The Tax Burden
You look at your pay stub. Nearly half is gone before you touch it. Your boss's income comes from capital gains — taxed at half the rate. The company you work for pays 15% federal tax but books profits through a subsidiary in Barbados. The road you drive to work has potholes. This is the system working as designed.
The System
How Canada's Tax System Favours Wealth Over Wages
The tax system is not neutral. It is a set of choices about who pays and who doesn't. Workers pay income tax on every dollar. Investors pay tax on half their gains. Corporations shift profits offshore. The result is a system where the people who do the work carry the heaviest load, and the people who own the assets carry the lightest.
Canada's top combined marginal income tax rate reaches 54% in Nova Scotia. Capital gains are taxed at a 50% inclusion rate — meaning the effective rate on investment income is roughly half the rate on wages. The proposed increase to 66.7% was cancelled by PM Carney in March 2025.
According to Canadians for Tax Fairness, 46 of the 60 TSX 60 companies — more than three quarters — have at least one subsidiary in a tax haven, and Canadian corporations and wealthy individuals held $682 billion in tax havens in 2024, up 165% over ten years.
The Canada Revenue Agency puts the net federal tax gap — revenue owed but not collected — at $34.7 billion for 2022. The Conference Board of Canada has estimated it as high as $47.8 billion. Either way, it rivals the size of the $52.1 billion Canada Health Transfer.
Canada's federal corporate tax rate was 28% in 2000. It's 15% now. The top 1% of families hold 24% of national wealth. The bottom 40% have a median net worth of $64,150. Canada is the only G7 country with no inheritance or estate tax.
The Promise
What Politicians Promised About Tax Fairness in Canada
There was a time when corporations paid their share. Corporate taxes funded the social programs that built the middle class. Then the rates were cut, the promises were made, and the money went elsewhere.
In the 1950s-60s, corporate tax rates were raised to fund Medicare, public education, and unemployment insurance. Corporate taxes were ~20% of federal revenue. The social contract was: corporations use public infrastructure, they help pay for it.
From the 1980s onward, corporate rates were cut in the name of 'competitiveness.' Federal rate: 28% (2000) → 21% (2007) → 18% (2010) → 15% (2012). Each cut was promised to create jobs. Corporate profits rose. Wages didn't keep pace.
After tighter eligibility rules began in 1996, Employment Insurance premiums built up a notional surplus of about $57 billion by 2008. In 2010 the government wrote that surplus down to about $2 billion, absorbing the balance into general revenue. Workers and employers paid in; the money was spent elsewhere.
The Reality
Capital Gains Taxed at Half the Rate While Corporations Book Profits Offshore
Workers carry the tax load. The structure ensures it. Income tax hits wages hardest. Payroll taxes are regressive. Municipal infrastructure crumbles while the corporations that use it pay less every decade.
Of the $223.6 billion Ottawa collected in income tax in 2018-19, personal income tax accounted for $163.9 billion and corporate income tax for $50.4 billion — roughly three dollars from workers for every one from corporations. Workers carry the load; corporations carry the accounting.
Payroll taxes (CPP, EI) are capped — a worker earning approximately $71,300 in 2025 pays the same absolute CPP contribution as someone earning $500,000. Above the cap, the effective rate drops to a fraction of a percent. CPP2, introduced in 2024, extends contributions to a second ceiling — but the base CPP structure remains regressive below those caps.
The Federation of Canadian Municipalities puts Canada's municipal infrastructure deficit at around $270 billion. Nearly 40% of roads and bridges are in fair, poor, or very poor condition. Municipalities own more than 60% of the country's core public infrastructure but receive only 8 to 10 cents of every tax dollar — and the corporations that use it daily pay a declining share of maintaining it.
What Works
Tax Systems That Actually Create Fairness Between Work and Wealth
Other countries prove that higher taxes don't destroy prosperity — they build it. And the global minimum tax is a first step toward closing the offshore loopholes.
Denmark's tax-to-GDP ratio is 45.2%, the highest in the OECD. Canada's is about 35% — above the OECD average. Denmark funds universal healthcare, tuition-free university, and generous unemployment support, and ranks among the happiest countries measured.
The OECD Pillar Two global minimum tax (15%) came into force in Canada in 2024. It applies to multinationals with revenue over 750 million euros. First returns due June 2026. It's a floor, not a ceiling — but it's a start.
What You Can Do
What You Can Do About Tax Inequality in Canada
The tax code is a set of choices. Different choices are possible. But only if people understand the current ones.
Follow the money. Canadians for Tax Fairness (taxfairness.ca) tracks corporate avoidance. The PBO publishes wealth distribution data. Ask your MP why capital gains are taxed at half the rate of wages. Ask why Canada is the only G7 country with no inheritance tax. The tax code is a set of choices. Different choices are possible.