Brain Drain And High Taxes Essay Research

Brain Drain And High Taxes Essay, Research Paper

Brain Drain and High Taxes:

Is there a correlation.

Introduction:

Campaigners against high taxes use the problem of brain drain as the perfect scapegoat to portray themselves as defenders of national interest. Brain drain is a pejorative description of the tendency for skilled workers to seek employment away from their own country. Canada can relate to the brain drain problem and its worst enemy is the United States. The drain of knowledge started off as only a little trickle. But it became an issue of interest by the early 1990’s, as there was evidence of Canada becoming a net loser of skilled workers to the United States, even though Canada was also a recipient of skilled workers on a worldwide basis. “Taxation is testing the allegiance of some of Canada’s best and brightest”, claims John Roth who is the vice-chairman and chief executive officer of Nortel Networks (Canada Newswire, 1999, page1). A network design and engineering company like Nortel Networks has to deal with a shortage of skilled high-tech workers in Canada and thus blindly point the finger at high taxes to be the cause of this problem. Hence, clearly high-taxes have become a perfect excuse for those who are trying to avoid dealing with the real reasons behind the brain drain problem.

Referring to the statement made by the Canadian Alliance Leader, Stockwell Day that, “High taxes are pushing some skilled workers to the U.S” (Canada NewsWire, 2000, Page1). It clearly shows that, the above individuals have not taken into mind the correlation between the brain drain and other factors, such as Canadian public sector cutbacks, the lack of professional and skilled occupations available with higher salaries, and the insufficient amount of investment put into research development, which also have a major role to play. Realistically, the tax differential is not a major issue for Canadians who have moved or who are planning to move to the United States. And despite all the myths and research that claim high-taxes to be the primary cause for Canada’s best and brightest to cross the border, this so-called tax advantage from a move to the United States may not be very significant at all.

In order to clear up the misconception of taxes having to be the major cause for the brain drain, many articles have referred to a survey conducted by the PricewaterhouseCoopers and ComputerWorld Canada in September 1999, to back them up. More specifically, journalist Murray G. Dobbin wrote an article on the “Brain drain- nonsense”, and used this survey to strongly prove that the tax level in Canada has nothing to do with why people immigrate to the United States. The survey was conducted by asking high tech workers to list all the factors that they will take into consideration when looking for another job. And the results show that taxes did not even make it into the top ten considerations. The main concerns to the individuals in the survey were to do with the way their employer respected and supported them. Which was then followed by concerns to do with sufficient health care benefits, paid training and if the company was offering the latest technology for them to work with. Thus, the most significant reasons for Canadians high-tech workers to want to emirate to the U.S. had to do with factors related to the attitude of employers. “It is not surprising that those same employers look around for something else to blame. And as they are already on record as wanting to ‘down-size’ government social programs and income redistribution, why not blame taxes.” claims Dobbin and is evidently to case for many.

The cause for concern:

Based on the knowledge that,

“Emigrants to the United States are more than twice as likely to hold an university degree than are immigrants to Canada. However, because of the overall greater number of immigrants, there are four times as many university degree graduates entering Canada from the rest of the world as, there are university degree holders of all levels leaving for the U.S” (Education Quarterly Review, 2000, page 8).

So why then do we have to be concerned about the brain drain issue if Canada is not actually losing that many skilled workers to the United States. The concern lies in the fact that, those that are leaving are mostly from high-technology industries, which include engineering, computer science and communications. Also many workers employed in hospitals and schools in Canada are leaving as well. Consequently, it is necessary to focus on the reasons why such emigration occurs in the above-mentioned industries, as they are all vital pillars that hold up the Canadian Economy.

When dealing with the outflow of Canadian skilled workers, it not only deals with a loss to the Canadian knowledge-based economy, but it also implies a loss in societal investment made by the Canadian Government. Comparing the amount of investment in skill development, “Canada ranks first among the G-7 countries when it comes to education spending” (HRDC and Industry Canada, 1999, Page 5). With all the money invested, it should be a concern to the Canadian Government if all its profits, which are in the form of skilled workers, are leaving for the United States.

Furthermore, the likelihood of having a Canadian leave, based on his or her education level needs to be observed as well.