regulatory, tax, and trade policies.” Heritage reports signs of renewed labor market dynamism and increased growth, and major regulatory and tax reforms are spurring business confidence and investment.

If Trump got elected, dozens of celebrities declared they were going to move to Canada, including Barbra Streisand, Stephen King, Bryan Cranston, Chelsea Handler and Chloe Sevigny.  But it looks like they are all still here – wonder if it has anything to do with the tax cuts?

All things considered, I think I’ll be returning to the land of the mostly free.

Rowena Itchon is senior vice president of the Pacific Research Institute.


Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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