R15: Income splitting

I’m posting on the reasons I won’t vote for Stephen Harper and his party:

I’m one of the 15%. Or I thought I was. In my household, I work as a data analyst and programmer; my husband works part-time as caregiver for my mother, as well as watching our home on his days off and taking care of our daily life. I thus earn a bit more than he does (though he works just as hard): and we could benefit from income splitting. Under such a policy, we’re able to “split” our incomes so that a significant portion of my income is given to him, so it’s taxed at a lower bracket. So we would pay less in taxes.

Oh, but I forgot. We don’t have kids. So we don’t qualify. Part of the complexity of the tax code that favours “real” families: people who have children. Isn’t that discrimination based on family status? We’re simply helping with my mother, who has dementia and is unable to care for herself. Doesn’t that “count” as maintaining family responsibility?

In the U.S., “income splitting” is pretty much normal. It’s one of the reasons I wanted to get married down south: taxes are calculated by family if desired, by individual is only one option. And in the States it’s been like that for a while. My ex-wife and I filed together; it’s one of the reasons I was frustrated when my husband and I could not do so. Though with the recent passage of same-sex marriage, that hurdle has passed, because in the U.S. it’s not necessary to have kids to be able to “split” incomes. So you’d think I’d be happy with Mr. Harper’s decision to do something typically American. If filing as a family works in the States, what’s wrong with it in Canada? A brief response:

  • It helps only 15% of the Canadian population, and primarily only the top 15%. (BNN, 2015). It benefits “medium– through high-income households”, and the bottom 20% benefit very little (Macleans, 2015). Not that they can’t use income splitting: it just does them no good. It only helps if one member of the couple earns more than the other: enough to be in a significantly different tax bracket. If you don’t know what bracket you’re in, or if you earn nearly the same as your spouse, you probably wouldn’t benefit. “The problem with income-splitting isn’t that it is designed to benefit the best-off families; it’s that it is not designed to benefit those who are really struggling to make ends meet.” (BNN, 2015)

  • There’s a gender bias to all this: because of those 15% they are virtually all “traditional” family structures in which the man earns more than the woman, who is the one to whom his income is “split”. Now again, it isn’t set out that way explicitly: but the numbers work out that way. (Rabble, 2014; CP24, 2014)

  • A couple must have children in order to benefit. Many of the poorest couples can’t afford to have children, and this doesn’t help them. And beyond that: in a world where humans have overpopulated the planet and are consuming resources at a frightening rate, it is bad policy to encourage couples to have more children.

  • It will cost 2.2 billion to the federal government, and have virtually no impact on those who most need it (National Post, 2015). This added to falling revenues in Canada will lead to an expanded deficit for the country. Hardly good news for the Conservative economy that Harper has touted. If done right, it could be a benefit to families (of all kinds): but it is hardly something that should be introduced while the country is even in a mild recession. Unless, of course, you’re trying to buy votes.

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2 Responses to R15: Income splitting

  1. Pingback: R16: Family Status | The Geographer's Corner

  2. Pingback: R18: Harper’s Regressive Tax Policy | The Geographer's Corner

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