Life is getting harder for most people across Canada. Groceries cost more, rent keeps rising, and gas prices are spiking. Millions are now turning to food banks every month. For many families, paychecks no longer cover basic needs, and the affordability crisis is becoming a daily reality.

At the same time, wealth at the top is growing rapidly. In 2025, income inequality reached a record high, and the wealth gap between the richest and the rest continues to widen. The richest 1% of Canadians now hold $3.9 trillion in wealth – nearly as much as the bottom 80% combined – while the bottom 40% hold just over 3% of the country's wealth.

While economic growth is built on the backs of workers – many holding down multiple jobs at once – the benefit of this growth is not distributed evenly. Wealth is being concentrated at the top, deepening inequality, while the cost-of-living crisis is pushing millions into poverty, insecurity and precarious situations.

In times like this, it's important to ask how the system is working, especially when it comes to taxes. Is Canada's tax system fair and is it working for everyday people, or is it enabling inequality?

According to the new report A Tale of Two Tax Seasons: Tax season in a K-shaped Canadian economy from Canadians for Tax Fairness, this gap exists because income is not treated the same across the board – how an individual is compensated matters a lot.

Most people earn wages, which are taxed right away. Ordinary Canadians pay their income tax, claim their basic credits and call it a day. But for wealthier individuals, the picture is strikingly different. For example, highly compensated executives take maximum advantage of a tax system that treats income earned from wealth – like stocks – far more generously than income earned from wages. This gives the wealthiest access to preferential tax rates. Some of the wealthiest also move money into offshore tax havens to avoid paying their fair share.

A closer look at tax data shows how unequal the system has become. According to the Canadian Centre for Policy Alternatives, the top 100 CEOs in Canada earn $16.2 million a year on average. However, much of that income is taxed at lower rates or delayed because it comes from stocks and stock options rather than wages.

This small difference reveals a system that allows the richest to reduce how much their income is taxed, while ordinary Canadians pay tax on nearly every dollar they earn. The rules are designed in a way that favour wealth and privilege over work, and it's contributing to deepening inequality across the country.

Create a new federal bracket taxing income over $1 million at 37 per cent. This would affect only 43,000 Canadians, help deter outsized salaries, and raise $1.3 billion annually.

Establish a Wealth Tax to redistribute wealth. One of the most direct ways to address inequality is through a progressive wealth tax. Currently, ultra-wealthy Canadians accumulate vast fortunes while paying relatively little tax on their total wealth. A wealth tax targeting those with a net worth of $10 million starting at 1 per cent, rising to 2 per cent for net wealth above $50 million and 3 per cent on net wealth over $100 million would ensure that extreme wealth contributes more equitably. This measure alone could raise an additional $495 billion in tax revenues over the next decade. This revenue could be reinvested in health care, childcare, affordable housing and fund other essential services.

Close the capital gains loophole. All income should be treated equally for tax purposes, regardless of how it is earned. Closing the capital gains loophole would end the 50% discount on income that comes from wealth instead of work, which doesn't help anyone living pay cheque to pay cheque and almost exclusively benefits those wealthy enough to make their money from money. It would also pull in approximately $30 billion in federal revenue a year, and more in provincial and territorial revenue.

Supporting the establishment of the International Panel on Inequality. Tackling inequality requires better global coordination. One of the world's foremost experts on inequality, Joseph Stiglitz, led a report to the G20 that was presented at the most recent meetings in South Africa. The priority recommendation from the report is the formation of a new body, an International Panel on Inequality (IPI). The IPI would bring together the best evidence to clearly show how inequality is harming people, democracies and economies, and what governments can do about it. Canada should support the formation of IPI to design effective policies and ensure that reducing inequality becomes a central global priority.