Study finds top 20% pay 58.3% of taxes despite earning under half of income
Canada's wealthiest families are already carrying a heavier tax load than their income share would suggest, according to new research from the Fraser Institute that pushes back against arguments for further tax hikes on high earners.
The report, titled Measuring Progressivity in Canada's Tax System, 2026, found that families in the top income quintile pay 58.3% of all taxes collected in Canada, including personal income, sales, and property levies, despite earning only 49.5% of total family income. When personal income tax is isolated, the gap widens further: the top 20% contribute nearly two-thirds of that total, at 65.3%.
The bottom fifth of income-earning families, by contrast, pay just 1.7% of total taxes while receiving 4.3% of total income, the study found.
Jake Fuss, director of fiscal studies at the Fraser Institute and co-author of the report, said the findings challenge a widely held view about who bears the greatest tax burden in Canada.
"The idea that top earners don't pay their 'fair share' of taxes ignores the evidence that these families pay a disproportionately large share of the total tax bill," Fuss said.
Advisor toolkit
For advisors fielding client questions about tax fairness debates, the report offers a useful framework: comparing a group's share of income earned against its share of taxes paid. Measured this way, the top quintile stands out as the only income group paying more than its proportional share, the study found.
The report also warns that pushing tax rates higher on top earners could backfire from a revenue standpoint.
Previous research cited in the study found that tax hikes on high-income Canadians often trigger behavioural shifts, including tax planning, income shifting, and avoidance strategies, that shrink the taxable base and leave governments collecting less than projected.
The study further cautioned that raising taxes on high earners risks weakening Canada's ability to attract and retain skilled professionals such as doctors, scientists, managers, and software engineers, at a time when competition for that talent extends across borders.
"The assertion that the top 20 per cent of earners in Canada are not paying their fair share is simply not supported by the evidence," Fuss said.
Broader tax fairness debate
Fuss added that policymakers should factor in the progressive structure already built into the system before pursuing further increases.
"Canadians should be aware that the country's tax system is already progressive and calls to raise taxes further on top earners can have unintended economic consequences," he said.
The Fraser Institute describes itself as an independent, non-partisan Canadian think tank that does not accept government grants or research contracts.
