REGINA – The latest Fraser Institute study into the tax system in Canada finds that the top 20 per cent of earners in the country are paying over half the taxes of the country.
The study, titled Measuring Progressivity in Canada’s Tax System, 2026, found that in Canada’s progressive tax system the top 20 per cent of income-earning families are paying 58.3 per cent of total taxes. That includes personal income, sales and property taxes.
Jake Fuss, director of fiscal studies at the Fraser Institute and co-author of the study, said they essentially were looking at how much different income groups in Canada pay in taxes relative to their share of the income.
“So, we break up families in Canada into five income groups, so the bottom 20 per cent, the next 20 per cent and so on, all the way up to the top 20 per cent of income earning families in Canada.
This is a study they do every year, he said. It was inspired by much of the talk in Canada about whether wealthy earners were paying their fair share.
“You know, I think there's a lot of discussion generally about what the fair share of taxes is for different income groups in Canada,” said Fuss.
“And what we wanted to do with this study is root it in data and facts, so that people can have a discussion about ultimately what is fair in order for different income groups in terms of how much they pay in taxes, but ultimately having that discussion first about, you know, here's the data, here's the facts, and then we can have the discussion beyond that about, you know, how much is fair.”
He said the finding that the top 20 per cent pay more than half of total taxes, including income, sales, and property taxes, was a significant amount.
“I mean, it's something we've consistently found year after year, where the highest income earning families are paying a disproportionate share of total taxes relative to their share of income.”
He noted that this group is “earning a little less than half of all income in Canada at 49.5 per cent.
“But they're paying the majority of total taxes, and they're also paying, you know, nearly two-thirds of personal income taxes. So this is, you know, a huge amount of money, considering it's, you know, 20 per cent of income earning families in Canada. And I think that's the really important part of the discussion, is just providing these facts and data here.”
On the flip side, the bottom 20 per cent are paying 1.7 per cent of the share of total taxes.
“So if we look at, you know, the whole pot of 100 per cent of taxes being paid, that bottom 20% of families in Canada is going to pay less than two per cent of all taxes in Canada, whether that's personal income taxes, sales taxes, property taxes, and the list goes on. And they earn just over four cent of total income in Canada, in terms of the share.”
The top 20 per cent, Fuss said, is the only income group that is paying a higher share of taxes relative to their share of total income in Canada. For every other income group, it's the opposite situation.
“But we do see, you know, for middle income families in Canada, for instance, you know, they're earning about 14.6 per cent of all income in Canada and paying almost 13 per cent of total taxes in Canada.”
He adds that in general, because of the progressive nature of the tax system where you pay more in taxes as your income rises, “you are going to see as each income group ascends in terms of the amount of income that they're earning, they're generally going to pay more taxes than the previous income group towards the bottom of the income spectrum. “
There are ramifications from all of this, with the Fraser Institute pointing to those higher income earners looking to find a way to avoid paying those taxes entirely.
Fuss said they know from empirical research that when taxes are increased on top income earners, “they're going to try to reduce their taxable income through getting more lawyers and accountants involved, you know, more tax planning, avoidance, or even evasion, that can result in governments creating less revenue than they actually anticipate.”
He pointed to this happening in the United Kingdom, and in Canada with some of the tax increases in 2016.
“So just because you're increasing taxes on the top income earners doesn't actually mean that you're necessarily generating the level of revenue that you anticipate.”
Fuss agreed this also could drive those top revenue earners to leave Canada entirely and take their talents elsewhere.
“One of the factors that we see, again, from international evidence, not just here in Canada, but when you're increasing taxes on top income earners, that's going to make your country a less attractive place to live and work for highly skilled people like doctors, scientists, managers, software engineers, or even athletes, for instance. So, you know, there are consequences associated with having relatively high tax rates like Canada does for those top income earners… but just because you have those higher tax rates doesn't mean that actually necessarily provides the revenue that you're thinking you're going to get.”
As for what they hope this study achieves in terms of changes and progress going forward, Fuss said the really important thing here is having the discussion.
“You know, Canadians can ultimately decide for themselves whether, you know, certain income groups are paying their fair share of taxes. But the important part was providing them with the data and the facts so they can make those really important now, especially with so much of the discussion about fair share of taxes and what definitions we're going to use and how much different families are actually paying. So I think the real point of this study is to get the ball rolling in terms of the discussion for Canadians and rooting it in facts and data.”
