Atlantic Canada vs. New England: A Policy Competitiveness Scorecard

Past research has shown that Atlantic Canada chronically underperforms compared to New England across several indicators of economic performance. This paper builds on that research by examining policy differences between the Atlantic Canada and New England regions that may be contributing to the gap in economic performance. More specifically, we generate an economic competitiveness “scorecard” to illustrate policy differences between the regions. We find that tax policy in Atlantic Canada puts its provinces at a competitive disadvantage compared to the New England states. Atlantic Canada’s marginal tax rates are higher on high-income and middle-income individuals. Sales taxes are a larger burden on Atlantic Canadians. Finally, top corporate tax rates and top capital gains tax rates are also higher in Atlantic Canada. A similar story emerges in other areas beyond tax policy that affect competitiveness. Data from the Economic Freedom of North America report shows that the government has a larger role in Atlantic Canadian provincial economies than in New England states. We discuss evidence that shows that a larger government presence in the economy undermines competitiveness. We also show that Atlantic Canadian provinces all carry a greater debt burden than the New England states. We summarize our results in an economic competitiveness scorecard that reviews the policy differences between the two regions. Taken as a whole, this scorecard demonstrates that there are many ways in which all of the New England states enjoy a policy competitiveness advantage over all of Canada’s Atlantic provinces.