A new TD Economics report warns Canada is quietly losing highly skilled workers, entrepreneurs and STEM graduates to the United States through work visas, tech recruitment and stronger economic opportunities.

BNN Bloomberg spoke with Francis Fong, managing director at TD Economics, about how Canada’s tax structure, productivity challenges and lack of business scale are contributing to the country’s ongoing talent retention problem.

• Canada is quietly losing highly skilled workers, entrepreneurs and STEM talent to the United States through stronger compensation and career opportunities.
• Productivity challenges are being worsened by weak business scale-up, lower venture capital availability and a lack of globally competitive firms.
• High marginal tax rates and lower income thresholds are creating competitiveness concerns for professionals and business owners.
• Lower-tax U.S. states such as Texas and Florida continue attracting Canadian workers and entrepreneurs seeking higher growth opportunities.
• Retaining top talent will require stronger economic competitiveness, improved business investment and better conditions for firms to grow domestically.

Read the full transcript below:

ROGER: A new report from TD Economics argues Canada is quietly losing many of its most skilled workers, entrepreneurs and STEM graduates to the U.S. The report calls it a “silent brain drain,” led by highly skilled professionals leaving through work visas, tech recruitment and stronger economic opportunities. Joining us now to discuss this is Francis Fong, co-author of the report and managing director at TD Economics. Francis, thanks very much for joining us.

FRANCIS: Thanks for having me, Roger.

ROGER: Okay, how does this compare to the ’90s when we saw a brain drain then? Is it larger? Different sectors?

FRANCIS: No, I think, Roger, you pointed to it correctly. This is not an issue that is brand new for Canada. It’s one that we’ve been facing for quite some time. The reason we wrote this report, however, is to highlight the fact that we’re sort of in this moment in time right now, with our relationship with the U.S. deteriorating and us trying to diversify our trading partners, to highlight the fact that we are still not really all that competitive. Our productivity growth is quite low and has been for a few years now. So, banging this drum about wanting to raise this issue around competitiveness, that was the goal of this.

And in the report, we highlight the fact that our personal tax rates — relatively high-income earners face extremely high marginal tax rates — in combination with a business tax architecture that can often drive entrepreneurs and business owners to pursue tax-planning initiatives to try and lower that rate. All that leads to an inefficient allocation of resources, low productivity growth and the risk that we’re obviously highlighting here: the risk that our high-skilled talent leaves the country for better opportunities offshore.

ROGER: All right, let’s talk about the tax. There’s probably more than just tax and competitiveness, but let’s talk about that. How different is it? How much of an advantage do the Americans offer when it comes to saving money?

FRANCIS: Yeah, I mean, there are sort of two points to this here. One is just the actual tax rate and when it hits. So, if you compare Ontario, B.C. and Quebec, the highest marginal tax rate rises above 50 per cent. In Alberta, it’s 48 per cent, but they all hit at that top federal income tax bracket, around $275,000 or a little bit higher than that.

Whereas in America, they might have equivalently high marginal tax rates in places like California or New York, but the levels of income they hit at are far, far higher than ours — upwards of maybe US$700,000 to US$1 million. So, if you sort of equalize the income levels, the incomes we’re earning here, where we’re paying the highest marginal tax rate, are comparatively relatively low.

That’s the major issue here. Even high earners — or what you might not even consider to be a high earner in America — if you brought that income over here, they’d be paying extremely high rates in Canada.

ROGER: And is there enough to convince government to give breaks, or is that something we just can’t see happening here?

FRANCIS: So, here’s the challenge. It’s hard to take high personal marginal tax rates as a standalone issue where we can just lower rates here. We have to consider the fact that our business taxes have these odd distortions that can create a disincentive for firms to grow.

We often refer to this gap between the small-business tax rate — the favourable tax rate we offer small businesses below a certain size — as being really, really low relative to the general corporate income tax rate. Basically, what happens is when a firm starts to grow, once they reach above a certain size in terms of income and asset thresholds, their marginal tax rate rises extremely high.

As a result, you have business owners pursuing tax-planning strategies and managing their affairs in a way where they can defer those taxes or lower their effective tax rate, which salary earners don’t have the opportunity to do. So, there are a lot more issues than just high personal marginal tax rates, which we try to go through in this paper. It’s quite complex in that regard.

ROGER: And also one of the things you mentioned: productivity and scale problems. We’re simply not big enough, are we?

FRANCIS: Yeah, and that’s ultimately the issue. At the end of the day, there’s the one side where our tax system might not be super competitive, but on the same token, the biggest draw for folks to the U.S. is really just the opportunity to earn more.

All that argues that Canada has to be that much more competitive for us to retain our top talent — our doctors, our entrepreneurs, our tech workers and so on — relative to the U.S., which is sort of this elephant in the room. We need to figure out some way of maintaining that.

And that’s also not getting into the adjacent challenges related to Canada’s relatively high regulatory burden and our relative lack of venture capital and patient capital. All these issues ladder up into the productivity problems that we face today.

ROGER: And have you talked to people who have left? Did you talk to anybody who left and ask, “Hey, what would bring you back?” Are there things that might surprise people that would bring them back?

FRANCIS: That’s the trillion-dollar question, Roger. It’s not something we unfortunately were able to do, but I certainly can tell you that this is something government is really focused on right now.

What we’re hearing out of the federal budget last year and out of the spring economic update earlier is that there’s a huge focus in government on trying to get firms to locate and remain here. Infrastructure is obviously where they’ve put a lot of their eggs in that basket, which is ultimately a good thing given our infrastructure gap that we’ve been dealing with for quite some years too.

But obviously, it’s just one piece of the puzzle, and there’s still time yet to see how this government wants to tackle this challenge.

ROGER: And this move, is it fairly uniform across the country, or are certain areas being hit harder than others? Could you break that down at all?

FRANCIS: Well, ultimately, I think this points to the fact that we are a very north-south-oriented country. So, I don’t think it’s necessarily one region getting hit harder than another, but certainly it’s the case that we’re going to be losing talented entrepreneurs to our closest trading-partner states.

So, obviously Ontario and Quebec will lose people to New England, but we do see quite a lot of movement of Canadians to lower-tax jurisdictions and high-growth states — places like Florida and Texas. Part of that is going to be retired people just going down south, so we do have to present some nuance in the numbers. It’s not all talent moving down there.

But on the same token, we can say the same thing about what’s going on in the U.S. You can compare high-tech states like California and New York, and they are also losing people every single year to Texas, Florida and other lower-tax jurisdictions. So, the same sort of tax dynamic exists down there as well, and we’re part and parcel of that larger story.

ROGER: All right. Like they said in The Wire, “Follow the money.” Francis, thank you very much for joining us, sir.

FRANCIS: Thanks for having me, Roger.

ROGER: Francis Fong, managing director at TD Economics.

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This BNN Bloomberg summary and transcript of the May 25, 2026 interview with Francis Fong are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.