Taxes in Canada, and the public programs which they pay for, have had a huge effect in slowing the rise in inequality in Canada. By cutting taxes (and the programs they pay for), inequality will rise dramatically.
Pre-tax earnings and incomes have become dramatically more
unequal in recent years. The top fifth of Canadians now takes home
27 times as much income, before tax, as the bottom fifth. That's up
from an 18-to-1 ratio just a decade ago. But thanks to income taxes
and transfer payments (like EI, pensions, and welfare), after-tax
inequality is not nearly as severe (about 8-to-1, instead of
27-to-1). Even after-tax, however, inequality has started to grow
measurably - mostly due to tax cuts since 1996.
Source: CAW Research from Statistics Canada, "Income in Canada."