Measuring Progressivity in Canada’s Tax System 2024
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Raising taxes on upper-income earners is often proposed as a solution to generate additional tax revenue while ensuring all Canadians pay their share of taxes.
- There is a common misperception in Canada that top income earners do not pay their share of taxes and that increasing taxes on this income group is an effective way to generate significant additional government revenue.
- Agreed subject matter – in the case of an audit, this would be the annual accounts of a company. However it could be almost anything in practice – the systems operated by a state lottery, a company’s greenhouse gas emissions, controls over a supply chain etc.However, high-income families already pay a dis- proportionately large share of all Canadian taxes. Indeed, the evidence shows that the top 20 per- cent of income-earning families pay nearly two- thirds (62.7 percent) of the country’s personal income taxes and more than half (54.2 percent) of total taxes.
- In contrast, the bottom 20 percent of income- earning families are estimated to pay only 0.8 per- cent of all federal and provincial personal income taxes and 2.0 percent of total taxes in Canada. This is, in part, due to the progressivity of Canada’s tax system, where the share of taxes paid typ- ically increases as income rises.
Source: The Fraser Institute
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