Reality check—top earners already pay majority of taxes in Canada

As Canadians grapple with a sputtering economy and the cost of living, some advocates want governments in Canada to increase taxes on high-income individuals. According to this narrative, the tax system is “unfair” and governments should raise taxes on “the rich” to pay for a greater social safety net that will supposedly help improve affordability.

But while the image of “robber barons” who don’t pay their fair share of taxes might provide a useful scapegoat for today’s problems, proponents of this narrative seemingly ignore the reality of how governments distribute taxes in Canada. Namely, that top earners already pay the majority of taxes in the country.

According to a new study published by the Fraser Institute, in 2026 the top 20 per cent of income-earning families in Canada will pay 65.3 per cent of all personal income taxes and 58.3 per cent of total taxes (income taxes, sales taxes, property taxes, etc.) to all three levels of government while the bottom 20 per cent of income-earning families will pay 0.7 per cent of personal income taxes and 1.7 per cent of total taxes.

Is this system fair? Proponents of higher taxes on top earners rarely define what constitutes a “fair” distribution of taxes, but the study offers some insight by comparing the share of taxes paid relative to the share of income earned across each income group.

For example, the top 20 per cent of income-earning families pay roughly two-thirds of all personal income taxes and more than half of total taxes, but earn less than half (49.5 per cent) of total income in Canada. In other words, top-earning families pay a disproportionately larger share of taxes compared to their share of income. Conversely, the bottom 80 per cent of income-earning families all pay a smaller share of taxes than their share of income. For example, the bottom 20 per cent earn 4.3 per cent of total income yet pay less than 1 per cent of personal income taxes and less than 2 per cent of total taxes.

Again, is that fair? That’s up for individual Canadians to decide. But these disparities are due to the “progressivity” of our tax system, which imposes higher tax rates as you earn more income—for example, the federal income tax rate (on the next dollar earned) at $50,000 of income is 14 per cent compared to 26 per cent at $150,000. This progressivity leads to a greater concentration of the tax burden on Canadians who earn higher incomes. Conversely, less progressive tax systems—which might feature a single-rate income tax (like Alberta had for many years) or impose the highest rate at a lower income threshold—tend to spread out the tax burden across all income groups.

In fact, when you compare the design of Canada’s tax system with other high-income countries, it turns out Canada maintains one of the most progressive tax systems in the industrialized world. Consequently, not only does Canada’s tax system impose an increasingly higher tax burden as you earn more income, it does so to a greater extent than most other industrialized countries. And the high progressivity of our tax system can discourage Canadians from working, saving or investing because higher tax rates reduce the financial rewards of these activities.

It’s easy to use high-income earners as scapegoats for today’s economic challenges, but in reality, they already pay the majority of taxes in Canada. Rather than continue to mislead Canadians, proponents of a greater social safety net should be honest about the tax system and the costs of more government.