Why Aren’t Canadians Happier? Is Inequity Part of the Problem?

Let's start with what I think shows just how unhappy Canada has become.

Here are the 10 happiest countries in the 2026 World Happiness Report:

• 1st: Finland

• 2nd: Iceland

• 3rd: Denmark

• 4th: Costa Rica

• 5th: Sweden

• 6th: Norway

• 7th: Netherlands

• 8th: Israel

• 9th: Luxembourg

• 10th: Switzerland

Canada is 25th out of 147 countries. For the first time, we are behind the United States, which ranks 23rd. The rankings are based on people's own assessments of their lives, averaged over three years, rather than simply combining economic and social statistics.

Here is how Canada's ranking has changed:

• 2012: 5th — the inaugural World Happiness Report

• 2015: 5th

• 2021: 14th

• 2025: 18th

• 2026: 25th

The decline is pretty remarkable. Canada went from being a consistent top-five country to 25th in just over a decade.

Interestingly, five of the top seven countries are cold: Finland, Iceland, Denmark, Sweden and Norway. These aren't exactly tropical paradise countries. They have long, dark winters, cold temperatures and, in some cases, pretty brutal weather.

And yet people who live there seem to be doing pretty well.

So what about Canada?

Why are we so far out of the top 10?

We live in an incredibly beautiful country. We have a stable democracy, personal freedom, relatively low crime and a high standard of living. We live next door to the United States, where we can sometimes look south and say, "We don't want to be like that."

We don't want their gun violence, political division, health-care problems or the seemingly endless political chaos (or their wack-job president).

We should be happier than them.

Apparently, we're not.

Why Norway?

Earlier this year, Teresa and I spent three weeks travelling around Norway, and it was an absolutely fantastic trip. If you're interested, you can read my seven posts about Norway and the Netherlands on my blog.

For this article, I'm going to use Norway as something of a reference point.

Norway ranked 6th in the 2026 World Happiness Report. Canada ranked 25th. If we were as happy as Norway, we'd be right near the top of the global rankings.

I'm not suggesting Norway has figured everything out. It hasn't. Norway has its own problems with inequality, housing, discrimination and access to services. But it is an interesting comparison because Norway is a wealthy, democratic, northern country with a large resource economy, universal health care and a strong social safety net.

In other words, it isn't so different from Canada.

So why are Norwegians happier?

I certainly don't have the answer. But I have a theory.

A little about my political philosophy

Before I get into it, I should probably explain where I'm coming from.

I consider myself fiscally conservative and progressive on social issues.

But my definition of fiscal conservatism is probably a little different from the way some people use the term.

To me, fiscal conservatism means governments should be responsible with money. They shouldn't continually run huge deficits and pile up unsustainable debt. Government programs should be evaluated to determine whether they actually work, and taxpayers should expect accountability.

But being fiscally conservative doesn't mean the only answer to a budget problem is cutting spending.

Governments have two sides to a budget:

spending and revenue.

If a government can raise additional revenue in a way that is economically responsible and then use that revenue to reduce deficits, improve essential services and reduce inequality, I don't see that as socialist.

I see it as being fiscally responsible.

And that's the approach I'm going to take here.

Inequity in Canada is contributing to unhappiness

For this post, I'm going to look at two different forms of inequity:

income inequity and what I will call structural inequity.

They are related, but they aren't the same thing.

Let's start with income.

Income inequity

One statistic really caught my attention.

According to a recent analysis by Canadians for Tax Fairness, when all major taxes were considered, the top 1% of Canadian earners paid an estimated 23.6% of their income in taxes in 2022, compared with 36.7% for the average earner. This is not a Statistics Canada estimate of the overall tax system; it is an analysis by an advocacy organization using its own methodology. But if the calculation is even approximately correct, it raises an important question about how fairly different types of income are taxed.

And there is more.

Wealth is generally taxed more lightly than employment income

A salaried employee earning $150,000 pays income tax and payroll taxes on their employment income.

Someone who earns substantial amounts through investments, capital gains, corporations or other assets can have access to different tax rates, deductions, deferrals and planning strategies.

I think that's a fairness issue.

I'm not arguing that all investment income should necessarily be taxed at exactly the same rate as every dollar of employment income. There are legitimate reasons for encouraging investment and entrepreneurship.

But the idea that the tax system should give substantially more favourable treatment to people simply because their income comes from accumulated wealth rather than work deserves serious examination.

And I don't buy the argument that any increase in taxation of investment income will cause investment to disappear or send all wealthy Canadians fleeing the country.

There will certainly be behavioural responses. Some people will change investments, reduce taxable income or consider moving. That's normal when tax rates change.

But that's very different from saying that investment will stop or that Canada will experience a mass exodus of wealthy people. Norway, despite having a wealth tax, has 74.5 millionaires per capita versus 59.9 in Canada. 24% higher in Norway despite a wealth tax and high taxes.

Personally, if someone says, "I'm leaving Canada because my taxes went up," I'm not going to lose a lot of sleep over it. (Kevin O'Leary, I am looking at you!)

Canada should consider a wealth tax

Norway has a net wealth tax. Canada doesn't.

My proposal would be something along these lines:

• 1% on net wealth above $10 million

• 2% above $50 million

• 3% above $100 million

The Parliamentary Budget Officer has actually costed a proposal with this basic structure. Its estimate was approximately $22.8 billion in 2025–26, rising to $26.8 billion by 2029–30, after accounting for the behavioural and administrative assumptions in its model.

That's a significant amount of money.

And importantly, this isn't a tax on the average Canadian. It is targeted at households with extremely high levels of net wealth.

Let's introduce an inheritance tax

Canada also has no federal inheritance tax.

I would introduce one, but with a very high threshold.

My proposal would start at $5 million.

In other words, we're not talking about taxing someone's $500,000 house or the modest inheritance a family might leave to its children.

We're talking about very large transfers of wealth from one generation to another.

A tax on estates or inheritances above $5 million could generate at least $2 billion a year, according to an estimate from Canadians for Tax Fairness. That figure is an advocacy estimate rather than an official Parliamentary Budget Officer costing, so I would treat it as a starting point rather than a guaranteed amount.

And yes, I would recommend doing both a wealth tax and an inheritance tax.

Why?

Because they address two different things.

A wealth tax deals with the concentration of wealth while someone is alive.

An inheritance tax deals with the transfer of substantial wealth between generations.

Reducing poverty

The other side of the equation is reducing poverty.

I personally favour a guaranteed basic income or minimum-income program.

And there is evidence that a properly designed program could significantly reduce poverty.

The Parliamentary Budget Officer's 2025 analysis found that its modelled guaranteed basic income would reduce poverty, measured using the Market Basket Measure, by 34% under one family definition and 40% under another. The lowest-income quintile received the largest improvement in disposable income.

There is an important qualification here.

The PBO's modelled GBI has a gross cost of about $107 billion under its nuclear-family definition. However, much of that cost is offset through changes to existing tax credits and tax provisions. The PBO estimated the remaining behavioural cost at approximately $5 billion under that definition.

So I wouldn't say a GBI simply "pays for itself."

I'd say something more accurate:

A carefully designed GBI can redistribute income very substantially while requiring far less net new government spending than its gross cost initially suggests.

And despite the arguments we hear that guaranteed income would cause everyone to stop working, the evidence does not support such an extreme conclusion. There can be some reductions in labour supply, depending on how a program is designed, but that is very different from people simply deciding not to work.

So what would my income-equity package look like?

Here's the basic idea:

• Guaranteed minimum income — designed to reduce poverty while simplifying and restructuring existing benefits

• Wealth tax — approximately $23–27 billion annually under the PBO-costed structure

• Inheritance tax — $2 billion or more as an initial working estimate

• Investment-income and capital-gains reform — perhaps $10–18 billion annually, depending on how aggressively it is designed

• Tax-avoidance and tax-expenditure reform — additional billions

The point isn't simply to raise taxes.

It is to change who pays, what gets taxed and what the government does with the revenue.

I would use some of the additional revenue to reduce deficits and debt.

But I would also invest in things that directly improve people's lives:

• affordable housing

• health care

• pharmacare

• dental care

• child care

• mental health services

• education and skills

• infrastructure

The broad distributional effect should look something like this:

• Bottom 20%: large improvement

• Lower-middle income: moderate improvement

• Middle income: relatively little change

• Upper-middle income: small reduction

• Top 1%: meaningful reduction

• Ultra-wealthy: largest reduction

That would create substantially greater income equity.

And I think it would make Canada a happier country.

But income isn't the whole story.

Corporate taxes and subsidies

Before leaving income inequality, I want to look at another area: corporate taxation and subsidies.

This is complicated. There are legitimate reasons for governments to provide tax incentives and subsidies. Some encourage investment, innovation, clean technology and job creation.

I'm not suggesting we eliminate everything.

But I would conduct a much more aggressive review of programs such as:

• fossil-fuel industry subsidies and tax preferences

• corporate tax incentives for already-profitable industries

• excessive executive compensation preferences

• employee stock-option deductions for highly compensated executives

• industry-specific tax credits that don't demonstrate sufficient public benefit

• corporate tax deferrals and other poorly targeted tax expenditures

The objective shouldn't be "tax corporations because corporations are bad."

The objective should be:

If taxpayers are giving a company money or a tax break, what are taxpayers getting in return?

If the answer is good jobs, investment, innovation or other measurable public benefits, keep it.

If the answer is essentially "the company would have done it anyway," reconsider it.

I think a serious review could realistically produce something in the range of $12–15 billion a year in additional federal revenue.

That money could go toward health care, dental care, pharmacare, housing, deficit reduction and other areas that directly benefit Canadians.

Structural inequity

Now let's look at something bigger.

Income inequality is about how money is distributed.

Structural inequity is about whether people's circumstances systematically affect their opportunities and outcomes.

This includes race, Indigenous identity, income, geography, gender, disability and other factors.

And the Canadian data are pretty troubling.

Poverty

In 2024:

• 15.5% of racialized Canadians lived in poverty

• compared with 8.9% of non-racialized Canadians

Among Indigenous Canadians aged 15 and older, the rate was 18.1%, compared with 10.6% among non-Indigenous Canadians.

Access to health care

In 2024, 79% of racialized Canadians reported having a regular health-care provider, compared with 84% of non-racialized, non-Indigenous Canadians.

For Black Canadians, the number was only 73%. Some other racialized groups were even lower, including Arab, Latin American and Southeast Asian Canadians.

We need to be careful here. Not every racialized group has worse outcomes. Filipino Canadians, for example, had a higher rate of regular access than the non-racialized comparison group.

But the overall pattern shows meaningful disparities.

Health outcomes

The income-health connection is particularly striking.

In 2023, Canadians in the lowest income quintile could expect approximately 61.9 years of health-adjusted life expectancy, compared with 70.0 years in the highest income quintile.

That's an 8.1-year gap in healthy life expectancy.

At age 65, the gap was about 2.4 healthy years.

That's more than an income statistic.

It means that economic inequality is associated with a difference in the number of years people can expect to live in good health.

Incarceration

The justice system shows another enormous disparity.

In 2023/24, Indigenous adults were incarcerated at approximately 10.2 times the rate of non-Indigenous adults, after adjusting for age and gender.

For Indigenous women, the overrepresentation index was approximately 18.2.

Black adults were incarcerated at approximately three times the rate of White adults in the provinces for which disaggregated data were available.

Those numbers should concern every Canadian, regardless of political philosophy.

Maternal health

There are also significant racial disparities in maternal and birth outcomes.

Research in Ontario has found that Black pregnant people experience higher risks of several adverse outcomes, including preeclampsia, gestational diabetes, preterm birth, emergency C-sections, low birth weight and NICU admission.

This doesn't mean every disparity is caused by racism or discrimination. Income, geography, access to care, underlying health conditions and many other factors matter.

But when the same disparities repeatedly appear across different systems, we should be asking why.

Canada versus Norway

This is where Norway becomes an interesting comparison.

Norway isn't free of structural inequity. It has socioeconomic health differences, discrimination against the Sámi and disparities among some immigrant communities.

So I wouldn't claim Norway has solved these problems.

But some Canadian disparities—particularly the health and incarceration disparities experienced by Indigenous people—are much more severe.

For example, Canadian First Nations and Inuit populations experience dramatically shorter life expectancy than the non-Indigenous population. Norway's Sámi population has experienced historical discrimination and assimilation, but the overall health gap is considerably less severe.

So Norway isn't a perfect model.

But it does demonstrate something important:

A wealthy, northern country can build a society with much stronger social protection without destroying individual freedom or economic prosperity.

But here's the thing: money won't solve everything

This is where I want to be fair to the other side of the argument.

If we simply raise taxes and send everyone more money, we won't magically make Canadians happy.

The World Happiness Report doesn't say that money is the only thing that matters.

The 2026 report looks at differences in life evaluations in relation to factors including income, healthy life expectancy, social support, freedom to make life choices, generosity and perceptions of corruption. The 2026 report also puts significant emphasis on social connection and the changing role of social media.

And Statistics Canada's own data reinforce this broader picture.

So what else is making Canadians unhappy?

Cost of living

This is probably the most obvious one.

Housing, groceries, transportation, insurance, utilities and other basic expenses have all become sources of financial stress.

Statistics Canada has found a strong relationship between financial well-being and life satisfaction. Between 2021 and early 2024, 59% of Canadians experiencing no financial difficulties reported high life satisfaction, compared with only 29% of those experiencing financial hardship.

That is a huge difference.

Housing insecurity

Housing deserves its own category.

The stress of high rent, large mortgage payments, saving for a down payment and worrying about being able to stay in your home can affect happiness even when someone has a decent income.

And there is another issue.

Imagine someone who bought a house 30 years ago and now owns it outright.

Compare that with a 35-year-old who earns a good salary but is paying a huge rent, has little savings and can't see how they will ever accumulate enough money for a down payment.

That isn't just a financial difference.

It can create a feeling that the system isn't fair.

Social connection and loneliness

This one isn't going to be solved by a tax cut.

People need other people.

Family, friends, neighbours, clubs, sports, volunteering and community all matter.

Statistics Canada found that about 59% of rural Canadians reported high life satisfaction in 2023, compared with 49% of urban Canadians. There are many possible explanations for that difference, but stronger community connection may be part of the story.

The 2026 World Happiness Report also puts considerable emphasis on social connection, kindness and trust.

We shouldn't underestimate this.

A country can become richer while its people become more isolated.

Trust

Do Canadians trust their government?

Their neighbours?

The police?

Businesses?

The media?

Other Canadians?

The World Happiness Report includes perceptions of corruption because trust in institutions is associated with people's evaluations of their lives.

If people believe the system is rigged, it doesn't matter how many economic statistics tell them that Canada is a wealthy country.

They don't feel wealthy.

They feel cheated.

Mental health

Mental health is another major issue.

Statistics Canada found that life satisfaction has declined in recent years, while financial hardship increased. In early 2024, people experiencing financial hardship were dramatically less likely to report high life satisfaction than those without financial difficulties.

Money isn't the only cause of mental-health problems.

But financial stress, loneliness, housing insecurity, lack of access to care and uncertainty about the future can all make things worse.

We need more mental-health services, but we also need to address some of the conditions that are contributing to poor mental health in the first place.

Freedom and control over your life

Another factor in happiness is the feeling that you have control over your own life.

Can you afford to change jobs?

Can you move?

Can you start a family?

Can you buy a home?

Can you take a vacation?

Can you retire when you want?

Can you pursue something that gives your life meaning?

This is one reason I think housing affordability matters so much.

It's not just about the cost of a house.

It's about freedom and choices.

Meaning and purpose

Finally, people need a reason to get up in the morning.

Statistics Canada found that among Canadians reporting high life satisfaction, 84% also reported a strong sense of meaning and purpose.

That can come from family, work, volunteering, religion, hobbies, community, nature, travel or helping other people.

And this may be the biggest lesson of all.

Money can make life easier. It can't tell you what your life is for.

So, are Canadians unhappy because of inequality?

I think the answer is partly yes.

Income inequality, financial insecurity, housing affordability and structural inequity are significant contributors.

But they're not the whole story.

I think the bigger picture looks something like this:

Financial insecurity

↓

Housing stress

↓

Mental-health stress

↓

Less optimism about the future

↓

Less sense of control

And alongside that:

Structural inequity

↓

Unequal access to opportunity and health care

↓

Worse health and economic outcomes

↓

Less trust that the system is fair

And then another track:

Less social connection

↓

More loneliness

↓

Less community and trust

↓

Lower happiness

These things reinforce one another.

So what would I do?

I wouldn't try to make Canadians happier by simply writing bigger cheques.

I'd try to build a society where people have a reasonable chance to live a secure, healthy, connected and meaningful life.

That means:

Economic fairness

• A guaranteed minimum income

• A more progressive tax system

• A wealth tax on extreme wealth

• A high-threshold inheritance tax

• More equal treatment of investment income

• Reform of aggressive tax avoidance

Corporate fairness

• Review corporate subsidies and tax expenditures

• Eliminate poorly performing programs

• Reform excessive executive tax preferences

• Capture extraordinary resource rents and windfall profits

• Keep incentives that genuinely produce investment, innovation and jobs

Opportunity

• More housing supply

• Affordable child care

• Better education and skills training

• Transportation and infrastructure

• Help for people who want to work and improve their economic position

Health

• Better access to primary care

• Pharmacare

• Dental care

• Mental-health services

• Better maternal health care

• Targeted programs where racialized and Indigenous Canadians experience demonstrably worse outcomes

Structural inequity

• Address Indigenous health and justice disparities

• Improve access to culturally appropriate care

• Collect better race-based and socioeconomic data

• Examine systemic barriers rather than pretending they don't exist

• Focus resources where the evidence shows the greatest need

And finally: rebuild community

This one is harder.

Government can't legislate friendship.

But we can create communities where people have opportunities to meet one another, participate, volunteer, play sports, join clubs, enjoy parks and public spaces and feel that they belong.

Because if the World Happiness Report is teaching us anything, it's that social connection, trust and kindness matter enormously.

Are we capable of becoming happier?

I think we are.

Canadians are not unhappy because Canada is a bad country.

Quite the opposite.

We have an enormous amount going for us.

But I think we've allowed some important things to get out of balance.

We've allowed housing to become increasingly unaffordable.

We've allowed wealth to become increasingly concentrated.

We've allowed significant structural disparities to persist.

We've allowed health-care access to become more difficult.

We've allowed loneliness and mental-health problems to grow.

And we've allowed too many people to feel that the system isn't working for them.

The good news is that none of these problems are impossible to address.

It will take money, but it will take more than money.

It will take better policy.

It will take political courage.

It will take governments willing to look at both sides of the balance sheet—spending and revenue.

And it will require Canadians to stop treating every policy discussion as a battle between "left" and "right."

I'm not suggesting that my ideas are the answer to everything.

I'm suggesting that we should judge them by one simple question:

Will they make Canada a fairer, healthier and happier place to live?

Maybe we won't make it into the top 10.

Maybe we will.

But I'm pretty confident that Canada can do better than 25th.

And I'd certainly like to see us back ahead of the United States.

If you have questions, comments or a different point of view, I'd love to hear from you.

You can reach me at thethirdperiod.ca@gmail.com.