The three faces of Canada's brain drain: talent, entrepreneurs, and businesses.
Examining the ways Canada is losing its most ambitious people.
A TORRENT OF TALENT
A recent TD Economics report confirms that Canadian brain drain is very real. But, as many in the tech industry know, it’s worse than that.
The roots of Canadian brain drain run deep.
Canada boasts a long history of educating homegrown talent, churning out leading research, and attracting highly skilled immigrants. As a result, the country has one of the most educated populations on the planet and a higher-than-expected capacity for research and innovation.
But Canada’s inability to retain many of its most ambitious citizens does not reflect those strengths.
A TD Economics report released in May of 2026 calls this a “silent” brain drain. But as many in the tech industry already know, that drain can be pretty loud and torrential.
Speaking at Toronto Tech Week 2026, Uber Co-founder Andrew MacDonald explains how big the brain drain problem has become.
“I think we have a bigger problem today… the most highly contributing members of society are leaving. It’s not just doctors, it’s capital. It’s entrepreneurs. It’s trained senior executive talent. It’s people who just want to like build the Canadian dream, but take that to America.”
That drain siphons off our most skilled contributors — and most fruitful tax base:
Workers: like engineers, doctors, and nurses
Entrepreneurs: builders, from AI to IT
Businesses: which create growth and jobs
This is a systemic problem and appears to range from the cultural (risk aversion and tall poppy syndrome) to the structural (high personal and corporate taxes).
As a result, in some ways, Canada has become a feeder system for the U.S. innovation economy. Canadian founders and researchers go on to create immense value and generate high-paying jobs elsewhere. That production translates into significant tax revenue paid by the corporations, employees, and founders.
It begs the question: Imagine if even a fraction of those ventures remained anchored in Canada?
Culture clash: The ‘tall poppy’ problem
Could our brain drain problem have some roots in our culture?
‘Tall poppy syndrome’ is roughly defined as the practice of throttling or sidelining people with ambition. That marginalization is considered by many to be more common across the former British colonies:
“In Europe and Australia, there is something called the Tall Poppy Syndrome: People like to cut the tall poppies. They don’t want you to succeed, and they cut you down — especially people from your own social class.” — TV Producer Mark Burnett
The U.S., in contrast, was seeded with an Ayn Rand-like individualism. We see this reflected in how the U.S. ecosystem attracts ventures, capital, talent, and more lucrative positions.
A knock-on effect of Canada’s notorious risk aversion is that it makes life harder for young people wanting to move into the middle class. Now, tales of opportunity to the south have piqued the interest of many young Canadians. This is no surprise. Grads are struggling to find work in their specialty, and even in ‘survivor’ jobs are often out of reach.
Revealing that sentiment, a 2025 Ipsos survey found that a whopping 43% of Canadians aged 18-34 would vote for Canada to become part of the U.S., followed by 33% aged 35-54 and 17% aged 55+.
Those sentiments were based heavily on financial security.
Three faces of Canadian brain drain
1. Talent gets pruned
For a smaller country, Canada has done an impressive job of generating globally competitive talent, from STEM to the arts. But it also loses them at higher rates.
Canada has become a veritable training ground for high-potential individuals who ultimately become assets for the U.S. economy. But this problem is worse than traditional brain drain metrics suggest.
A May 2026 TD Economics report, ‘Canada’s Silent Brain Drain’, found that the country’s productivity challenges are being magnified by poor retention of top talent. While Canada has strong education and research outcomes, our commercialization, business R&D, tech adoption, and company-scaling potential remain low.
The loss of our top talent extends to immigrants in Canada as well. TD Economics found that those with more education were more likely to leave Canada: doctorates at 34%, master’s at 32%, and bachelor’s at 24%.
“The industrial revolution of our time is happening now, and the forefront is extremely concentrated in one place, and that is San Francisco. Our best people and our best technologies all go to labs and companies. If we invented the future here in Toronto, it slipped away.” — Alex Danco, Andreessen Horowitz Editor-at-Large
Better Dwelling reports that Canadians and permanent residents are leaving at a rate never seen in 74 years of tracking (based on Statistics Canada data).
STEM professionals in particular tend to move to the U.S. most often, partly because it is easier to immigrate with a STEM degree than with a degree in another discipline. Those from highly ranked universities are more likely to leave, especially within the first 5 years after graduation.
TD Economics reports that the highest-performing Waterloo students are most likely to leave, doing so at roughly twice the rate of bottom performers. Meanwhile, the U.S. remains “highly selective of the labour it attracts from Canada, absorbing its upper tail.”
That migration is not just permanent; there is also a drain of temporary high-performing workers. This factor is not included in many brain-drain metrics, yet it significantly worsens the problem.
“If you are a young, ambitious person, the obvious thing to do is to go to San Francisco. If you are a founder looking for money and signal and people and proximity, the obvious thing to do is to go to San Francisco.” — Alex Danco, Andreessen Horowitz Editor-at-Large
Why talent is leaving
While top graduates in Canada may earn fairly well by Canadian standards, others are leaving for better compensation, equity, and upward mobility — all of which are significantly higher in the U.S.
Median pre-tax tech wages are ~46% higher in the States (TMU, 2023), and taxes can be 30-40% lower.
High-skill exits reduce productivity here at home, limit entrepreneurship, and lead to knowledge loss. Productivity is one of the most important factors in building the middle class, reducing poverty, and improving living standards. This suggests that brain drain could be part of why Canada’s standards have been in decline for years.
The result is a runaway feedback loop that decreases upward mobility, shrinks our middle class, and makes life harder for everyone left in Canada.
“I think when you have people leaving because they feel like we’ve lost the plot a little bit here. Not just in the domain of tech. — Uber Co-founder Andrew MacDonald
2. Entrepreneurs and capital flee
The Canadian dream heads south as builders flee to greener pastures.
Beyond its individual workers, Canada is also losing the entrepreneurs and founders that drive innovation and scaling.
These discussions have been percolating in the tech community for years, but notable leaders and industry groups like Build Canada are pushing for change.
Canada currently lags behind in business R&D and tech adoption, scaling, and commercialization. The tax environment is also not particularly friendly.
High personal tax rates begin at relatively low thresholds (~C$218k federal top bracket, adjusted), and business taxes are fairly complex. This all places a focus on planning systems rather than scaling a business.
Ultimately, builders are incentivized in multiple ways to move to the States.
Canada's top marginal tax rates exceed 50% in places like Ontario (53.53%), Quebec (53.3%), and BC (53.5%). Compare that with Florida and Texas, which max out at a flat 37% federal rate. Even high-tax U.S. jurisdictions like California (~50.3%) and NYC (~52%) have far higher income thresholds before the top rate applies. While a Canadian hits the 53%+ ceiling at around $260,000 CAD (~$190,000 USD) in BC, an American must earn between $1 million and $25 million USD to trigger those equivalent 50%+ rates.
Canada’s shrinking middle class is also reflected in the business world. Canada relies heavily on small businesses for employment (47% of jobs vs. 33% in the U.S.), while medium and large firms employ far fewer people than in the U.S. This is partly due to less available capital, regulatory burdens when scaling, and smaller markets and revenue.
As a result, ambitious entrepreneurs and capital flow south where deeper VC markets, larger addressable markets, equity-heavy compensation, and clearer growth paths exist.
3. Corporations pack up and head south
People, builders, operations: the brain drain trifecta emerges when a corporation leaves.
It naturally follows that many Canadian-founded firms would choose to scale in the U.S., given access to larger markets and more favourable tax regimes and regulatory frameworks.
When companies relocate even part of their operations, stock market indexing, and/or headquarters, or choose to scale up stateside, this can reduce the number of roles in Canada, dampen industry growth, and reduce the tax base.
For instance, in January 2026, GFL Environmental (North America's fourth-largest waste management giant with a $21-billion market cap) announced it would relocate its headquarters from Ontario to Florida, citing market access, market indexing, and the ability to attract highly skilled talent stateside. That was largely a structural move. While GFL has left its footprint in Canada, the movement of executives siphons off decision-making and wealth-creation opportunities, which reduces the company’s capacity to scale in Canada.
If companies can’t reach critical mass at home, Canada risks becoming a “branch-plant nation”, something that AI Minister Evan Solomon acknowledges. He admits: “We’ve got to do better.”
“The fundamental problem isn’t attracting talent but anchoring it: Canada produces strong research and education outcomes but underperforms on commercialization, business R&D, tech adoption, and scaling firms, which lowers the domestic returns to skill and entrepreneurship versus U.S. innovation clusters.” — TD Economics
The movement of businesses and builders compounds the traditional brain drain of individuals. Without a healthy middle tier of SMEs, talent is no longer anchored in Canada, and entrepreneurs have fewer skilled people to build with.
Complex and hefty corporate taxes also reward staying small or lead to a focus on tax-planning and deferral strategies rather than scaling and investing in growth.
Creating a winning culture
While businesses and people are currently forced to build small, earn small, or look for greener pastures, there are ways Canada can break out of its feeder-system cycle of educating talent, incubating ideas, and then waving goodbye as companies, jobs, and tax revenues flee.
Perhaps Calgary can provide a template. With lower operating costs and higher salaries, startups enjoy a more convivial environment in which to scale. Its technology sector, for instance, has enjoyed a 40% annual growth rate in tech roles since 2021, which is four times the Canadian average of 9.6%. According to CBRE, between 2021 and 2024, Calgary’s tech workforce expanded by over 61% (CBRE). As Brad Parry, CEO and President of Calgary Economic Development, explains in the National Post, Calgary has “no sales tax, no land transfer tax, and one of the lowest corporate tax rates in all of North America.”
Similarly, the TD report suggests that provinces should embrace incentives that encourage companies to scale rather than relocate to avoid taxes. Addressing tax structures (like personal tax thresholds and business tax simplification) could help build up the missing corporate middle.
Canada’s culture of risk aversion may be difficult to change, but it can start at the top. The first step is to acknowledge the problem. The next step? Creating a healthy ecosystem for SMEs and tall poppies.
“The good news is I do feel like momentum is starting to shift ot that front… but I think brain drain understates the problem that we’ve been having for the last decade.” — Uber Co-founder Andrew MacDonald