Why Canada's Best Business Builders Are Choosing America

Added: 2026-05-28

[00:00:00]Canada is losing its best entrepreneurs.

[00:00:02]Not slowly, not gradually, but fast. And the data backs it up.

[00:00:08]What's up, guys? I'm Phil Shank, a Calgary realtor and mortgage broker with the Live Inner City Real Estate team, where we cover Calgary news and real estate that matters. According to a CD Howe Institute report, [music] Canada has been experiencing a significant net outflow of high-income earners and entrepreneurs for years. The trend accelerated sharply after the federal government's 2024 capital gains inclusion rate increased, [music] raising the rate from 50% to 66.7% on gains above $250,000.

[00:00:39]Shopify CEO Tobi Lütke called it a brain drain accelerant. Dozens of prominent Canadian founders signed an open letter warning it would drive talent and capital out of the country. [music] And they weren't wrong. Here's a structural problem. Canada's startup ecosystem is hollowing out. Not because we lack talent. We don't. But because the economics of building a company here increasingly [music] don't make sense. A founder selling a $10 million company in Canada >> [music] >> now pays materially more tax than the same founder in Texas or Florida.

[00:01:16]Canadian venture capital sits at [music] $7.7 billion annually versus $170 billion in the US.

[00:01:24]>> [music] >> A 22 to 1 ratio in a country with 1/9 the population. We have University of Toronto, UBC, Waterloo, McGill producing world-class talent, [music] but we're essentially running a talent subsidy program for the United States. We educate them, we train them, [music] and then America offers better economics, and they leave. What needs to change?

[00:01:48]The fix isn't complicated. Reverse the capital gains inclusion rate increase.

[00:01:54]Expand the lifetime capital gains exemption beyond $125 million.

[00:02:00]Simplify the SR&ED tax credit and create incentives for Canada's $2 trillion in pension fund assets >> [music] >> to invest in Canadian startups instead of American ones. Here's the uncomfortable truth. Canada is a great place [music] to be an employee, but it's becoming a harder place to be an entrepreneur. When entrepreneurs leave, they don't just take themselves. They take their companies, their employees, their tax revenue, and [music] their ability to mentor the next generation of Canadian founders.

[00:02:31]That is a compounding loss and it gets harder to reverse the longer we ignore it. The best Canadian entrepreneurs of the next decade won't be building in Calgary or Toronto if we don't fix this.

[00:02:44]They'll be building it in Austin and we'll be reading about their success from here. Comment newsletter to get updates on this story or for more news that [music] actually matters. And share this with anyone you know who cares about our economic future.