Equalization Payments

We know you know (or hope you know) there are 50 states in the U.S. But do you know how many provinces there are in Canada? (Canadian readers: put your hands down...we're proving that Americans are oblivious and self-obsessed here.)

Bzzzzzz. There are 10 provinces in Canada. Some are wealthier than others (uh, yeah...some have one of the biggest cities in North America located inside them, others have more moose than people).

Equalization payments represent the way the Canadian federal government evens things out. The central government hands out these subsidies to the poorer provinces to even out the tax revenues.

According to the National Post, six provinces received payments in 2017 (with the bill totaling $18 billion): Ontario, Quebec, Nova Scotia, New Brunswick, Manitoba, and Prince Edward Island (home of Anne of Green Gables).

You probably noticed that this list seems to undermine our Toronto/moose joke from earlier. The provinces with Canada's major cities (Ontario and Quebec) receive payments, while places where moose might have the franchise (i.e. Saskatchewan)...don't. Well, first off, we didn't say which was the rich group and which was the poor group. You assumed the urbanized provinces would be wealthy, so...that's on you. Best check your assumptions at the door next time.

Second, the formula used for figuring out the payments heavily relies on per capita tax revenue figures. Natural resource revenue also plays into it. Ontario may have a lot of people compared to the rest of Canada (more than a third of Canada's total population lives in the province), but that also means they have a lot of poor people.

So, for instance, Ontario and Quebec together make up more than half of Canada's total GDP. But per capita (per person), GDP for each of those seemingly prosperous provinces is less than that in Alberta, Saskatchewan, Newfoundland, and Labrador.

Alberta's actually the surprise (to self-obsessed Americans) queen of the Canadian provinces. It has by far the highest per capita GDP and highest average income in Canada.