One Comment About Taxation – Are The “Rich” Paying Enough Tax?

I’m a fun guy to go out for dinner with. Just ask my wife or our friends. Before long, I’ll steer the conversation toward tax policy. I know, I know…I’m a blast at parties.

 

A common dinner topic is how much the so-called “rich” actually pay in income tax. When I share the statistics, the reaction is almost always the same: genuine surprise. Why? Because many people assume wealthy Canadians pay little tax thanks to endless loopholes and rate preferences. They simply aren’t contributing their “fair share.”

 

But the data doesn’t support that shallow narrative.

 

The Fraser Institute published its latest annual study on tax progressivity this week. The top 20 per cent of income-earning families pay 65.3 per cent of all personal income taxes in Canada, and 58.3 per cent of all taxes once you add sales, property, and every other levy governments collect. The bottom 20 per cent pay 0.7 per cent of personal income taxes and 1.7 per cent of total taxes.

 

Statistics Canada’s own effective tax rate data tell a similar story. In 2023, the top 1 per cent of income earners in Canada reported 10.1 per cent of total income but paid 22.1 per cent of federal and provincial income taxes. The top 0.01 per cent – roughly 3,000 people – reported 1.1 per cent of total income but paid a whopping 3.0 per cent of total taxes. The bottom 50 per cent paid 5.0 per cent of total taxes – clear evidence that redistribution is a central pillar of Canadian tax policy.

 

Consumption taxes have a similar narrative. Statistics Canada’s Survey of Household Spending shows that in 2023, the highest-income quintile spent, on average, $123,447 on goods and services – more than triple the $40,080 spent by the lowest quintile. GST and HST apply to most consumer purchases, and the exemptions – basic groceries, most financial services, resale housing – apply the same way regardless of income. The wealthy are paying substantially more consumption taxes simply because they buy more.

 

Then there are taxes aimed almost exclusively at higher-income Canadians. The federal luxury tax, introduced in 2022 on certain boats, aircraft and automobiles, was partly repealed in Budget 2025 after the government acknowledged it was inefficient, costly to administer and harmful to Canadian industries. The same reasoning applies to automobiles, and the tax should be repealed entirely.

 

And let’s not forget what happens when someone leaves the country. Canada imposes a “departure tax”. Individuals who cease Canadian residency are generally deemed to dispose of their assets at fair market value immediately before departure, triggering tax on accrued gains (subject to certain exceptions and deferrals). Similar rules apply at death.

 

The above evidence settles one debate: Canada’s highest-income earners already shoulder a disproportionate share of the country’s tax burden. The more important question is what happens when governments continue trying to extract even more revenue from a relatively small group of taxpayers.

 

The evidence on targeting the rich for “more” is well documented: the UK’s 2010 hike of its top rate to 50 per cent was projected to raise £2.5 billion; it raised, at most, £1 billion. The same happened in Canada in 2016 when the Trudeau government increased the top personal tax rate by four percentage points. The instinct to vilify success rather than celebrate it reflects the same short-sightedness.

 

None of this happens in a vacuum. Emigration from Canada reached a 10-year high in 2024, and the elevated pace continued into 2025. Not everyone who leaves is wealthy, but when successful entrepreneurs, investors, and highly paid professionals go, they take investment capital, business activity, expertise, and years of future tax revenue with them.

 

Chase away the geese, and you stop getting golden eggs.

 

So, what are some of the solutions for all of this? Well, the Royal Commission on Taxation, led by Kenneth Carter, recommended in 1966 that Canada’s top marginal rate should never exceed 50 per cent, warning that anything higher becomes a pure disincentive to work, invest, and build. That warning has aged well. Canada’s combined federal-provincial top rates today reach as high as 54.8 per cent in Newfoundland with seven other provinces also above 50 per cent.

 

But Carter also wanted full taxation of capital gains, on the theory that “a buck is a buck is a buck” regardless of how it was earned. In 1969, then Finance Minister Edgar Benson, steering the government’s response to the Commission’s report through fierce backlash, rightly rejected that piece of Carter’s vision. The 50 per cent capital gains inclusion rate that emerged from that fight, and that has survived largely intact for over fifty years, reflects something Carter gave short shrift to: how a dollar is earned matters. Risk matters, and policies that reward it grow the pie.

 

The reform worth pursuing borrows from both men. Take Carter’s rate discipline – a hard ceiling on the marginal rate – genuinely enforced through federal-provincial coordination and no higher than, say, 45 per cent – while keeping Benson’s recognition that capital deserves different treatment than labour income. Add full elimination of the luxury tax, meaningful deferral relief for capital gains triggered for businesses and during a person’s lifetime to encourage reinvestment, and an end to treating “tax the rich” as a substitute for spending discipline.

 

The question was never whether the rich pay enough. The data answered that years ago. The real question is whether Canada wants to keep the people who pay it.

 

So, the next time you invite me to dinner and the conversation drifts toward taxes, I won’t need to convince you the rich are already paying more than their fair share. The numbers did that work for me. The only question left on the table is whether we keep squeezing the golden goose until it finally flies south for good.

 

One Comment About Leadership – Great Leaders Create the Conditions for Greatness

 

A big misconception about leadership is that exceptional organizations are built simply by finding exceptional people. Talent certainly matters but spend enough time studying or building organizations that consistently outperform their peers and you’ll notice something interesting: they don’t have a monopoly on intelligence, work ethic or experience. Their competitors recruit from the same talent pool and often pay similar salaries. The difference is rarely the people themselves. More often, it’s the environment in which those people are asked to perform.

 

People are remarkably responsive to their surroundings. A capable employee placed in a culture where mistakes are punished and dissent is unwelcome will naturally become cautious. Place that same individual under a leader who welcomes thoughtful disagreement, provides clear expectations and rewards sound judgment, and you’ll often see abilities emerge that had been hidden all along. The person hasn’t fundamentally changed. The conditions have.

 

This is why effective leaders spend less time trying to “fix” people and more time examining the systems around them. They ask whether priorities are clear, whether accountability is consistent, whether unnecessary bureaucracy is getting in the way, and whether people feel trusted to exercise good judgment. They recognize that motivation is difficult to manufacture, but an environment that encourages initiative, responsibility and continuous improvement can be intentionally designed.

 

When performance declines, many leaders instinctively conclude that they need better people. Sometimes that’s true. More often, however, the better question is whether the organization has unintentionally made success more difficult than it needs to be. Conflicting priorities, poor communication, excessive oversight and unclear decision-making authority will eventually discourage even the most talented employee.

 

Jim Collins found something similar in Good to Great. The companies that made the leap didn’t succeed because their leaders possessed outsized charisma or because they hired superhuman employees. They succeeded because disciplined leaders built disciplined organizations where capable people could consistently do their best work over long periods of time. Sustainable excellence was the product of an enduring environment, not occasional acts of brilliance.

 

Leadership, then, is less about creating great people than creating the conditions in which people have the opportunity to become great. Organizations rarely outperform the environment their leaders establish. The culture you cultivate, the systems you build and the expectations you reinforce ultimately determine whether people’s potential quietly withers or has the opportunity to flourish.

 

One Comment About Economics / Politics  – Canada’s Economic Garden and the Seeds We Sow

 

Every spring my wife and I plant vegetables in a small garden at our cottage. Some years the harvest is terrific. Other years it’s disappointing. After enough seasons, I’ve learned something important: it’s rarely the seed. It’s almost always the soil.

 

I was thinking about that while attending last Sunday’s Mass at my local church. The Gospel reading was taken from Matthew’s famous parable of the sower – the one where a farmer scatters the same handful of seed across four different patches of ground and gets four completely different results. It’s a two-thousand-year-old story, but it is, without exaggeration, the best short explanation I’ve ever come across for what’s actually wrong with Canada’s approach to capital and entrepreneurship. Because we keep diagnosing a seed problem when we have a soil problem.

 

The seed, in this analogy, is capital and entrepreneurial ambition – Canadian and foreign investors and founders willing to take risk. That seed is not in short supply. What varies, and what determines whether it ever amounts to anything, is where we ask it to land.

 

Seed on the path. In the parable, some seed never even gets the chance to root – birds take it before it touches soil. This is the entrepreneur who looks at a punitive personal or corporate tax regime, a regulatory approval process measured in years rather than months, and simply never plants at all. Capital that goes to Texas or Dublin instead of Calgary or Toronto isn’t lost to bad luck. It’s lost before the first spade goes into the ground, because the ground was never in contention.

 

Seed on rocky soil. This is the one that should make every Canadian entrepreneur nervous, because it looks like success right up until it isn’t. Seed on shallow rock sprouts fast – no competition, quick access to the surface – and then the sun comes out and it withers, because there was never enough depth for a root system. This is exactly what a promise-heavy, follow-through-light political announcement looks like. Mark Carney’s government has been very good at the quick sprout: sweeping commitments, ambitious framing, headlines generated. What’s been thin is the root structure underneath – durable, legislated, multi-year policy architecture that survives a change in political weather. Growth built on announcement rather than architecture is rocky-soil growth. It looks fine in June. It’s gone by July.

 

Seed among thorns. This is the soil that doesn’t reject the seed outright – it lets it grow, and then slowly chokes it. This is the ever-growing compliance burden: complex tax rules, endless reporting requirements, regulatory duplication and bureaucratic processes that consume time and capital without creating value.

 

Good soil. The seed that lands here isn’t different or better than the seed that landed on the path, the rock, or in the thorns. In the parable, it’s the exact same seed the sower scattered everywhere else. That detail matters more than any other part of the story, because it means the yield – thirty, sixty, a hundredfold – was never a story about the quality of the seed. It was entirely a story about the quality of the ground it was given.

 

That’s the argument I keep making about Canada, in different forms, in nearly every column I write: we have a shortage of good soil. Competitive, predictable, structurally sound tax and regulatory architecture is not a nice-to-have or a talking point for a budget speech – it is the entire difference between seed that dies and seed that yields a hundredfold. If the soil is poor, fewer people will bother sowing.

 

Back at the cottage, I’ve since learned you bring in real soil, fertilize it nicely and work it every year, and you plant in the same spot deliberately, not by accident. That simple lesson also explains the philosophy behind my new consulting program – The Acorn Growth Program. Entrepreneurs rarely need better ideas. They need better ground: systems, structure and an environment where good ideas can take root and compound.

 

An acorn doesn’t need convincing to become a mighty oak. It simply needs good soil.

Bonus Comment – Attributed To Peter Drucker – The Father of Modern Management – About The Purpose of an Organization

 

“The purpose of an organization is to make ordinary people capable of extraordinary performance.”

 

Exactly. Leaders, a key role of yours is to create that environment that enables people to be extraordinary. Do it!

 

I hope today’s newsletter has been thought-provoking for you.

 

As many of you know, I’m passionate about helping people make better decisions – whether in tax, leadership, or business. If you’d like to go deeper on those topics, my recently released book, Making Life Less Taxing (Version 2), is now available and expands on many of the practical ideas I’ve written about over the years.

 

I’m also putting the finishing touches on my next book, Leadership Compounds: How Small Decisions Build Culture, Credibility, and Legacy. It explores a simple but powerful idea: leadership isn’t about grand gestures – it’s about the small, consistent decisions that compound over time.

 

For those interested in a more hands-on approach, I’ll soon be announcing a bespoke consulting initiative – The Acorn Growth Program – designed to help leaders and organizations grow intentionally, one small (but important) decision at a time. Feel free to reach out to me directly for more information.

 

And if you’re not already on my mailing list, feel free to sign up for my In the Mood Network newsletters to receive more content. No fluff – just practical insights on tax, leadership, and economic policy.

 

Thanks for reading. As always, I welcome your thoughts and feedback.

 

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