Ted Cruz may have been born in Canada, but Bernie Sanders is the U.S. politician who seems most interested in Canadianizing his country via this 2016 election. So it’s a good idea to look at what the avowedly socialist Democratic contender is proposing, as it has played out across the northern U.S. border. Hint: it’s expensive.
Whether it is single-payer health care, or free tuition for post-secondary education, paid family and medical leave for workers, or extensive public infrastructure projects, most of Sanders’ favorite solutions are taken from the policy book of America’s friendly—and very much more left-wing– neighbor.
In some cases, Sanders is “Canadian-light,” putting forward proposals not as socialist as their Canadian equivalents. In other cases, Sanders’ ideas are even more socialistic than their Canadian equivalents—though they tend in the same direction.
Take his biggest ticket item: health care. Sanders estimates the system he espouses will cost an additional $1.4 trillion per year. Americans won’t need to pay for private insurance under his plan as they instead will get “free” health services—like Canada.
Of course, the extra cost will have to be covered in some way. That will be through income-based taxes on employees and households. Federal income tax rates in the Sanders Administration would be hiked substantially, with the highest rate of 52 percent applied to incomes in excess of $1 million. Capital gains and dividends would be fully taxed as income and various deductions curbed for the rich.
Canadians don’t pay directly out of pocket for hospital and physician services, and they pay at subsidized prices for drugs and other health care services. As in Sanders’ proposed scheme, Canadian income and sales taxes cover the costs, largely paid by the middle-class and rich.
With tax hikes imposed this year by the newly elected Trudeau government, the top total marginal income tax rate now averages 53 percent. Not far from Sanders’ idea.
The catch is that Canadians label anyone “rich” who has an income of more than $140,000 in U.S. dollars. Americans may find that the Sanders version of Canadian health care requires something similar.
To keep health costs low, which Sanders says he will do, the Canadian system rations services with long waiting times and tough limits on “non- necessary” services such as optometry, homecare, dental care and drugs. Health care is a right in Canada, just as Sanders hopes to achieve, but it is not always a right to timely, quality health care.
This has led middle-class and wealthier Canadians to seek “parallel” health services by travelling to the U.S.
As a response to that dilemma, Sanders’ health proposal would allow a European-style private medical system to operate alongside the “free” one. But that too is likely to be expensive, and something only the well-to-do can afford.
Sanders’ idea of free tuition for universities and colleges is more aggressively socialistic than in Canada where students pay roughly a fifth of their education costs. On the other hand, his idea of paid parental and medical leave for 4 months isn’t as sweeping as Canada’s one-year limit.
And Sanders’ proposal to build bridges, roads and other public infrastructure is not as big in relative terms as massive transportation and infrastructure spending planned by deficit-plagued Canadian federal and provincial governments.
Taken together, however, Sanders’ proposals will expand federal programs and push up taxes to levels similar or beyond Canada’s, equal to roughly 40 percent of U.S. Gross Domestic Product (current level, about 33 percent).
His ideas to pay for this include financial transaction taxes, expanded estate taxes (“death taxes”) and corporate taxes on income in tax-haven countries. Canada has none of these—yet.
On the other hand, Canadian federal and most provincial governments impose value-added taxes as high 15 percent in some provinces as well as new levies on carbon. Sanders wants to cut carbon emissions by 40 percent within 15 years with a whopping carbon tax, elimination of fossil fuel subsidies and “massive investments” in renewable energy.
So welcome to Canada, America! Your close neighbor may soon get closer than you ever imagined.
Jack M. Mintz is the founding director and President’s Fellow at the University of Calgary School of Public Policy and currently Scholar-in-Residence at Columbia Law School.