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The Almighty Buck

The Price Of Doing Business 797

Posted by michael
from the they're-not-even-a-real-country-anyway dept.
8127972 writes: "It seems that a ton of high tech companies are leaving cities (like San Fran) with high costs of doing business for cheaper cities (Washington DC is mentioned due to new government spending) or even cities in Canada. Sounds like American high tech workers are going to have to learn to say the word "eh?" a lot."
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The Price Of Doing Business

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  • Re:Sure, whatever. (Score:2, Informative)

    by Succa (108618) on Friday March 01, 2002 @02:49PM (#3093097) Homepage
    Most people overlook Canada when it comes to being a tech "hotbed", but there are lots of great companies up here. Ottawa (Corel, Alcatel, Nortel [!]), Waterloo (RIM, Open Text), Burnaby BC (Electronic Arts), Toronto (guh...I dunno), and Montreal (Softimage, Discreet, Zero Knowledge) are the cities I'd be choosing to set up shop. Ottawa in particular has a wealth of (struggling) tech companies over in the west end, as well as the Ottawa Linux Symposium. Canada: not just for doughnuts anymore!
  • Re:Interesting (Score:2, Informative)

    by Sakhmet (137111) on Friday March 01, 2002 @02:56PM (#3093172)
    Interestingly, the "Brain Drain" has also been called a hoax. It seems lately that a lot of skilled American workers are moving up here to follow the companies that are moving up here. Especially since Ontario has been named the most cost-effective place in North America to do business.

    And Canada is generally considered (I don't actually support this opinion) a "better" place to live than most other countries.

    Sakhmet.
  • by bigmouth_strikes (224629) on Friday March 01, 2002 @02:57PM (#3093187) Journal
    Here's [homefair.com] a neat tool that let's you compare what your income would have to be elsewhere in order to have the same lifestyle.

    $100,000 in Oklahoma City compares to $279,000 in Menlo Park.

    I saw it on the Internet, so it must be true.
  • Re:What th--?! (Score:3, Informative)

    by dhamsaic (410174) on Friday March 01, 2002 @03:01PM (#3093230)
    It's from the movie South Park: Bigger, Longer and Uncut. More specifically, it's from the song "Blame Canada", which, as the title implies, blames Canada for the problems of the world. It is said between song lines by one of the bystanders in the movie.
  • New Hampshire (Score:1, Informative)

    by Anonymous Coward on Friday March 01, 2002 @03:10PM (#3093322)
    Cities like Manchester and Portsmouth are becoming tech hotbeds because of the following bennies:

    Close to Boston without the expense.

    Easier commute. Less congestion and NH drivers are not selfish bastards.

    Cheap rents. You can get a 2 bedroom apartment for as little as $700/mo. Office space is cheap too. Less regulation. NH is way more laid back than MA is in the area of business regulation. * No income tax. No sales tax. Taxes are generally low except property taxes in rural areas.

    Incentives by Gov. Shaheen. to entice tech companies to NH.

    Sundial Avenue in Manchester is Telco central. Gobs of fiber avalable!

    Home to companies like PC Connection and Tyco.

    The lifestyle here is cool too. If you live in Manchester, the mountains (camping, skiing) is an hour away. The beach is 40 min away from Manchester too. The people here are alot more laid back than in MA.

    - mindstom posting as AC because he can't find his password.
  • food for thought (Score:2, Informative)

    by eracerblue (473104) on Friday March 01, 2002 @03:17PM (#3093395)

    i like the "even Canada" statement. said as if it were completely outrageous. "even timbucktwo..."

    perhaps the weak Canadian dollar and the dual Canadian olympic hockey golds will be joined with a monumentous reverse brain drain. Canada's been complaining about it for years... maybe the US will get a kick at the can.

    and i see the "baren glacier as soon as you hit the border" misconception is still alive and well. Vancouver, Calgary, Toronto, Ottawa, Montreal, and others are massive metropolatin centers with similar climate to many US cities. in Vancouver it rarely freezes and typically has winter temperatures in the mid-high 40's. (that's around 8degC... eh?)

  • Canadia (Score:5, Informative)

    by maggard (5579) <michael@michaelmaggard.com> on Friday March 01, 2002 @03:23PM (#3093464) Homepage Journal
    No, I doubt lots of American high-tech employees will come flooding to Canada. For one thing it's rather difficult for a US'er to get a work permit. Like the US Canada gets lots of applications but has commitments like being a Commonwealth nation, there are different priorities. Furthermore with Nortel, Corel, and the like still hurting there's no employment crunch up here, no need to invite folks from south of the border.

    Next if US'ers moves here they'll be paid in Canadian dollars. While you'll live well in Canada it's a big pay cut from the US, especially when you add taxes on top. Furthermore prices in Canadian cities have started to rise and while they don't compare to NYC, Boston or SF they're still shocking the natives and expensive in local terms.

    Finally there are the cultural differences. While visiting Toronto or Vancouver may feel very familiar to a US'er that changes when you actually live here (Montreal is immediately obvious as being different.) There're the little things like brands being different, everyone being that one notch politer, and Curling being a real sport. There's also a dearth of ghastly evening news (you'd think Canadians are the world's worst drivers from watching TV news until you realize there aren't as many shootings and other violent incidents for the if-it-bleeds-it-leads stories) and lots more interest in international events.

    However there are even more important differences. One is the Quebec issue. This is where I live but it comes up everywhere across the nation: French language laws, government policies, separatism, and the economic shock-waves every time Quebec threatens to leave.

    Other significant differences:

    • Little separation of Church & State with things like religious lessons in schools.
    • However by-and-large Canada is more liberal then the US and does have far fewer of the extreme right-wing biblethumpers.
    • Canada doesn't place individual liberties above all else; the general good is at least as important.
    • The Provinces are stronger politically then US States and there's a lot more Federal/Provincial jostling.
    • Strong social policies often more in line with European models then US.
    • Political parties that don't map at all onto the US model.
    • Socialized Medicine (services are generally good in spite of the horror stories often heard in the States.)
    • Establishing credit across the border can be difficult, sometimes very difficult.
    • Lots of technology comes out later in Canada (wireless Palms) or not at all (TiVo.)
    • While Canadians get US TV & somewhat radio there are lots of programs, acts, and personalities that are big in Canada but unheard of in the US. Some are programs like "This Hour Has 22 Minutes [22minutes.com]" and others are bands that make Top-10 in Canada but never rise above Top 500 in the US.
    No, I like living in Canada a lot, and US friends love visiting, but ask any US expat. living in Canada and they'll tell you it is different and it's more then the good beer.

  • by Tackhead (54550) on Friday March 01, 2002 @03:23PM (#3093466)
    > Canada? Wouldn't the taxes alone make that less appealing? When I think it's expensive in California, all I have to do is remember the GST and PST I paid in Ontario. Gads. Probably lots of available land, but so has most of the midwest.

    According to Ernst & Young Canada Tax Calculator [ey.com], marginal rates in most provinces top out at around 40-50%.

    If you're in CA (California) and making $US 75K, you're paying a marginal federal rate of 27%, plus 9.3% state taxes (on everything over $30000), plus 6.3% for the SS pyramid scheme (up to $86000 and increasing by 5% per year), plus another 1.5% for medicare taxes. Works out to a marginal rate of about 45%.

    If you're in .ca (Canada) and making $CAD 75K, you've stopped paying into CPP (the Canadian version of the SS pyramid scheme) and EI (unemployment insurance) after C$35K or so. The marginal rates aren't really any different.

    Of course, a $CAD is worth about $0.63 US, so your C$80K is only $50K. But the cost of living is much lower.

    Got investments? Canada taxes capital gains at only half the marginal rates, and has no long-term vs. short-term rate difference. (In the US, you have to hold it for a year to qualify for the 20% "long-term" federal rate, and in CA, you're still paying that 9.3% CA income tax on it. So your long-term capital gains in California are taxed at 29.3%, and your short-term trades are at 40%. In Canada, all trades are taxed at about 20%.)

    GST/PST? OK, compare 15% vs. 8.25%. But how much do you spend, vs. how much do you save? The better-off you are, the less a consumption tax hits you.

    And if you have kids, what do you get for your money? In the US, you pretty much need a private school and university education costs are about double. And you have to pay for your own medical insurance. In Canada, the health care for Bad Stuff (cancer, etc) sucks ass, but for 90% of the population that only has to deal with colds, flu, and the occasional broken bone, it seems pretty good.

    Bottom line - The US may be tax-competitive for an individual, but California sure as fuck ain't.

  • by csbruce (39509) on Friday March 01, 2002 @03:29PM (#3093521)
    almost 1/2 your paycheck goes to income tax, employment insurance, and the Canada Pension Plan

    You should manage your money a little better. I make over $80K and pay out only 25% for those items.
  • Re:Interesting (Score:3, Informative)

    by Tackhead (54550) on Friday March 01, 2002 @03:34PM (#3093574)
    > Interestingly, the "Brain Drain" has also been called a hoax. It seems lately that a lot of skilled American workers are moving up here to follow the companies that are moving up here. Especially since Ontario has been named the most cost-effective place in North America to do business.

    At the height of the "Brain Drain" (Canada-to-US migration of skilled workers), Ontario was governed by a socialist party and had marginal tax rates about 10-15% higher than its current rates (umm, and in conjunction with the tax hikes, welfare benefits doubled, and the commie bastards in power were confused as to why they'd gone to record deficits for the duration of their rule). British Columbia was in a similar mess.

    Both parties were swept out of office in landslide elections (Ontario about 6 years ago, BC more recently) and neoconservative governments were put in place with aggressive tax-cutting policies.

    Federally, Canada had a debt-to-GDP ratio of about 70%, and similarly high taxes. (Canadian tax brackets weren't indexed for inflation when inflation was under 3% -- as such, there was tremendous bracket creep). In this case, the party in power didn't change, but its policies did, largely due to the actions of a reasonably-clued Finance Minister.

    Canada appears to have done the right thing - cut taxes, cut spending, foster growth. But 10 years ago, there was no light at the end of the proverbial tunnel, and in a move reminiscent of "Atlas Shrugged", many Canadians simply gave up on their country and came to the States to seek their fortunes in the dot-com boom.

    Of course, the dot-com implosion is the largest factor in people migrating from California to cheaper jurisdictions, but at the rate US legislation is going, a "reverse Brain Drain" may well take place in a few years.

  • by Anonymous Coward on Friday March 01, 2002 @04:02PM (#3093833)
    yeh, but the aftermath of a Bush clan executive has destroyed teh infrastructure, tax base and school system there.

    add to it the terrible pollution problem...


    Again, the ignorance shown with that statement is astounding. There is no "destroyed infrastructure," no problem with the "tax base," and very little wrong with the schools in general. The pollution problem is largely confined to one semi-coastal city.

    As to the tax statement, Texas is one of fewer than ten states that have a currently balanced budget despite the recession, and Texas itself has yet to enter a true recession.

    Also, the Governor of Texas has very little power compared to the Lt. Governor by Constitutional design (Texans being suspicious of government historically). In a power ranking of state governors, the Texas Governor would rank 49th out of 50 with number 1 having the most power. This would leave any Governor of Texas little leeway to destroy anything, whether or not he/she had a "clan."

    Check your facts and reduce your ignorance. Or is that just your political bias showing through? (note that I did not endorse the former governor, I merely refuted your erroneous statements)
  • Dallas or Houston (Score:1, Informative)

    by Anonymous Coward on Friday March 01, 2002 @04:03PM (#3093848)
    Dallas, Tx is the largest IT market in the USA.

    Houston, Tx IT market is almost as large as Dallas.

    Both have extremely low cost of living and doing business.

    3000 square foot NEW house close to town in Houston costs $150k.

    Contrary to stereotypes, almost all Texans live in Dallas, Houston, Austin, or San Antonio.

    The funny thing is that San Francisco governemnt is correcting the overpopulation by raising the costs of living/business so that people/businesses leave...this corrects the high cost of living problem...

    Another rare piece of actual economics talk of 'supply and demand' on /.
  • My company did this! (Score:2, Informative)

    by justinstreufert (459931) on Friday March 01, 2002 @04:04PM (#3093857) Homepage
    The company I work for [redtrumpet.com] moved from posh, high-tech Northern Virginia to York, PA. York is a sad, sad city. Almost everyone is white, almost no one has an open mind and the main attractions are the Harley Davidson factory and the Hooters. Culinary choices range from Arby's to Old Country Buffet. The local strip mall is almost devoid of actual places to buy anything.

    Needless to say, I live 2 hours away and telecommute!

    The reason they moved there, of course, is that this part of York has extremely poor economics and is being targeted for "growth" by the government. They have established an Official Small Business Bribery Zone and give us tax breaks and free services. Woohoo!

    Justin

  • by Epsas (563099) on Friday March 01, 2002 @04:13PM (#3093958)

    Companies are finally feeling the budget pinch caused by doing business in NYC, Seattle or San Fran? Come to your senses and move to Hawaii!

    Hawaii has a warm, beautiful climate and some of the best karma on the planet. Unlike other parts of the USA, the people on the islands are genuinely kind-hearted and friendly to each other. - As long as you pack a sense of common decency along with your swimming trunks you will be treated as Ohana.

    The cost-of-living is not as extreme as popular legend would demand - there are many people who comfortably survive here making less than $30K a year. Think of what your high-caliber IT wage can do here. Think of how much more value your expensive IT employees will find in their paycheck. And yes, there is bandwidth and lots of it.

    A rich social ecology of Native, Asian, Pacific and European culture exists here. Not only is the food great (the best sushi in the US), but the level of cultural diversity is intoxicating to the average Western mind. There's nothing like walking through the park in the morning and passing by a group of Chinese seniors moving through their Tai-Chi exercises, and strolling back through it in the evening to the sounds of a practicing Samoan choir.

    There is a small, but growing, technical community in the islands - which has it's plusses: The technical community that does exist is small, active and very supportive of each other. Most Importantly, people don't yawn when you tell them that you program for a living. :)

    the moment, The Hawaiian economy is economically addicted to the Military and Tourism. Without solid alternative industries, the islands will become stagnant with the transient natures of it's current economic benefactors. - The politicians of Hawaii are slowly coming to their senses about this, and are starting to listen to reason instead of to their campaign contributions.

    Because of this, there has never been a better time to move your venture to Hawaii. The govmn't of the islands are actively seeking Tech Companies to move to the Islands, and provide great financial incentives to businesses wishing to migrate and to the entrepeneurs willing to build here. There has never been a better time to move your venture to "paradise."

    -- Apologies to the Hawaiian Sovereignty People who may be reading this...

  • by ari{Dal} (68669) on Friday March 01, 2002 @04:13PM (#3093959)
    Disadvantages

    lack of world class cities and attractions

    I don't know what Canadian cities you've been visiting...but they're obviously different from where I've been! Have you ever been to Montreal? It's like a bit of Paris (the good bits.. not the seedy nasty non-showering bits) dropped down into the heart of the country. I'd take a walk down St. Denis or Sherbrooke over New York's Fifth avenue any day. Not to mention the world-class dining, shopping, and the fabulous nightlife..the party doesn't even get STARTED here til 1 AM.


    And did I forget to mention the cheap cost of living (I rent a 4 1/2 - that's a two bedroom for the non-Quebecois - for $450 a month in a prime location), amazing public transportation system, and the caché of coming from one of the most recognized places in the world.


    I won't even get into Vancouver, Ottawa, Toronto, St. John's (Party town!), and all the other great spots in this country.


    Other than that, I must say I agree whole-heartedly! Canada rocks as a place to live.. though the taxes do suck (almost half my bonus went to taxes this year...whimper). But I think the public health care system and low costs of just about everything else more than make up for all that.. yes the salaries are lower, but then again, where in NYC or San Fran are you going to find a decent apartment for under $500 CDN?

  • by rudedog (7339) <dave@nOSPAM.rudedog.org> on Friday March 01, 2002 @04:22PM (#3094054) Homepage
    If you have a bachelors degree in computer science, you are entitled to get a job in Canada on a NAFTA TN visa. Yes, you need a job offer as a systems analyst to get a TN visa, but it's not difficult to do that (I did the reverse job hunting from Canada for jobs in the US and got two offers within a month). Once you have the job offer, you just present your offer letter and your degree at the border and they will issue you a TN visa.
  • Re:Dallas or Houston (Score:2, Informative)

    by jsmith_250 (563191) on Friday March 01, 2002 @05:22PM (#3094538)
    I live in Houston and love it. No state icome tax, and the cost of living is really low.
  • by Watts Martin (3616) <layotl&gmail,com> on Friday March 01, 2002 @08:11PM (#3095644) Homepage

    Well, actually, the HomeFair calculator does take the most important things into account, just not perfectly. It's using what's called a "cost of living index," which compares different categories of costs--rent, utilities, health care, etc.--and making the calculation based on that.

    No, it's not precise--by necessity it's using average COL values, presuming you are paying the median in all its values for everything. But it's not a bad ballpark estimate. Vacations and mail-order computers are not your most significant reoccuring expenses, are they? The most significant expense for nearly anyone is housing, followed (roughly) by utilities, transportation and local taxes. If I moved from Tampa to Santa Clara, the fact that a Titanium PowerBook is the same price in both places is immaterial. The fact that my $650/mo apartment here is an $1800/mo apartment there is very material... and that's the sort of thing that salary calculators do take into account.

  • by helleman (62840) on Saturday March 02, 2002 @12:42AM (#3096597) Homepage
    I'm surprised no one has given one of the biggest reasons why multinationals have moved their R&D operations from the US to Canada - and that is the huge tax breaks the Canadian government makes to companies that do R&D.
    Up to 40% of an engineers salary is paid by the Canadian government!!
    Check out The Washington Business Journal [bizjournals.com] for just one idea of why a company might want to move expensive R&D sites from the US to the great white north.

What this country needs is a dime that will buy a good five-cent bagel.

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